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 ALL ABOUT THE NON-OCCUPANCY

CHARGES IN A HOUSING SOCIETY

 

The criteria for levy of Non-Occupancy Charges qualifies that if a property in a Housing Society (hereinafter referred to as the ‘Society’) is not self-occupied and the owner of the flat who has a commercial gain out of it for example monthly rent received out of the flat given on Leave & License basis, the Non-Occupancy Charges have to be paid by the owner to the Society. The Non-Occupancy Charges are applicable when an owner’s flat is occupied by non-family members/paying guest. There is no Non-Occupancy Charge if the owner’s family members are staying in the owner’s flat.

The family members mean a group of persons which includes Husband, Wife, Father, Mother, Sister, Brother, Son, Daughter, Son-in-Law, Brother-in-Law, Sister-in-Law, Daughter-in-Law, and Grandson & Grand-Daughter. The intermittent joint-stay of other family members or friends shall also not attract Non-Occupancy Charges.

As defined in the GR dated 1.8. 2001 and 25.2. 2011 appended at the end of this article issued by the Textile & Co-operative Dept. of the Govt. of Maharashtra, the Non-Occupancy Charges levied by the Societies should not be more than 10% of the consolidated/aggregated service charges excluding govt/statutory taxes. For example, if the service charges portion in the monthly maintenance bill is Rs.3,500/- per month, the Non-Occupancy Charges would be Rs.350/- (10% of Rs.3,500/-) per month. 

According to the latest model Bye-Laws governing the Societies in Maharashtra, the service charges include salaries and allowances to staff, outgoings for society office, sitting fees to committee members, printing and stationery charges, common electricity charges and others are considered under Section 79-A of MCS Act to serve the interest of the Societies as well as the members. In numerous cases at had been noticed by the Co-operative Dept. of Government of Maharashtra that by virtue of a naïve majority and with a view to extract more money from the members not occupying the flats, Non-Occupancy Charges were being imposed whimsically and at exorbitant rates.

The quantum of the Non-Occupancy Charges was settled by the Hon’ble Bombay High Court by its Judgment dated 2nd March, 2007 by upholding the Government Order dated 1st August, 2001 prescribing therein, the Non-Occupancy Charges not more than 10% of the only service charges excluding the Municipal Taxes, Sinking Fund, Repair Fund etc. both in respect of residential as well as commercial premises irrespective of the fact whether the new Bye-Laws are adopted by the Societies or not. This Judgment had brought in a great relief to the members of the Societies who give the flats on rent or Leave and Licence Basis.

The Society is concerned only with the fixed 10% extra charges over the regular service charges as "Non-Occupancy Charges" and strictly nothing beyond this. There is no concept of less than 10% or greater than 10% Non-Occupancy Charges. The Society cannot stop any services/amenities nor dictatorially collect any extra charge under any additional form from the said Lessee under the pretext of ‘Third-Party’ Charges irrespective of any resolution passed by the General Body of the Society.

Any amount under any additional head whatsoever collected besides the fixed amount of 10% of Non-Occupancy Charges, shall be considered absolutely illegal and abuse of power and the Society can be prosecuted under the Consumer Protection Act under the charge of ‘deliberate negligence and deficiency in services and over-charging of Non-Occupancy Charges with abuse of power and harassment including demanding compensation for causing mental and physical trauma as also under the Indian Penal Code (Criminal Acts) under the charge for Cheating u/s 418, Mischief u/s 427, illegal extortion of money u/s 383 etc. The Lessee must follow due documentary procedures along with the relevant documentary evidences (proofs) before initiating above legal actions.

In case the flat is owned by Trusts or Corporates, Non-Occupancy Charges cannot be levied on the guests such as bonafide staff members or the Directors, Executives, Managers etc. The Company has to submit to the Society, a Resolution passed by its Board of Directors giving the details of the person who shall stay in the flat.  

It is obligatory on the part of the owner-member i.e. Lessor of the flat who wants to rent/leased out his flat is obliged to comply with the submission of basic requirements to the Society under the Bye-Laws such as obtaining “No Objection” from the Society, certified photocopy of the Leave & License Agreement duly stamp duty paid and registered and Police Verification Report of the Lessee.

In this regard, it is obligatory on the part of the Society to follow the mandatory procedure as laid down in the Bye-Laws governing the housing societies in Maharashtra before start-up of charging the Non-Occupancy Charges to the owner-member of the flat.    

Bye-Law No. 20: A Sublettee, a licensee, a care-taker, or occupant who is eligible to be a Nominal Member and who shall apply through Member for such membership in the prescribed form applicable, along with entrance fee of Rs. 100/- as per Appendix – 11, may be admitted as Nominal Member by the Committee.

