Cooperative Housing Societies (CHS) often face situations where cash, dues, or certain recoverable amounts remain untraceable or irrecoverable. A common question arises: can the society members pass a resolution in the Annual General Meeting (AGM) to write off such cash balances from the account books? The answer lies in the provisions of the Maharashtra Cooperative Societies Act, the model bye-laws, and the role of statutory authorities.
Authority of the General Body
The general body of the society holds significant powers in decision-making. With the sanction of the general body, a cooperative housing society can pass a resolution to write off:
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Society charges from members that are irrecoverable
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Expenses incurred on recovery efforts
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Accumulated losses certified as irrecoverable
However, such a resolution is not independently sufficient. The write-off must comply with other statutory requirements.
Requirement of Certification
Before any amount can be written off, it must be certified as irrecoverable by the society’s duly appointed statutory auditor. The auditor’s certification ensures transparency, accountability, and safeguards against misuse of society funds. Without this certification, a society cannot legally write off any amount.
Approval of Financial Institutions
If the society has taken loans or is indebted to a financial institution, additional approval is necessary. In such cases, the society must obtain the consent of the lending bank or financial agency before writing off any amount. However, if the society is affiliated with a District Central Cooperative Bank or any other financial institution but is not indebted to it, such approval is not required.
Approval of the Registrar
Apart from the statutory auditor’s certification, the approval of the registrar (registering authority) is also mandatory. The registrar ensures that the proposed write-off is genuine, justified, and in the interest of the society. This step acts as a final layer of protection for members.
Relevant Bye-laws: 149–150
The powers and procedures for writing off amounts are clearly provided under Bye-laws 149 and 150 of the model bye-laws of cooperative housing societies. These provisions specify the types of losses that can be written off, the role of the auditor, and the requirement of approvals from the registrar and financial institutions, wherever applicable.
Conclusion
While the general body of a housing society can initiate the process of writing off cash balances or losses through a resolution in the AGM, it is not the sole authority. The statutory auditor’s certification, registrar’s approval, and, where relevant, financial institution’s consent are mandatory. This ensures proper checks and balances to prevent misuse of society funds and to maintain financial discipline.
