Financial Frauds in Co-Op. Housing Societies

This article deals with certain naked and stunning facts about the Economic and Fiscal Mismanagement in many Housing Societies about the wilful suppression of various financial affairs which are never brought by any of the Office Bearers to the knowledge of the innocent and gullible Members of the Society.

To recourse such fraudulent management of Society’s fund, once the audit is done the Members can appoint outside chartered accountant to scrutinize the Audited Accounts if they feel that there is any misappropriation. To prevent frauds, Members should meet Office Bearers at least once a month for informal discussions on Society matters.

The Section 83 of MCS Act stipulates that the financial loss incurred by the Society on account of fraudulent acts of the Office Bearers is recoverable and punishable offence. The Members can complaint to Dy. Registrar of Co-op. Dept. under Section 83 for investigation and recovery of losses caused to the Society. To complain under Section 83, 1/3rd of the Members signature is required as per the Act on the complaint letter.

Thus, if one third of the Members of a Society make request to the Dy. Registrar to hold an inquiry regarding its financial mismanagement, the Officer or his Nominee is duty bound to conduct such an inquiry. The Dy. Registrar may direct the complainants to deposit a sum of nominal amount with him and this amount can be forfeited if the allegations made against the Office Bearers turns out to be malicious.

Click Here for the full detailed article by Dilip Shah

Advertisements

2 Comments on “Financial Frauds in Co-Op. Housing Societies”

  1. Ram A Sharma says:

    Dear Sir – Here is As-is email , which is self explanatory in nature. Looking out for lawyer or consultants , who can resolve the matter. …. Following is my storyline.

    I had given a security deposit of Rs.1 lakh to the ad-hoc committee before the commencement of my construction activity in 2012. At that time I was clearly told (supported by a document) by ad-hoc committee that, this security deposit is taken from a member to compensate against any damage to the society premises during construction activity and it has been promptly refunded to almost all the members in the past immediately after the construction is over.

    But be cautious now, as a wrong precedence is being set and it may be used as a tool, to ransom against something unexpected.

    STRUGGLE:

    Please follow the chain emails for your reference, read in reverse chronological order. At the bottom you will find first communication.

    In my absence (As I was in Mumbai), the meeting happened between Our Chairman, Secretary, Treasurer and my wife. During the meeting, designated MCs told her that they are not going to refund our security deposit until we pay the transfer charges to the committee.

    My wife repeatedly explained them that the legal process of sale deed and transfer of title was not yet completed and once the transfer will be done legally, we will submit the transfer charges*. But they refused to accept this fact and finally denied to refund our security deposit until the payment of transfer premium to the society. After this, I took a legal advice and based on it, following are my Concerns and Conclusion:

    CONCERNS:

    1) On which basis is ad-hoc committee asking for transfer charges now? Has anyone approached them yet for any kind of NOC or have they received any request for co-membership? (which are generally the requisites for selling)

    2) Any Board/Name-Plate doesn’t take away the title from actual owner. Generally, Tenants also put their name plate for their convenience but that doesn’t mean they become legal owners. Just an intent of sale, does not attract transfer fees.

    3) Transfer Charges and security deposit both are taken for two different reasons and no society or committee can club these two charges and hold them for any reason whatsoever other than for what they are meant for.

    4) After committing publically in GBM and also through written emails and personally, that the transfer charges* will be paid once the transfer is done, committee is not ready to trust us.

    5) I don’t find any reason for this lack of trust as, I have not even defaulted once in the payment of my maintenance charges in last 5 years or in any other charges like security deposit, etc.

    6) If the member is in urgent need of money, he/she has to beg for his OWN money kept with committee, and wait endlessly, even after the purpose of the security deposit is solved. This is completely unfair.

    7) I don’t know about others, but I am speaking only about my experiences. There is a least sensitivity for the problems, needs and issues of the individual member. I understand everyone is busy with their own schedule and appreciate their time and voluntary contribution towards society, but when one takes a responsibility of society as a designated MC, he/she has a moral responsibility of solving individual as well as common problems (big or small….as one of the MCs said, small issues become big over the time) to keep the harmony in the society as a whole and one has to devote time for this purpose regularly otherwise the purpose of forming a committee is defied.

