Members of the Co-operative Housing Societies – please note – your entire exercise of redevelopment efforts will come to a naught, if your office bearers are not elected as per the provisions of Byelaws and the committee is lawfully formed. This includes the mandatory filing of indemnity bonds in Form M-20 within 15 days of their assuming the office (with effect from 14/1/2011 within 45 days).

However, most of the societies are found to be uninformed, clueless or simply ignored to file the indemnity bond – the first step towards redevelopment process as per the government notification. A provision in the Maharashtra State Co-op Soc Act 1960, sec 73(1AB) is mandatory for the members elected to the Managing Committee to execute a bond and taking personal responsibility of their action as members of the Managing Committee and the default of this provision turned the situation.

It said that if the bond is not executed within the given time frame, all the Managing Committee members shall be deemed as disqualified to run the Office of the Society and any decisions, resolutions, actions do not carry any legal effect.

Rule 58-A of the said act also states that Bond is to be executed by members of the Managing Committee. Every elected member of the Managing Committee shall execute a bond in Form M-20 within 15 days of assuming the Office of the Society (with effect from 14/1/2011 within 45 days).

Such bond shall be executed on the stamp paper of Rs.200/- as provided under the Bombay Stamp Act, 1958. The expenditure on stamp paper shall be borne by the society.

The Secretary of the society shall receive such bonds and keep them on the record of the society and accordingly inform the registrar with a due acknowledgement on the copy of Society’s letter. The bond in Form M-20 as per the format provided, is to be filled in and submitted by each committee members stating that the member shall be jointly and severally responsible for all the decisions taken by the committee during its term relating to the business of the society and shall be jointly and severally responsible for all acts and omissions detrimental to the interest of the Society as provided in sub-section 73 (1AB) of the Maharashtra Cooperative Societies Act.

Now what happens to many housing societies where Managing Committees are unaware, ignorant or have simply ignored or not bothered about the bond? In such cases, according to the decision taken by Registrar’s office which says “we offer to disband the committee and call for fresh elections”.

The member who fails to execute such a bond within the specified period shall be deemed to have vacated his office as a member of the committee. Bombay High Court too has upheld this provision of MCS Act.

There are several instances of disgruntled members filing cases against the Managing Committees for not having executed the mandatory bonds to derail the process of redevelopment. The Managing Committee may even get caught or be slapped with fraud and forgery charges for entering into any redevelopment agreement with the builders as has happened with a Housing Co-operative Society on the Hill Road in Bandra, Mumbai.

The society here entered into an agreement with a builder for redevelopment of their property without executing the mandatory Indemnity Bond in Form – 20 under Rule 58-A as also under section 73(1AB) of MCS Act. When it realized the deal will fall through for not having executed the bond as required, the elected office bearers resorted to trickery by purchasing stamp papers and back-dating the indemnity bonds. However an alert member found their trickery and registered cases against them under Sections 465, 467 and 471 of the IPC.

Hence, the members not having filed indemnity bonds as required cease to be part of the Managing Committee. All documents signed when they have ceased to be Managing Committee members are illegal and cannot be given effect to continue in any matter pertaining to the society’s day to day affairs.

First and foremost, the housing society members must ensure that their office-bearers are elected as per the provisions of Maharashtra Co-operative Societies Act, Rules and Bye-Laws. In short Managing Committee must be lawfully formed.

Housing society members must ensure they elect members with integrity, clean, honest records. Care should be taken not to elect office bearers who have consistently flouted provisions of Co-operative Act, Rules and Byelaws to further their own self interest, committed serious financial irregularities with the society funds, members with dubious records, corrupt backgrounds or even members from the committee which has year after year not carried out Audit Rectification as required by law (there are committees who hide this particular information from their members for fear of getting exposed).

Such members cannot be trusted to finalize and sign redevelopment agreements with the prospective builders in a transparent manner. Also there are officer bearers who hold on to the posts of Chairman, Secretary and Treasurer for decades by hook or by crook because for them to remain in the Managing Committee and attain undeserved importance amongst the gullible members of the Society, is a very, very lucrative business.

These Chairmen, Secretaries and Treasurers will make a show of resigning or stepping down when they see there is non-cooperation from the rest of the members, but will never do so in reality. They somehow find innocent members in new entrants to cling on to their lucrative posts! Do not trust the office bearers of your Managing Committee blindly in any redevelopment process which is not in conformity with the Government guidelines issued.

Because of such rampant irregularities and corrupt practices found in many housing societies, Dr. Sudhirkumar Goyal, Principal Secretary, Co-operation Department, has come out with a Do’s and Don’ts to be STRICTLY followed by societies going for redevelopment vide Govt. of Maharashtra notification no. CHS 2007/CR554/14-C dated 3rd January, 2009.