How to recover dues from defaulters under Section 101.

Sahakarsutra Infoseries:

How to recover dues from defaulters under Section 101.

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To make it easy for cooperative societies to recover amounts due by members exceptionally special provision/procedure has been introduced in the legal system of the State by inserting Section 101 in the M C S Act 1960.

In case of housing societies the dues by its members are defined under registered Bye-Laws of every housing society for the sake of simplicity as “Society Maintenance Charges".

A major portion of the Maintenance charges is the contribution to society funds earmarked for meeting various objects of the Society. 

For example Building Repair fund is meant to ensure that buildings of housing societies the core assets are maintained in good order and in habitable conditions. It is one of the key objects of a housing society.

Another fund is Sinking Fund and is towards meeting cost of structural modification which may be needed several years after the construction of the buildings. 

Contribution to yet another fund namely Common Amenities Fund is for attaining its main object  namely “to provide its members common amenities and  services”  emanating form the very definition of housing societies pursuant to Clause 16 of Section 2 of the M C S Act 1960 reading as (16) “housing society”means a society, the object of which is to provide its members with open plots for housing, dwelling houses or flats; or if open plots, the dwelling  houses or flats are already acquired, to provide its members common amenities and  services;

the amount demanded from every members and remaining outstanding are brought within the purview of Section 101 vide amendment to the M C S Act 1960 made by Mah. 20 of 1986, vide its s. 52(a) QUOTE: “by a co-operative housing society for the recovery of arrears of its dues”

What is the Section 101 Procedure

1.The Section 101 procedure is a simpler way of realizing arrears of  society dues without instituting  the cumbersome court proceedings  a compulsion in business which require   establishing debt  due by a debtor to a creditor in the course of business a profit making activity necessarily.

2.The hallmark of this procedure is the Assistant Registrar/ Deputy Registrar issuing  a Recovery Certificate for the amount due, after making a hearing and a summary inquiry on the basis of the affidavits filed by the disputant and the respondent. 

Obtaining this certificate costs maximum of Rupees one thousand payable as application fees to the State Government.

3.A certificate granted by the Registrar under sub-section (1) or (2) shall be final and a conclusive proof of the arrears stated to be due therein, and the same shall be recoverable according to the law for the time being in force for the recovery of land revenue.

4.After the recovery certificate is issued the ball is in the Court of the state Government;

i.On receipt of the Recovery Certificate, the Recovery Officer shall prepare demand notice for being sent to the Sale-Officer for attaching the movable property of the member concerned.

ii.The Sale Officer, on receipt of recovery paper from the Recovery Officer, shall visit the flat of the member concerned for preparing an inventory of the movable property and handover such list to the member concerned and serve the demand notice on the defaulter member.

iii.If the amount not paid by the member concerned immediately on service of the demand notice, the Sale Officer will seize the movable property.

iv.Thereafter, the Sale Officer will fix the date, time and place for such auction of the movable property seized and auction out the same and pay the sale proceeds thereof to the Society, in satisfaction of the outstanding dues payable by the defaulting member to the society.

Making Application for issuing  a recovery certificate

a.Issue a notice for payment of dues (including up to 21% interest) to the defaulter, with a warning therein that on failure to make payment of the same, an application would be made to the Competent Authority  under section 101 of MCS Act, 1960.

b.Pass the resolution to recover the dues in the Managing Committee Meeting.

c.Issue a final notice to the defaulter

e.Apply to the Assistant. Registrar/ Deputy Registrar for the recovery of dues.

f.Pay the prescribed fee (Rs 15 to 1000 max) through a challan payable at the Reserve Bank of India.

As is evident there is no suit before court of law is involved. Infact for cooperative disputes cooperative courts have exclusive jurisdiction and even that is obviated by special procedure of Recovery Certificate and Administration of the State helping Societies to recover arrears of dues at almost no cost.

Dayanand Nene

Convener, Sahakarsutra.