Friday, March 8, 2013

97 th Amndt. of Constitution- Guj HC in a PIL gives a Blow !

To Update>


20 Aug
Govt. passes Act to Amend Maharashtra Co-operative Societies Act, 1960

 Download Full Text of the Amended Maharashtra Co-operative Societies Act, 1960 known as Maharashtra Co-operative Societies (Amendment) Act, 2013


To share further thoughts:

A) For useful guidance on the point raised @ Ishwer C Naik, may look up the expert commentary and cited court cases in Kanga and Palkhivala’s Book on Income-tax, on the topic /under the main head of, “Precedents”; sub-heads of – “Binding force of a High Court Judgment”, “Uniformity of construction”, etc. However, In considering the applicability or otherwise thereof and , to what extent they are, one ought to keep in full focus that those are of direct relevance hence applicable in toto only to issues , including constitutional validity, arising/raised in relation to a provision of the law on income-tax, which admittedly a central legislation. In other words, what is not to be over sighted is the fact that the issues raised in the PIL and covered in the Gujarat HC judgment are patently distinct- a different “kettle of fish”, so to say.

B) Nonetheless , with the same breath, one may wish to add that the following are other equally relevant and important facets:
1. First and foremost, if one were to go by, and simply rely on, the independent mandatory provisions of the special State enactment on “flats” (or on “apartments”),- that is independent of / sans the constitutional amendment, since subjected to a controversy, -there appears to be no two views possible, so as to dispute the buyers’ rights to have a Society (Or Association ) formed and in place. Again. that is essential, for not merely the secondary purpose of an effective and efficient management of the common affairs of the buyers owning /residing in a condominium of flats or apartments; but for the primary purpose itself – being that, the property rights in the land and building as a whole could, as mandated, be fully and finally conveyed ONLY to the legal entity namely, a duly registered Co-operative Housing Society of flat purchasers (-in the case of Apartments, ONLY to a duly formed Owners’ Association).

To add, though at the cost of repetition, : the "first conveyance" by promoter /seller to purchaser of flat / apartment is only a partial conveyance. In that,- what the purchaser acquires thereunder are (a)  'owenership' rights and actual physical possession only for his individual apartment, and (b) but only a 'constructive' possession of his undivided / never divisible share in  the 'common areas and facilities'. 

2. One’s honest guess is, -that explains why the Centre had to think of and hence went ahead with the subject constitutional amendment; and mainly because of the overwhelming reality that,- in many of the States , Maharashtra being no exception, thanks to the recalcitrant attitude and indifferent disposition of many of the promoters / sellers, the mandates referred to in 1 above., which came to be known, but only lately, to being hardly implemented or enforced at the States level.

Be that as it should, the indisputable fact is that, as set out herein before, the right to form a 'co-operative society' by flat purchasers (an 'owners association' by apartment purchasers) is a right that already exists / stands assured/secured under the special enactments on the statute book of many of the States (e.g. Maharashtra and Karnataka).

On the mentioned concept of 'final conveyance', refer. the viewpoints focussed on in previous blogs - for instance, @

3. The controversy on the constitutional amendment, or other connected ones such as, -whether or not the Gujarat HC ruling has binding force in other States as well, would, in one’s individual/independent but impartial opinion, pale,- rather fade,- into insignificance, once the points made in 1 and 2 above , are made a conscious note of.

4. Last but least, despite/even without the cited PIL/ HC judgment, certainly nobody’s case is to the cotrary that, the States , left to themselves, could have made, and been well within its powers, all or any of such amendments as made by Maharashtra . Pithily stated, and to be essentially focused on , is, -why then, the amendments so made could, or should or need to, be necessarily regarded as ‘infructuous’. Instead,is there not a better, rather much desired and well considered view, possible ?!

Over to property cum constitutional law experts at large,- who alone could be considered/expected to be duly equipped, – for an in-depth deliberation as called for, to the end of sincerely serving the public interest at stake.