Bye-Law No. 24–b: The Associate/Nominal Member may have a right to occupy the flat with the consent of the Member and written intimation to the Society, subject to the conditions set out by the General Body Meeting.

Bye-Law No. 26: A nominal Member shall have no rights such as Member.

Bye-Law No. 29: A sub-letter, licensee, caretaker or possessor of a flat or part thereof, who has been admitted as a nominal Member of the Society may resign his nominal membership at any time, by writing the letter of the resignation to the Secretary of the Society, through the Member who has been permitted by the Committee to sub-let, give on Leave and Licence or caretaker basis the flat or part thereof or part with its possession in any other manner.

The Secretary of the Society shall place the Letter of Resignation before the meeting of the Committee, held next after the receipt of the Letter of Resignation duly recommended by the Member concerned for acceptance by the Committee. The decision of the Committee, accepting the resignation shall be communicated by the Secretary of the Society to the Member concerned and his sub-lettee the licensee, the caretaker, or as the case may be, the possessor of the flat or part thereof, within 15 days of the decision by the Committee. If the resignation is rejected, the Committee shall record reasons there for in the minutes of its meeting and the secretary of the Society shall communicate the same to the Member concerned and his sub-lettee, licensee or caretaker etc. within the time specified above.

Bye-Law No. 62-g. The Secretary of the Society shall communicate the decisions of the Committee or the General Body, as the case may be, to the applicants concerned within 15 days of the decisions of the Committee or the General Body, as the case may be, with reasons, where the applications are rejected by the Committee or the General Body, as the case may be, If the Society does not communicate the decision to the applicant within three months from the date of receipt of application for membership including nominal or associate membership, the applicant shall be deemed to have been admitted as a Member as provided under Section 22(2) of the MCS Act which reads as under:

Section 22(2) of the MCS Act: Where a person is refused admission as a member of a society, the decision (with the reasons therefore) shall be communicated to that person within fifteen days of the date of the decision, or within three months [from the date of receipt of the application for admission, whichever is earlier. If the society does not communicate any decision to the applicant within three months from the date of receipt of such application, the applicant shall be deemed to have been [admitted] as a member of the society. [If any question arises whether a person has become a deemed member or otherwise, the same shall be decided by the Registrar after giving a reasonable opportunity of being heard to all the concerned parties].

In case if the Society has charged the Non-Occupancy Charges in excess of the amount as described herein above, besides the prosecution under the Consumer Protection Act and also under the Indian Penal Code (Criminal Acts), the Lessee can make a written complaint to the Dy. Registrar of the concerned Ward stating that the Society may be directed to refund excess amount charged along with interest @18% per annum.

CASE LAW

After the consideration of the Committee’s Report, the State Government issued an Order dated 1.8.2001 in Public Interest under Section 79 A of the MCA Act, 1961 there by directing the Societies not to charge Non-Occupancy Charges beyond 10% of the Service Charges (excluding Municipal Taxes, Sinking Fund, Repair Fund etc.)

Palm Beach Riviera CHS Ltd. challenged this Government Order dated 1.8.2001 before the Hon’ble High Court during the years 2002 and 2006 on various grounds that this Order was against the interest of the Societies, arbitrary and not in public interest and unwarranted.

The State Government, justifying the Order dated 1.8.2001 and submitted before the Hon’ble High Court that it had been issued in exercise of statutory powers under Section 79-A of the MCS Act in public interest and stop the Societies forthwith who were in the business of extracting more money from the members not occupying the flats and levy various charges in the name of Non-Occupancy Charges which were being imposed whimsically at exorbitant rates.

It was also pointed out in the High Court that in such cases, Societies do not spend any extra money on account of the member giving the flat on leave and license basis. Therefore, the State Government issued the Order dated 1-8-2001 and at the same time, replaced by Bye-law No.45 in the amended Bye-Law, 2003 numbered as 43 which interalia, provided as under:

“Bye-Law No.43 (2) (C) of the year 2003 which read as under:

He shall pay Non-Occupancy Charges to the Society. Non-Occupancy Charges shall be charged in accordance with the Circular issued by the Government of Maharashtra, Commissioner for Co-operation from time to time and shall not be levied if the flat is occupied by the family of the member as defined under these Bye-Laws.”

The Hon’ble High Court observed that the validity of Section 79 A of the MCS Act has already been upheld by this Court in the cases 1989 Mh-L-J. 173 and 1993 (2), Mh-L-J. 1716, passed the Judgment on dated the 2.3.2007 by upholding the Government Order dated 1.8.2001 prescribing the Non-Occupancy Charges not more than 10% of the service charges excluding Property Taxes, Sinking Fund and Repair Fund etc. both in respect of residential as well as commercial premises irrespective of the fact whether the new Bye-Laws are adopted by the Societies or not. This Judgment has brought in a great relief to the members of the Societies who give the flats on rent or Leave and Licence Basis. Therefore, all the housing societies in the Maharashtra State should take necessary action to make appropriate changes in their Rules/Bye-Laws. In case of changes as above if not made, the Non-Occupancy Charges should not be assessed more than the mentioned maximum limit in this order, effective from date of issue of Government Order dated 1.8.2001.