    8) During the meeting of MCs with my wife, they expressed much annoyance about individuals like me, frequently writing emails to them. But when the calls are not picked up and mails are not replied for weeks together, what is the other alternative mode of communication left with me???? Mails are CCed to other MCs just with a hope that someone has a time to pay heed to individual problem and just to get a reply soon.

    9) When asked about it, my wife got a reply that “Why should the committee reply/acknowledge to individual emails?? And Committee is only answerable to GBM.” Does this mean that committee is answerable only once a year?? Then what about the everyday concerns of residents? To whom should they go to get them solved?? Responsibility and Accountability go hand-in-hand.

    10) It has happened to me several times that, When Committee demands from residents to do certain things, it asks them about a deadline and a date by which the work will be done. Now also, they asked my wife, by which date our transfer fees is paid. But when it comes to residents’ requests, they have to wait indefinitely to get their problems addressed and even acknowledged.

    11) I also do not have an extra time and energy to write emails. But when the member has been made a soft target repeatedly (e.g.: frequent reminders for small amount of debris removal, asking for increased maintenance even before complete work done , planting of a tree just out side my gate very near to an electric pole without even informing – damage to paving blocks, etc.), then member has to (made to) communicate his grievances, at the cost his precious time and own peace of mind.

    12) Being a MC in last year’s committee, I appreciate the communication wherein Mr. Nitin (ex-secretary) and many other MCs mostly used to communicate within minutes over the individual concerns or society problems. The members who have become new MCs for a first time may not know this, but old MCs will swear by it. It ensures a kind of transparency and I am familiar to that mode of communication. Why committee is shying away from written communication now? Why every thing has to be “GUP-CHUP”? Every resident is first a MC9 ( Member of Cloud 9) and then a MC ( Member of Committee).

    13) Now, apart from just a security deposit, there is a concern over the working principles and working style of the committee. I understand that the collections are important for a society. But collections (advance collection of transfer fee in my case) and getting things done from the residents should not be the only agenda of the committee. The concerns of the residents, from whom the collections are coming, should also be given due importance and priority and should be resolved in an unbiased manner.

    CONCLUSION:

    1) This is my last and final email to the committee regarding this issue, unless & otherwise committee chooses to reply. Also, this email supersedes all the previous communication, including the discussion with my wife, in this regard. After this, I will find alternatives to solve this matter.

    2) As per the legal advice, My security deposit Rs.1 lakh be immediately refunded which is held up for no valid reason, failing which I consider it must attract 24% interest from the date I applied for it (7th September 2014) as the society generally charges the members for their late maintenance payments. It should be returned to me with an accumulated interest over the respective period.

    3) I will pay the transfer fee [*As Per the Act and Govt. Rules] only after the legal process of sale deed and transfer of title is complete. I believe committee would also need proper supporting document of sale, to collect the transfer fee.

    4) I do not have any intention to avoid transfer fee* but I can not give any time limit for this, as these are generally lengthy government processes and are not entirely in our hands.

    5) I can not give maintenance at an increased rate(1.15 Rs /Sq.ft) until I get my refund of Security Deposit, as committee is holding it unnecessarily and already earning an interest on it.

    6) I strongly feel that rather than Closed Door meetings, where a member is called, made to listen and convinced by some MCs to their tune, open communication channels such as emails can give more justice to a member, having grievances which remain unresolved with the committee over a considerable period of time.

    Thanks & Regards

    -Ram A Sharma

    Plot no. 008 , Cloud 9, Pune.

    Phone : +91-9604961166.

  2. Shirish M Gujar says:

    Society name..Ashwani Hsg Society..still date no election taken….dt.of end.31/3/2014….co.member can elected as a commtt.member…pl infm details about election…tks bi…gujar ..one member.


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s