<(left unedited; open to concerned others to do so)

May 5, 2013

<> Instant reaction:

Subject to/pending a closer reading of the observations.etc. in the write-up, one may wish to draw attention to a HC (Madras!) Judgment in the matter of a criminal prosecution against  the elected  Secretary of a Hsg. Society in TN. If one remembers right, in upholding the prosecution as valid in law, the primary reason/ground of the court decision was that he was a 'public servant' within its legal connotation. May be, perhaps, this is one more aspect which, in one's conviction, could rightly be urged, in pleading asc to why the benefits of RTI Act ought to be extended to a hsg. co-operative society.
As rightly observed, - "Coop. Society is a group of members, means OF the members, BY the members, FOR the members, ONLY." That being so, going merely by dictate of common sense, one fails to understand why at all, even otherwise - that is, regardless of the applicability (or not) of the special enactment on RTI, anyone or more members cannot successfully press for and procure any info. or doct. from the MC, which it has in its custody or domain, so long as it pertains directly or otherwise, to the common affairs of the Society as such? 
   WRT the NOTE with the opening words, - "The Gujarat High Court has declared on 22-04-2013, that “Articles 243ZH to 243ZT”  of the 97th Constitutional amendment are “ultra vires”......", perceptibly, it is a topic which requires an in-depth but incisive study and understanding, for an appreciation in proper light, of its true implications. For the nonce, a recent post @ (link.> tentatively reflecting on the HC's ruling , though wprt its releance or otherwise to the law on apartments in force in Karnataka, may be found to provide some clues / guidance.

< Hemant Agarwal  (Legal Consultants)
In the view of explanation given by the President and Secretary of Society that there ....member and employee of cooperative institutions is a 'public servant'.

 HOUSING SOCIETY SECRETARY FINED 7000/- FOR POOR SERVICE - Civil ... › ... › Civil Law › Consumer Protection
Apr 3, 2009 - 8 posts - 7 authors
As a public service, Please spread the news of this judgement to all ... on thesecretary of Chandra Bhuvan Cooperative Housing Society at ...

Society Secretary is a Public Servant : Madras High Court ...

Oct 31, 2012 – Home » Society Secretary is a Public Servant : Madras High Court the Secretary of the Avinashi Co-operative Housing Society Limited, ...

Haryana registration & regulation of societies, 2012.

A Deverlopment - for COMMON good or bad?
97th amendment on co-ops unconstitutional -Gujarat HC
(Centre v State based Controversy)


 Maharashtra Co-operative Societies Act, 1960 – Amendments 2013

On the first blush, it appears that, there is more than one lacuna in the reported text of the amendments, as published.

Even on a casual reading, it appears, the text requires to have a re-look at, for possible lacunae :


1. “2. Members :
Only those who attend at least one general body meeting in consecutive five years and utilise minimum level of services (to be specified by government) are considered …”
In initial years, that is until five years completion as envisaged, how it will be given effect/to be aced upon ?

2. “12. A new sub-section (4) in section 166 provides that “the committees ….or till the expiration of their form, whichever is earlier. ”
Is the word ‘form’ intended to mean / be read – ‘”TERM” ?
so on..


Empanelment of Auditor for Audit of Cooperative Societies F.Y. 2012-13

The write-up confines itself to the state of Maharashtra. However, it calls for a specially pointed mention that the amendments of the Constitution are of relevance and equal application to all the states in India.
As of now, till the respective States have carried out the consequentially wanted changes in the own independent state enactments in force, by suitably incorporating the referred amendments in general, and in so far as they are to apply to housing societies in particular, the announced empanelment of auditors is, in no way, relatable thereto. 

 Going by one's information, in certain states (e.g. Karnataka) housing societies (in Karnataka, 'owners' associations) have remained, for long, to be brought within the purview of the Co-operative Societies Act.

Of course, as one imagines, until that happens, auditors would, in the audit reports, require to incorporate a suitably framed qualification Note, so as to bring out the actual factual state of affairs. To hint at, may be, it will require to be disclosed to the effect that the audited accounts of such entities (housing societies or associations) are subject to changes, if any called for, if and when the state enactment comes to be modified and the so amended provisions take effect.