 

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HC ON NO PRE-CONDITION OF INDIVIDUAL AGREEMENT TO EXECUTE

BEFORE CC ISSUED BY BMC

 

In the matter of redevelopment, the Developers are required to execute Tripartite Individual Agreement with each of the existing members of the Society in respect of providing new Permanent Alternate Accommodation and get the same registered before the members vacate their flats and hand over the possession of the same to the Developers for redevelopment. This being one of the conditions by default, in the IOD (Intimation of Disapproval) issued by the BMC.

In a historic judgment, the Bombay High Court has set aside a condition imposed by the BMC that the Developer must execute a Permanent Alternate Accommodation Agreement with the existing members of the housing society to get qualified for the issuance of Construction Commencement Certificate (CC) by BMC. The redevelopment of a part of the MIG Colony in Bandra that had remained stalled for the past few years can now go ahead as per the judgment pronounced by the Bombay High Court recently. It was observed that the Section of the Development Control Regulations (DCR) under which the redevelopment was being carried out, did not impose such condition on the Developer.

The Regulation 33(5) of the DCR does not impose under reference to the Condition no.10 viz. execute a registered tripartite agreement of new flat between the Developer, Society as confirming party and the existing members before issuance of the CC by BMC. In contravention to this, the Clause-10 of the IOD had imposed such condition, issued by respondent No.1 i.e. the BMC, without considering the Regulation 33(5) of the DCR under which the redevelopment of the said project was being undertaken.

Way back in October 2010, the MIG Society executed Development Agreement with MIG (Bandra) Realtors and Builders Pvt Ltd, a DB Realty group company. The BMC issued an IOD in September 2013. Around two years later all the 176 members of the buildings vacated their respective premises and handed over keys of their respective premises to the said Society, which passed them on to the Developer for redevelopment, indicating 100 percent consent in favour of the Developer. The BMC, however, refused to let the project go ahead and insisted on execution of Permanent Alternate Accommodation Agreements with the existing members to get the CC issued.

Despite the Developer pointing out to the BMC that the relevant Section of the DCR did not impose such a condition; that this was not a landlord-tenant type redevelopment project and the existing members of the Society were the owners of their flats. However, the BMC disregarded the Developer’s request, forcing them to approach the HC which later ruled in favour of the Developers.

The Court observed that the BMC, by imposing such a condition had acted in an arbitrary manner apart from the condition being illegal and the redevelopment project was inordinately delayed for years causing severe blows on the members of the said Society.

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MEMBER IN HOUSING SOCIETY CANNOT MERGE FLATS WITHOUT BMC PERMISSION

There are numerous examples of resident members in Housing Societies who buy luxurious flats either in new buildings or redeveloped ones which are adjoining ones and for their habitable convenience, merge them in to one flat or if the flats are situated on lower and immediate upper floor, merge them in to a duplex flat by construction in-house stairway connecting both the flats. While the resident members enjoying their stay thereafter never knew that Section 347-C of BMC Act, 1988 prohibits them for such merger without the authority’s prior permission.

Recently such case has been on record that Metropolitan Magistrate's Court, Vile Parle, held a Dahisar resident guilty of merging two flats without procuring the BMC permission. The accused was fined by the Court a sum of Rs.10,000/ for violation of rules. The offence of the said accused came to light through the information sought under RTI that no permission was granted by BMC for the amalgamation of flats, ruled the Metropolitan Magistrate of Vile Parle Court.

The accused admitted that he had indeed merged two flats in May 2010 before receiving the Occupation Certificate (OC). However, he agreed having paid the fine amount and rectified the changes made as he did not want his family to suffer. Section 347(c) of the BMC Act envisages that no alteration can be made to a residential building or plans which have been approved by the BMC. Once the plans are sanctioned and flats are built, any change including setting up a partition, demolishing walls, merging flats or using a residential apartment flat as a warehouse, require the permission of the Civic Chief, according to the lawyers. The text of relevant Section is appended herein:

Section 347-C: No alterations to be made in buildings for human habitation without written permission of Commissioner. "No person shall without the written permission of the BMC Commissioner or otherwise than in conformity with the terms of such permission make any alteration or cause any alteration to be made in an existing building originally constructed for or authorised to be used for human habitation for the purpose of using it or causing human It to be used as a godown warehouse, workshop, workplace, factory, stable or motor garage".

