INDEMNITY BOND IN FORM M 20 ABOLISHED FROM 6^TH SEPT. 2012

The long awaited demand of numerous Housing Societies with regard to abolish the filing of Indemnity Bond in Form M 20 has finally been agreed by the State Government.

The State Government vide GR dated 6^th Sept. 2012 pronounced the abolition of  prerequisite condition that required the elected Members who volunteer to serve the Society as Managing Committee in Cooperative Housing Societies to furnish an Indemnity Bond taking responsibility of all acts and omissions that may cause any loss to the Society.

However, the Members who were elected prior to the GR dated 6^th Sept. 2012 as Members of the Managing Committee are still bound and accountable for any of their acts detrimental to the interest of the Society under the said Rule.

The M-20 Bond was an undertaking given by each Managing Committee Member within 45 days of his assuming the Office of the Society. It said, “I shall be jointly and severally responsible for all decisions taken by the Managing Committee during its term relating to the business of the Society and shall be jointly and severally responsible for all acts and omissions detrimental to the interest of the Society…”The Housing societies were brought under the ambit of this Rule in 2001.

By implication, any person who signed Society Documents without signing an M-20 bond on assuming the Office of the Society was liable for prosecution for serious crimes including fraud, cheating, misrepresentation and forgery.

There are more than 90,000 cooperative societies in the State of Maharashtra of which about 50,000 are in Mumbai and Thane. More than 30% of these are run by State appointed Administrators. The State takes control of the Society when the Managing Committee is dissolved on legal grounds or Members resign and others are not willing to fill up vacancies.

It is assumed that the decision of doing away with the said stipulation would encourage sincere Members of the Society willing to take up the honorary job. In absence of M-20 bonds and in case of any wrongdoing, the aggrieved parties could take up the issues with Competent Authorities.

But a few Housing Society Activists are upset with the decision with a view that now with no stringent provision for punishment, the Managing Committees shall now act in an arbitrary manner and that the M-20 Bond was a strong gadget against any wrongdoing by them in the Society. There is a growing demand that the State should now introduce a more effective mechanism to check corruption and inefficiency in Housing Societies.

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