It is a commonly known but widely acknowledged fact that, in a few states (such as Karnataka, unlike MAHA), what are constructed for 'sale' are units of building falling under the category of 'apartments', as distinct from "flats'. The respective scheme of the provisions of the law applicable to apartments and flats are fundamentally and clearly distinguishable. For that matter, the modality for 'conveyance' of property rights, so also the concept of 'ownership', are mutually at variance (refer the other related blogs for a detailed explanation and exposition thereof; also, read the write-ups, including the one  lately put up in public domain, links - @  >


<> KNOW YOUR RIGHTS: Rules and regulations for apartment dwellers

<> Citizen Matters, Bangalore: Justice Hegde releases 'Living in


<>Citizen Matters, Bangalore: The apartment law you must know@

It necessarily requires to be kept in sharp focus that, in Karnataka (Bangalore), but for rare exceptions, the state law on apartments (to know its special features, read the marked article ) is not known to have ever been followed /strictly complied with by promoters / sellers. So much so, by and large, the apartment complexes do not have in place a duly constituted "owners' associations". In the eyes of law, it is only to such a legal entity to which final conveyance of the property in the land and building (belonging to apartment complex) is, as mandated, required to be effected. Instead, the largely obtaining reality is that  what they have formed are the so called "RWAs",  not being a 'legal entity' for the purpose.  This is an illegality / irregularity , of such a vital nature as to seriously impinge on / impact the lawful property rights and interests of 'purchasers' to the core; and more so, in turn, of the lending banks. Hence, a CA engaged for auditing and reporting on the final accounts of any such 'entity' is obligated to make a special note of and adequately qualify his report. Perceptibly, he cannot afford not to do so, if not done thus far, keeping in focus the inevitable developments expected to take place anytime, in the aftermath of the subject amendments of the Constitution, even now, without having to wait for the consequential changes in the state law.

Over to the ICAI, apart from its concerned members, especially the sirc (its Bangalore wing, and its constituents), for a further incisive study and insightful deliberation, as are considered necessary, for providing useful guidance in the form of a standard audit procedure,  for adoption on a timely basis.  

 Cr. Ref. March 9, 2013  

Key Note:  Section 81 of the MAHA Act stipulates that,, for a CA or any other person as specified,  in order to qualify for appointment as an auditor, should have "a fair knowledge of the functioning of the Societies" and an experience of at least three years in auditing of societies".

If strictly viewed and critically analyzed, it will be realized that no care has been taken in laying down the ideally  requisite qualifications/expectations:

For instance, remain unexplained, meaning left to anyone's wild guess:

'fair knowledge' ?

'of the functioning'?

In the initial year of the entity, first and foremost, and as a first step, auditor will be expected to satisfy himself whether it is a legal entity formed and duly registered in accordance with the state law. As , otherwise, the state of affairs as shown by the accounts, or audit of the accounts and report thereon would, in substance, turn out to be a useless tinsel.

If a 'firm', it says, -

"(b)    “auditing firm” means a firm of more than one Chartered Accountant within the meaning of the Chartered Accountants Act, 1949, who have a fair knowledge of the functioning of the societies and an experience of at least three years in auditing of societies       with a working knowledge of Marathi language;"
Does that mean, each one of the partners, individually,  should meet the requirements ? 

In short, none of the foregoing, it is obvious, bear out any courage of conviction or convey a definitive or purposeful import, so as to serve the very objective of  an 'audit' !

Miscellania >


Residents of co-operative housing societies, who normally are reluctant to take up the honorary responsibility of looking after the affairs of the society, are expected not to join managing committees. 

According to the new rules, every elected member of the managing committee of a society shall execute a bond on a stamp paper, as provided under the Bombay Stamp Act, 1958, within 15 days of his assuming office. The chief executive officer/secretary of the society shall receive such bonds and keep them in the records of the society and accordingly inform the Registrar of Societies within 15 days from the formation of the committee. Further, under the rules, a provisional list of voters should be prepared by every notified society in the year in which the election of the society is due to be held. Persons who have completed a minimum two years as members from the date of their enrolment should be included in the provisional list.

Occupation Certificate not a must for deemed conveyance TOI 17 Feb 2013, 02:56 IST
...the responsibility in cases where the Occupation Certificate has been withheld due to irregular construction. The Maharashtra Ownership Flats Act, 2005, states that in cases where a developer fails to execute the conveyance in favour of a coop society, the...
Minister unhappy with new cooperative actTOI 17 Feb 2013, 01:57 IST
...State cooperation minister Harshwardhan Patil is unhappy with the amendments to Maharashtra Cooperative Societies (MSC) Act, 1960, that has been practically foisted upon his ministry by the central government. He feels that taking away powers of the state...
Govt no longer has a say in housing societiesTOI 16 Feb 2013, 04:12 IST the state co-operative laws have come into effect. The changes were mainly introduced Maharashtra State Cooperative Act, 1960, to align the laws with the 97th Constitution (Amendment) Act that recognizes formation of societies as a fundamental right. To...


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