FRAUDS IN CO-OP HOUSING SOCIETIES – NOW A CRIMINAL OFFENCE.......

97^th Constitutional Amendment is a step among a series of revolutionized changes proposed in the Act which aims at promoting controlled structure, independent functioning, self-governing organization and proficient management of Cooperative Societies.

 One of the fascinating measures is to check misappropriation or mismanagement of Members’ funds in Cooperative Housing Societies and it seems that the State is determined to introduce a new provision in the Maharashtra State Co-operative Act, 1960, allowing an Auditor to register a criminal offence against Office-Bearers found guilty of financial misconduct.

The question here is that an Auditor appointed by the Society will be able to take such courageous step against the erring Office Bearers? In our country, the laws are nothing but eyewash and mockery. Many commercial audits have exposed corporate houses involved in financial scandals amounting to millions of rupees. What happened? How many corporate giants are pushed behind the bars?

The provision in the amendment makes Auditors i.e. Chartered Accountants, a Certified Auditor or a Government Auditor responsible for submitting a special report pertaining to losses to Members.

Again it occurs to mind that was it not done till date? Were the Balance Sheets and Profit & Loss Accounts supported with Auditors Reports not placed in AGMs?  

It is further provided in the amendment that for wilful mismanagement, the Auditors will also have to submit another report specifying the offences and will have to register FIRs against those responsible after obtaining Registrar’s permission and any failure on part of the Auditor to comply with this directive will also amount to an offence. The amendment is silent over the question as to who will be the deciding authority to grill such irresponsible Auditors.  

This is another farce of amendment that the Auditor has to obtain the Registrar’s permission for registering FIR and Mumbaikers of thousands of Housing Society know the level of corruption in Offices of Registrars.  The Auditor shall be appointed by the Society’s General Body from a panel approved by State Government.

Is there any check at Deputy Registrar’s Office as to how many Housing Societies submit their Annual Accounts and how many have been studied?

Apart from the above amendment, the Maharashtra government is planning to simplify the management of Cooperative Housing Societies which will give more powers to the Managing Committees.

However, the proposal has raised a debate among lawyers and Members of Housing Societies, on the suitability of such an Act for Mumbai. The proposal aims at minimising government role in the functioning of Housing Societies by giving greater autonomy to Managing Committees.

The objective of the Atma Nirbhar Act is to do away with the role of the Registrar of Cooperative Societies. For instance, if a Member is not paying his maintenance arrears, the Housing Society at present would be required to go to the Deputy Registrar of Cooperative Societies, but under the proposed Act the matter could be referred to an Arbitration Council.

The proposition envisages the setting up an Arbitration Council comprising Society Members and a few Government Representatives to resolve Members' disputes and other administrative problems.

The proposed Act would bring all Co-Operative Organizations that have neither taken loans from the State Government nor asked it to stand guarantee for them out of the purview of the Maharashtra co-operative Societies Act.

Transferring power to Managing Committee Members would not be a good idea in Mumbai as high property rates could merely shift the corruption base from the Registrar's Office to the Office of the Managing Committee, fear housing experts.

Registrars have powers to supersede Managing Committees and appoint Administrators, but unless there are in-built checks and safeguards in the proposed legislation, it would be difficult to monitor the activities of Managing Committees.

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