RECOVERY OF DUES FROM SOCIETY DEFAULTERS

It is a sorry state of affair that in many Housing Societies, the Managing Committees are not serious about the periodical recovery of Society’s dues from the non-paying members and neither they are enthusiastic to initiate any recover proceedings nor prepared to choose remedial measures easily available under the law. The ever mounting up of default runs in lakhs with continuance of enjoying all the facilities by such members at the cost of other regular payers. 

The Cooperative Housing Societies can now recover its dues from such defaulter members without long drawn legal procedures. Under the Cooperative Law, they can themselves resort to certain provisions under Section 101 without even appointing a lawyer for the purpose.

The Society can first start by giving a notice to the defaulter member. There is no specific format for the same. A simple letter detailing the default shall serve the purpose. This is to give him an opportunity to pay his dues to the Society within such period that the Society may allow.

The notice should also contain a warning mentioning that on failure to make the payment, the Society will make an application to the Registrar under Section 101 of the Maharashtra Cooperative Societies Act (MCS) for recovery of these outstanding dues.

Upon the failure of the defaulter to make the payment of the outstanding dues to the Society within the stipulated period mentioned in the notice, the Managing Committee should pass a Resolution in a Meeting to take action against the said member.

They should resolve to take action against the defaulter under Section 101 of the MCS Act 1960 and authorise the Society’s Secretary or Chairman to sign all the documents that need to be submitted to the Registrar of Cooperative Societies and also authorise them to furnish the necessary information to the Registrar who would need to issue a Recovery Certificate.

After the Registrar receives this application from the concerned Society, he may ask for a hearing with the defaulter member and verify the records. Once he is satisfied about the truth of the outstanding dues, he can then issue a Recovery Certificate to the Society.

Once the Recovery Officer receives the Recovery Certificate under Section 101, he will prepare a demand notice to send to the Sale Officer. This demand notice is to attach the movable property of the defaulter.

A Certificate of Recovery issued by the Registrar is final and conclusive proof of the arrears stated to be true and recoverable from the defaulter-member. Even though the defaulter member may appeal against the order of the Registrar, before preferring an appeal, he has to make payment of not less than 50% of the amount due.

There will be little or no scope for an ‘appeal’ when the Certificate of Recovery granted by the Registrar is for recovery of dues that are legitimately levied by the Managing Committee. Moreover, if the dues claimed are legitimate, they will be recovered, no matter how many appeals a defaulter member makes.

The Sale Officer can then visit the flat of the defaulter member and prepare an inventory of all his movable property and handover this list to the concerned member and also serve him the demand notice.

If the defaulter member still does not pay his outstanding dues after the receipt of the demand notice, the Sale Officer can then seize the defaulter member’s movable property and hand it over to the Secretary or Chairman of the Society for safe custody.

The next step involves the fixing of a date, time and place for an auction of the defaulter’s seized movable property. The sales proceeds from this auction can then be used to pay the defaulter member’s outstanding dues.

Sometimes though, there have been cases when the sales proceeds of the auction may not cover the cost of the outstanding dues completely.

In these cases, as per the Recovery Certificate, the Sale Officer has the right to proceed and arrange an auction of the defaulter member’s flat to recover the remaining dues. In most cases, the defaulter members pay up their dues long before such a situation arises once they realise the seriousness of the situation.

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