The next door neighbour of accused lodged a complaint with the BMC and also stated that the accused had built a door to connect the drawing rooms of the two flats. Further, without the BMC's prior permission, a bathroom in one of these two flats was turned into a kitchen. However, it was reported that while BMC delayed initiating action against the accused, his neighbour filed a query under the RTI Act which motivated the Corporation to issue a notice to the accused. The BMC lodged a case before the Metropolitan Magistrate when the accused failed to comply with the notice to restore the flats to its original condition.

As per Section 342 of BMC Act, 1988 (amended till date), the following “tenantable repairs”, can be carried out without obtaining permission from the ‘Building and Factory’ Department of local BMC Ward:

• Plastering, painting, pointing of your flat

• Providing guniting to the structural members or walls

• Changing floor tiles

• Repairing WC, bath or washing places

• Repairing or replacing drainage pipes, taps, manholes and other fittings

• Repairing or replacing sanitary, water plumbing or electrical fittings

• Replacing the roof with the same material

• Replacement of existing water-proofing material of the terrace. The only pre-conditions to the renovation work to be done at residences are:

• The original tenantable structure (whether rental or ownership) must be legal, i.e. it is based on the original BMC-approved Building plan.

• Though no BMC permission for the above is required, it is advisable to do so under strict supervision of a registered Architect and/or Structural Engineer.The "tenantable repairs" however shall NOT include the following:

• Replacing or removal of any structure members of load bearing walls.

• Change in horizontal or vertical existing dimensions of the structure.

• Lowering of plinth, foundations or floors.

• Addition or extension of mezzanine floor or loft.

• Flattening of roof or repairing roof with different material

• No merger of tenancies by removal or opening of any walls in between two or more tenancies.

• Changing location of bathroom/WC/kitchen sink, in a way that can cause leakage to residents below.

• Increasing the internal height of the structure.

BMC Notices

Notice issued by BMC under Section 354 is a STOP Work Notice if it feels ongoing work is unlawful. If there is unauthorised construction then BMC can issue a Show-Cause Notice under Section 351. This is NOT a Stop Work Notice – it is issued when work is completed and persons are utilizing the said premises. If the officer is not satisfied with the documents produced, then he has to give them an opportunity to revert the property back to the original legal status after which, the BMC can initiate demolition under Section 488. The party can go to the Civil Court for a stay. Notice under Section 381 is issued by BMC if there is nuisance to other members due to some work done by the resident. For any construction to be legalized; there must be documentary proof (electric bill or property assessment etc.) that the structure existed prior to 1962.

Before starting renovation work on your property, if you are in doubt, it may be safe to take ‘dated’ pictures of the property. However, if you submit a letter to the local BMC office, attaching a copy of the Architect’s proposed plan, you may be requested to forward the same to Building Proposal Department of your Local Municipal Ward for written approval.

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TDR ON PRIVATE & INTERNAL ROADS 

There’s good news for redevelopment projects located along internal private roads across the suburbs as the Urban Development Department (UDD) of State Government has finally clarified that Transfer of Development Rights (TDR) can be now be issued on both private and internal roads with a width of 9 meters after the BMC delayed issuing TDR for such projects. The hindrance came after the State Government announced a new TDR policy in 2016.  

As we are aware that due to new TDR policy, redevelopment projects located along internal private roads in private layouts across the suburbs were stalled because the BMC had stopped issuing/loading of TDR under new TDR policy for such projects as a result of which, an estimated 500 housing society redevelopment projects were affected for the last few weeks in certain western and eastern suburbs.

The TDR was being issued only for municipal roads, public roads, pre-merger layout roads and road alignments marked by the Brihanmumbai Municipal Corporation (BMC). Most housing societies that were contemplating redevelopment located in Chembur, Ghatkopar, Santacruz, Khar and Juhu, where TDR was not given to such redevelopment projects abutting internal roads and right of ways.

The impediment was the State's new TDR policy introduced last year which did not permit TDR to be loaded on redevelopment projects on internal roads not owned by the BMC. Hence, the BMC refused to allot additional construction permissions in the form of TDR to complete the said projects.

The move of State Government will benefit close to 500 housing societies up for redevelopment which were affected by the earlier decision of barring the issuance of TDR for internal private roads in private layouts. This has now clarified that any private or municipal roads and roads with a width of 9 mtrs can now avail TDR benefits.

TDR is generated and raised under Regulation 34 of the Development Control Rules (DCR). The rule states that a BMC road with a width of 9 mtrs and abutting any structure is issued a TDR. The Developer can use the TDR elsewhere in the city. It is further clarified by UDD that the rule is likely to be further relaxed to 6 mtrs to ease redevelopment of those buildings on BMC roads having width of less than 9 mtrs. A notification in this regard is awaited.

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