Misappropriation of funds in Housing Societies
By Advocate Vivek M. Sharma
Generally misappropriation/frauds are done in the following manners : –
1. Not showing collection done from the members of showing less collection.
2. Expenditure vouchers are hiked false cash memo-bills are attached.
3. Showing false expenditures.
4. Approving higher tender and taking benefits from contractor.
5. Manipulation collection receipts showing lesser amount in the office copy.
6. Handling cash and using for personal purpose.
7. Issuing cheque and payment by over ruling bye law of Co-operative Housing Society.
How to recourse
1. Once the audit is done the members can appoint outside chartered accountant to scrutinize the audited accounts if they feel that there is any misappropriation.
2. That to prevent fraud, members should meets office bearers at least once in three months for informal discussions on society matters.
3. They can approach the managing committee and ask for explanations, if these are unsatisfactory, they can approach the registrar and joint and deputy registrars. As a last resort they can approach the Co-operative Court.
4. U/s. 83.
It is recoverable and punishable offence as per M.S.C. Act, 1960, if fraud has been in the affairs of the society then all members can raise voice and can complaint to Dy. Registrar of Co-op. Dept. U/s. 83 for investigation and recovery of losses done to the society. To complain U/s. 83. 1/3rd of the members signature is required as per M.S.C. Act, 1960. On the complaint letter.
Thus if one third of the members of a society make request to the registrar to hold an inquiry regarding its financial condition, the officer or his nominee is duty bound to conduct such an inquiry. The registrar may direct the applicants to deposit a sum of nominal amount with him and this amount can be forfeited if the allegations made against office bearers turns out to be vexatious or malicious.
If the inquiry discloses substance in the charges made the amount has to be refunded to the applicants if the allegations are not false but yet cannot be proved the state government would bear the cost of inquiry.
The Maharashtra Co-operative Society Act, 1960 provides that all office bearers and members of the society past and present are supposed to co-operate with such inquiry and produce any document that is needed and is in their possession. The registrar is supposed to inform the society as to the findings arrived at through the inquiry. It is open to members to taken action against the office bearers on the basis of find. Under the Act, the registrar has the power to himself (suo-moto) commence an inquiry into the financial condition of the society. This means that even a single member can in an appropriate case, persuade the registrar to initiate proceedings. (Vyankage Vs. Girmaji, 1996 C.T.D. 150, 151) Madhav vs. Samrudhi C.N. Society, 1968 C.T.D. 30,35).
An application by a member of a society alleging the mismanagement of the affairs of the society by the ex-chairman which has caused loss to the society, the Registrar has to decide whether it is a dispute under Section 91(1), or an inquiry U/s 83 is necessary (Vyankaje V/s. Girmaji, 1966 C.T.D. 150, 151)
[Ravindranath T.S.G.N.S. Deopur Dhule Vs. Bajirao Bhll Patil, reported in 1991 C.T.J. 61 (Bom. H.C.) (DB)] In this case the society had passed resolution in the general meeting to expel the former Chairman and Secretary of the Society, as they were guilty of falsification of accounts and misappropriation of large sums. The Bombay High Court held the same.
Sir,
I have query regarding my problem in Coop. housing society.(Maharstra ). pl.guide me where to post my problem. Thanks
1.. THE FOUR-MEMBER MC CONSISTING OF G.S.BAHL (CHAIRMAN), RANGA RAO (SECRETARY), B.A.TAMBE (TREASURER) AND RATNA MALHOTRA (MEMBER). OF POISAR SUNRISE CHS LTD. IN SAMATA NAGAR, KANDIVALI EAST, MUMBAI 101,IS IRREGULAR, BECAUSE:
(a) It was arbitrarily selected; (b) MC members have not signed the Indemnity Bond; (c) All four MC members are incompetent and ignorant; (d) they are indulging in so many irregularities violating the MCS Act and Rules of 1960 amended from time to time; (e) repairs and some other expenses incurred by them are fabricated. Hence, all their actions of last 3 years are subject to strict scrutiny and reimbursement of the losses sustained by the Society due to their overbilling due to corrupt practices.
2.. Flat no. 549 Ratna Malhotra residing with son Abhay Malhotra (runs Acting Classes) and Renuka Abhay Malhotra run Maths Classes (monthly earning over Rs.2 lakhs).More than direct nuisance to us, there is nuisance due to scooters and cars of her students being parked, in Society’s
compound etc. Cam the provisions of Section 170(A) of the New Model Bye Laws anyone encroaching on common property of the society be applied and the said flat be charged 5 times more on monthly maintenance.
3.. Audit Report and Action Taken Report are not submitted to members along with the Agenda of the AGM. Similarly, the members have not been notified where they can check the accounts books for 2012-2013. It is mandatory that you display the full Account books with bills etc for scrutiny of the members. The undersigned demanded to see the books of accounts be placed before the AGM.
4.. OBJECTIONS TO DRAFT MINUTES CIRCULATED on 11.08.2013 OF THE GBM HELD ON 23.09.2012: Draft Minutes should be circulated within one month of the AGM, according to the Bye-laws. Objections raised, if any, should be incorporated. This was not done. Even the
shabbily written minutes circulated at last minute are not in order. My item-wise objections are as under:-
5. Item No.3: Roofing and one coat part painting expenses were approved at approx Rs.1,50,000/- Repairs committee consisting of Dr. Leo Rebello (552), Mr. C.S.Shah (554) and Mr. Deepak Sheth (546) was appointed. The Repairs Committee was not consulted, nor the estimates were received or the final work done re: roofing was not approved, nor the bills were presented to the Repairs Committee for scrutiny or to the General Body at the AGM held on Sunday, 25th August. When questioned by me in writing to explain the Amount of Rs.4,24,872/- shown towards major Repair and another amount of Rs.21,031/- to Repairs and Maintenance, no bills were presented for the scrutiny of the AGM.
6.. In a Criminal Case of serious nature, in the MM Court, the MC has sanctioned and paid by cheque an amount of Rs.40,000/- approx and paid by cheque to one corrupt Adv. Kishor Joshi, which cannot be done.
7.. The Auditor P.K.Chavan has overlooked all these lacunae and has not submitted the Audit Report; or if he has submitted, then it was not sent with the AGM Agenda by the corrupt MC. The MC is supposed to rectify the defects and submit the rectification Report as required u/s 82 of the
MCS Act 1960 and rule 73 of the MCS Rule 1960 in the prescribed ‘O’ Form along with a copy of the Managing Committee Resolution in Duplicate.
8.. This is a Housing Board Society, formed 25 years ago. Till day Conveyance of Society Land has not taken place. This is a case of Deemed Conveyance. The MC is not capable and/or the MHADA authorities are corrupt.
9.. Inspite of the original Share Certificates dated 25th July 1988 signed by Dr. Leo Rebello as Chairman, G.S.Bahl as Secretary and Ramesh Sagare as MC Member duplicate share certificates were issued on 24th November 1990 by V.Malhotra as (illegal) Chairman, G.S.Bahl as (illegal)
Secretary and Y.J.Chad as (illegal) M.C.Member are not valid. Can duplicate Share Certificates be issued when no cause is made out.
10. Inspite of pointing out these and other serious irregularities in writing, and offering my expertise as the founder member and later Chairman, the corrupt MC members are not rectifying the mistakes and continue to indulge in malpractices.
in our co-op. society the office bearers and M.C. is done fraud of 6 to 9 lakhs towards toi do the deem conveyance, whom to approach police or Dy. Reg. to recover the said fraud money. Dy. Reg even my application is taking no interest in above fraud, please guide me. Mirza. 9867019196/ 9920550204