How does a Society finance itself? How does it screen potential members? Why does it bill its members maintenance charges? Where and when does the member voice his concerns or opinions?
These questions must have popped in your head time and again as a member of a housing society. Look no further than the inconspicuous little book of ‘Model Bye-laws”.
Model Bye-laws are rules formed by societies to self-regulate their activities and to control the actions of its members. These bye-laws are provided and approved by higher authorities (government bodies, legislative authorities). Model bye-laws of a co-operative housing society could vary from one state to another in their particulars, yet the basic framework and nomenclature remain the same. Let’s briefly explore distinctive categories for each component of the functioning of a society. These are broad categories that cover every aspect of operating a co-operative housing society, be it holding a meeting, issuing shares to members, collecting dues from them, conducting Elections, allotting parking spaces or putting out a circular on the notice board.
1. Name and address
This section informs us about the procedure for naming, change in name, classification, address change procedure and exhibiting the Name Board of the society.
The meaning of the nomenclature, i.e the exact definition of commonly used terms (common areas, sinking fund, active member) is given so as to legally distinguish common usage of words in the context of a housing co-operative.
3. Area of operation, objectives, affiliation
To define the locality of the society within a municipality and to define the main objects of the society as well as declare it as Member of the Co-op Housing Federation of the District / Ward / Taluka, the District Central Co-operative Bank of the district.
4. Raising of funds and their utilisation
These bye-laws lay down rules on modes of raising money such as issuing shares, taking loans, voluntary donations & deposits, etc. and explains how to issue shares to members and limit of liability for the society. The ways in which the funds are utilised are also described, such as reserve fund, repair and maintenance, emergency fund and training fund.
5. Rights of member
This section describes the eligibility, conditions and procedure of obtaining membership in a society, distinguishes between active, non-active, associate and nominal members. The rights of members elaborated under these bye-laws include right to inspect records, get a copy of bye-laws, right to Occupation of Residence, conditions for and acceptance of Resignation by Members, procedure for Nomination by a Member and its revocation / revision, procedure and requisite documents for Transfer of Shares and interest from a member to another in the Capital/Property of the Society, Transfer of Shares and interest of the deceased Member, and rules on Exchange and Sub-letting of residences.
6. Responsibilities and liabilities of members
This section details the duties of the member, including applying for permission to make additions and alterations in a flat, allowing examination of flats and report about repairs, not to cause inconvenience to other members. It also entails the grounds for expulsion from the society and its procedure, circumstances under which a person ceases to be a member and the follow-up action taken by the society, rules on holding multiple flats, liability limited of members to unpaid amount on shares.
7. Society charges
Bye-laws describe the composition and break-up of the society charges, including Property Taxes, Water Charges, Common Electricity Charges, contribution to Repairs and Maintenance Fund, expenses on Repairs. Operation and Maintenance of the lifts contribution to the Sinking Fund, Service Charges, Car Parking Charges, Interest on the defaulted charges, Repayment of the Loan, Installment and Interest, Non-occupancy Charges, Insurance Charges, Lease/Rent, Non-agricultural Tax, Education and Training Fund, Election Fund, and any other charges.
8. Duties and powers of the society
These are rules specific to the common seal and incorporation of the society as holding the power to acquire, hold and dispose of the property, to enter into contracts and other legal proceedings. It also pertains to having a charge on the shares and/or interest of a Member, policy for allotment of flats and cancellation of flats, handing over possession of flats, society’s duty to carry out Structural Audit, allotment of parking lots and its restrictions, marking of parking lots and their eligibility, along with payment of charges for parking of vehicles.
9. General Meetings
This section gives detailed and specific rules on how to conduct society meetings, including general, annual and special body meetings. Rules regarding the agenda of the first general meeting, the duties of provisional committee and its handover to newly elected committee, the functions of the annual general body meeting, rules for special general body meeting, period of notice and quorum of a general body meeting, voting rights of members, recording of the minutes of meeting, holding of the adjourned General Body Meeting, among others are explicitly stated.
10. Management of regular affairs
Rules under this category include opening up of bank account for operations, strength (in numbers) of the Managing Committee, guidelines for Election, First Meeting of new committee, duration of holding office, conditions for cessation of membership of the Committee, and Resignation of Committee Member/Office bearer. There are detailed lists of all the required functions of the Managing Committee, Chairman and Secretary of the society.
Detailed lists of maintaining books of accounts, records and registers are specified, including but not limited to cash books, ledgers, Sinking Fund, Investment, Nomination, Loan Registers, Minutes Books, Applications for membership, resignations, correspondences received from within the society or from external agencies related to property tax, conveyance, electricity, vouchers and counterfoils of share certificates and issued cheques, periodical statement of accounts, audit memos, election papers, service staff payment records.
12. Profit Distribution
Rules on how to distribute funds (after paying interest on loans/deposits and after making such other deductions) are prescribed clearly in bye-laws. The allocation includes percentage of amount to be deposited in the Reserve Fund, in dividend of shares to shareholders, compensation paid to office-bearers, and towards Common Welfare Fund.
13. Writing off dues
This section prescribes the conditions under which the Society is allowed to write off its irrecoverable charges due from the members, the expenses incurred on recovery and the accumulated losses.
14. Accounts Audit
The basic procedure for conducting an annual financial audit of the society is described in detail, including the appointment of a registered Auditor/CA, the timeframe to conduct the audit and the steps for completing an Audit Rectification Report before Annual General Meeting.
15. Conveyance, redevelopment and repair/maintenance
This section gives details of getting the deed conveyance under society’s name through an advocate and proceeds to list rules on renovation and repair. Member’s contributions towards repair are stated, along with the procedure of inviting tenders from architects/ developers, and a step-by-step guide to the entire redevelopment process is given. Guidelines on emergency planning schemes, disaster management and response machinery are prescribed as well.
16. Miscellaneous matters
Minor yet important rules regarding day-to-day operational activities are mentioned in the bye-laws. These include sending and displaying notices on general meetings and their resolutions, how to fix the Notice Board and what to display on it, penalty amounts for member breaches against the society, regulating the services, amenities as per members’ convenience, fixing timings and rules for use of common areas such as parks, staircases, etc, making available spaces for members to install solar energy electrical systems, making copies of the documents required by the members and the charge per page.
17. Redressal of member complaints
Based on the complaint type, the bye-laws give a list of relevant authorities to approach. They describe the types of complaints handled at the Society’s General Body Meeting. Other than that a variety of complaints are handled by the Registrar, Co-operative Court, Civil Court, Municipal Corporation/Local Authority, Police or the District/State Federation, depending on the nature of the grievance.
Why should you know about the model bye-laws?
The answer to any question you have about the functioning of your society can be found in the model bye-laws. They may seem verbose or cumbersome, but they should be on your ‘essential reading list’ as they are your ‘set in stone’ legal chaperones that cannot be refuted by any society under any circumstances. As part of a society, you’d be remiss if you are not aware of your basic rights and duties, your society’s foundational policies, its management and the guidelines that dictate its decisions. A lot of homeowners harbour an approach of ‘we’ll cross that bridge when we get to it’ with respect to the rules of a society, thinking all is accomplished once they have occupied their residence inside it. Be that as it may, to avoid being misinformed or manipulated by dishonest committee members, to stop the violation of your rights, or simply to be aware of the workings of the community you’re part of, familiarising yourself with model bye-laws is necessary. Model bye-laws are easily available online to peruse in your own time. Otherwise, as a member you have the right to ask for a copy from your society.