Managing committee members of housing societies often face the challenge of dealing with irrecoverable dues. These financial complications include outstanding loans and interest, charges due from society members, funds spent on recovery efforts, and accumulated losses. To address these issues, many housing societies establish a bad debt fund specifically designed to cover amounts that may need to be written off. These financial matters must be properly documented during housing society accounting audits.

The Model Society Bye-Laws 148 and 149 provide important guidance on handling irrecoverable dues. According to Bye-Law 148, a society may write off charges due from members, expenses incurred for recovery, and accumulated losses that have been certified as irrecoverable by the statutory auditor appointed under section 81 of the Act.

However, Bye-Law 149 establishes specific conditions that must be met before writing off these amounts. The process requires three key approvals:

1. The General Body meeting must provide proper sanction for writing off the amounts through a formal vote.
2. If the society has outstanding debt with a financing agency, that agency must approve the write-off.
3. The Registering authority must approve the write-off.

There are notable exceptions to these requirements that housing society managers should understand. If the society maintains an affiliation with a District Central Cooperative Bank or another financing agency but doesn’t carry debt with that institution, obtaining permission from the bank or financing agency becomes unnecessary.

Furthermore, societies classified as A or B category in their most recent audit receive additional flexibility. If these societies maintain sufficient balance in a specially created Bad Debt Fund, they can proceed without securing permission from the bank, financing agency, or Registering Authority.

Understanding these regulations helps committee members navigate the complex process of managing irrecoverable dues effectively. When handled correctly, writing off genuinely uncollectible debts allows the society to maintain accurate financial records and focus on sustainable operations moving forward.

The ability to properly manage irrecoverable dues represents an important aspect of financial governance for housing societies. By following established procedures and maintaining appropriate documentation, committee members fulfill their fiduciary responsibilities while ensuring the society’s long-term financial health.

Housing society management committees should regularly review outstanding dues, work diligently on collection efforts, and only resort to write-offs when truly necessary. This balanced approach protects the interests of all members while maintaining the community’s financial stability.