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Keerthi (Manager)     10 June 2014

Karnataka societies - conduct of society

Dear Experts,

Require inputs to file a petition/complaint to the Registrar regarding the misappropriation of funds in my apartment in Bangalore which is currently registered under Karnataka Societies Registration Act, 1960.

1.       I raised concerns about amendments/resolutions made in the AGM not being filed with the Registrar in the AGM conducted in 2013. However no action has been taken to file them and resolutions based on certain individuals whims and fancies was getting passed in the name of majority (no attendance record has been communicated. The President has informed that Registrar has asked to submit the amendments with due notice on why the delay. In this scenario, is the resolutions adopted by the society legally binding on the owners without Registrars approval (see point 6 for the latest resolution which is completely against the law)?

(Reference - Alteration of memorandum of association: Section 9 of the Karnataka Societies Registration Act states that the changes should be filed with the Registrar within 30 days along with a fee of Rs.20.The order of Registrar refusing to register amendment is appealable in the court of law

Every change in the memorandum of association approved under sub-section (1) shall be filed with the Registrar within thirty days from the date of making thereof and the Registrar may if he is satisfied that the change is in accordance with the provisions of this Act and the rules made thereunder register such change. Such change shall not have effect until it has been so registered)

 

2.       A draft copy of the bye law (unsigned version) created in 2011 was circulated to the members via e-mail. However on inquiry of the registered version it was told that the signed copy is in Kannada and hence not circulated. The society is now using Apna Complex as the prime forum and I noticed that signed copy of the Bye law in both English and Kannada was available. However this is not the circulated version.

3.       Corpus fund: Currently the society is collecting corpus fund of Rs.10,000 by simply passing a resolution in the AGM. There is no mention of corpus fund in the registered bye-law although there are some provisions to collect funds for the welfare of the society. However specific use of this fund has not been well defined in writing. The association has also come up with a penalty of Rs.50 for defaulters. But none of these resolutions have been filed with the Registrar and consequently no approvals for the amendments were obtained.

4.       When I approached the President to provide an explanation for not filing the amendments or audit reports with the Registrar for over 3 years, he said they are taking actions to file everything in the coming weeks. Though no such actions have been taken till now. Also the audit reports for the previous years were submitted cumulatively than on an annual basis. Explanation for larger funds is not clear in the audit reports which question the authenticity of the reports.

5.       On raising the concerns above, I was asked to pay the Corpus fund than raise such questions. When I requested the association to serve a legal notice for the same, they have remained silent (for the obvious reason that it is null and void without any approvals?). Nevertheless they have gone further and conducted an emergency AGM on 31st May and have sent a notice (not a legal one) to all the defaulters threatening to discontinue the power back-up on failing to pay the corpus fund.

6.       I remitted the amount of Rs.10,000 which I am not obliged to accept. On protest, I am taking the legal process for the funds already mobilised and the nature of funds pending as well as proper approval of the registrar for both amendments as well as the audited accounts. Since I have already paid the maintenance fee for which I am entitled for the entire service.

Please advise what sort of legal action I can take. Any guidance on the appropriate lawyers who handle this in Bangalore will be of great help.  

 Thanks, Keerthi



Learning

 8 Replies

vswaminathan   11 June 2014

"......my apartment in Bangalore which is CURRENTLY registered under Karnataka Societies Registration Act, 1960."
The purport or significance of the querist saying 'CURRENTLY' is not understood. Be that as it may, for deciding on appropriate course (or further course) of action, for knowing the strict legal position /status of an entity, if it has wrongly registered under the KSRA, suggested to look up among others the educative article published on the website of 'Citizenmatters' quite sometime ago; so also other related copious material available on that website.

For any further practical guidance, the querist will have to necessarily approach a competent law expert , especially in practice in Bangalore.

Over to the others, being the  in-house experts, should anyone have something to add / dilate.
 

vswaminathan   11 June 2014

Rider: link HERE>

https://bangalore.citizenmatters.in/articles/4202-the-apartment-law-you-must-know

Keerthi (Manager)     11 June 2014

Dear Sir,

Many thanks for your valuable inputs. To clarify the society is called " X Y Owners Welfare Association" registered in 2010 under the Karnataka Societies Registration Act. It is interesting to note that a separate act for Apartments is available, however the Registration department has allowed to register the association under the wrong act then?

T. Kalaiselvan, Advocate (Advocate)     14 June 2014

There is nothing wrong in registering under KSRA until the requirements have been properly complied with.  In your case, the association president cannot take law in his hands to act as per his discretion especially with funds belonging to the public( Society), it amounts to fraud and scandal.  It is better you consult a local lawyer who is conversant with such issues, issue a legal notice to the president of the society narrating the entire irregularities and procedural errors and demand explanation as well as rectifications to the continuous errors committed by them. A copy of this notice may be endorsed to the Registrar of Societies.  If there is no response even after the legal notice, you may file a suit with the appropriate court of law seeking desired relief and remedy.

Dr. MPS RAMANI Ph.D.[Tech.] (Scientist/Engineer)     14 June 2014

The law relating to management of apartment complexes is very weak in Karnataka. There is a Karnataka Apartment Ownership Act, 1972. But curiously enough registration under the Act is optional. Also once registered there is provision for withdrawal from the Act also. Societies Registration Act lacks punch. Actually the Act is intended for voluntary associations. Membership of an apartment association cannot be voluntary.

In Maharashtra once an association is registered under the Societies Registration Act, registration under the Public Trust Act is also compulsory. Registration under PTA makes the trustees accountable. I do not know the position in other States.

Keerthi (Manager)     29 June 2014

Thanks everyone for your valuable inputs. I am following the advise provided and have approached legal expert

Dr. MPS RAMANI Ph.D.[Tech.] (Scientist/Engineer)     30 June 2014

The link given by Mr. Swaminathan does not give any revolutionary information. First of all it pertains to Maharashtra, whereas the person who asked the question is in Karnataka. Also the article refers to co-operative housing societies only and not other types of associations. Maharashtra has comprehensive laws regarding housing societies unlike many other states including Karnataka.

I am in Maharashtra and I know that many of the things written in the article are not correct. They are at the most the author's personal views. I am not going into the details here as Maharashtra Co-operative Societies Act is not the subject matter of this post.


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