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Redevelopment of Buildings - INDENMITY BOND IN FORM M-20

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  • dilip7shah@gmail.com
    Message 1 of 2 , Dec 31, 2010
       Subject:INDENMITY BOND IN FORM M-20
       Category of Topic:Redevelopment of Buildings


      I take this opportunity to write something on Bond required to be executed by the members of the Managing Committee of the Co-operative Housing Societies within 15 days of their assuming the office under the Maharashtra Co-operative Societies Act 1960.

      The provision is important because if the bond is not executed within 15 days of his assuming the office or if the member fails to execute the bond he shall be deemed to have vacated his office as a member of the Managing Committee.

      Attention is also invited to the Bye-law no 136 of the old Model bye-laws and bye-law no 138 of the new Model bye-laws which lay down as under:

      "The members of the Committee shall be jointly and severally liable for making good any loss which the society may suffer on account of their negligence or omission to perform any of the duties and functions cast on them under the Act, Rules and Bye-laws of the Society."

      In addition to the above bye-laws, an amendment was inserted by Mah. 41 of 2000, S. 3 of the amending Act (w.e.f. 23-8-2000) to
      Section 73 by introducing Section (1AB) to the Maharashtra Co-operative Societies Act 1960. Similarly Rule 58-A was inserted by G.N. of 18-2-2002 in the Maharashtra Co-operative Societies Rules, 1961 and Form M-20 was also inserted by G.N. of 18-2-2002.

      Section 73(1AB) of the Maharashtra Co-operative Societies Act 1960 is reproduced below:

      "The Members of the Committee shall be jointly and severally responsible for all the decisions taken by the committee during its term relating to the business of the society. The members of the committee shall be jointly and severally responsible for all the acts and omissions detrimental to the interest of the society. Every such member shall execute a bond to that effect within fifteen days of his assuming the office, in the form as specified by the State Government by general or special order.

      The member, who fails to execute such bond within the specified period i.e. within fifteen days from joining the Managing Committee member, shall be deemed to have vacated his office as a member of the committee."

      Further, the power to decide whether the losses incurred by the society are due to act or omissions of members of the committee is given to the Registrar

      "Provided that, before fixing any responsibility mentioned above, the Registrar shall inspect the records of the society and decide as to whether the losses incurred by the society are on account of acts or omissions on the part of the members of the committee or on account of any natural calamities, accident or any circumstances beyond the control of such members."

      Rule 58-A of the Maharashtra Co-operative Societies Rules 1961 is reproduced below:

      "Every elected member of the Managing Committee shall execute a bond in
      Form M-20 within fifteen days of his assuming the office. Such bond shall be executed on the stamp paper as provided under the Bombay Stamp Act 1958. The expenditure on stamp paper shall be borne by the society. The Chief Executive Officer / secretary of the society shall receive such bonds and keep them on record of the society and accordingly inform the Registrar within Fifteen days from the formation of the Committee."

      It is clear from above that the bond must be executed within fifteen days of assuming of office by each member of the Managing Committee in Form M-20 on a stamp paper. Failure will invite penal consequences.


      March 2008

      Article by Dilip Shah

      The legislature having experienced and realized that the members of the Managing Committee of different co-operative societies were acting in an arbitrary manner, with a view to have some accountability amongst the members of the Managing Committee, have enacted a provision in the Maharashtra Co-operative Societies Act, 1960 ("MCSA") mandating every member of such Managing Committee to execute a bond within 15 days from the date being elected as Committee member. If the committee member fails to execute the bond within the specified period, then such member shall be deemed to have vacated his office as member of the Committee. This provision has been given effect by Section 73(1AB) of the MCSA.


      This legislation was recently challenged by a Writ Petition filed in the Bombay High Court (Writ Petition No. 457 of 2007) under Article 226 of the Constitution of India on the ground that the same is ultra virus. However, the Bombay High Court has upheld the legislature's act.


      The intention of the legislature is to make the members fully aware of their personal responsibility and liability towards the society and its members. The time limit laid down under Section 73(1AB) is mandatory and the elected committee members have to hand over the bond to the Deputy Registrar of Co-operative Society within such stipulated time.


      This ruling of the Bombay High Court in the aforesaid writ petition emphasizes the basic principle of "ignorance of law is not an excuse" i.e. being unaware of the provision contained in Section 73(1AB) of the MCSA cannot be used an excuse for the failure to execute the bond within the stipulated time.

      Bandra building residents unearth Rs 100 crore fraud

      A resident of Rachna co-operative housing society at Hill Road in Bandra has accused some members of the managing committee of resorting to forgery to strike a Rs 100 crore deal for redevelopment rights.

      Mohammed Musaddique Shaikh, the resident, alleges the members resorted to forgery fearing the deal would fall through as the papers of the society were not in order.

      "After the managing committee members entered into an agreement with the builder for redevelopment in December 2006, they realized that they had not filed the mandatory indemnity bonds," alleges Shaikh.

      When a managing committee is elected, it is mandatory for them to file indemnity bonds (before the registrar of societies) accepting responsibility for wrong-doing, if any, during their tenure. Without the indemnity bonds, the society cannot enter into a deal to redevelop the property.

      "The election took place on May 25, 2004. The committee was constituted on the same day. The indemnity bonds ought to have been placed on record by committee members on or before June 9, 2004, which was not done," alleges Shaikh.

      His advocate Pradeep Havnur says, "Members not having filed indemnity bonds within 15 days of being elected cease to be part of the managing committee. All documents signed when they have ceased to be managing committee members are illegal and cannot be given effect to proceed in any matter pertaining to the society's day to day affairs."

      "When residents of the society insisted on seeing copies of the indemnity bonds, the accused purchased stamp papers and prepared back-dated indemnity bonds," alleges Shaikh. Another resident, S B Naik, moved the HC alleging fraud. The court asked the additional controller of stamps (Mumbai) to investigate. The investigation revealed that the dates on the indemnity bonds were forged. An officer at Bandra police station said a complaint was registered under Sections 465, 467 and 471 of the IPC.


      Dilip Shah

      Posted: Dec 25, 2007 - Article Directory, India


      Mumbai, December 25 The Bombay High Court recently ordered fresh elections to the managing committee of an industrial cooperative society in Chunabhatti. Following their removal from the committee for non-execution of bonds under the Maharashtra Cooperative Societies Act, Deepak Rao and others had moved the HC contesting the order passed by the Divisional Joint Registrar as he was "facing corruption charges and his anticipatory bail application was rejected by the sessions court".


      The Managing Committee of the Shri Mahalakshmi Industrial Premises Cooperative Society Ltd was superseded by an order of the Deputy Registrar of Cooperative Societies on July 6. The members challenged the order before the Divisional Joint Registrar Shivaji Pahinkar - who is under suspension, according to Assistant Government Pleader G W Mattos. Pahinkar dismissed their appeal on October 23, following which the members moved the HC.


      According to Mattos, the petitioners contested Pahinkar's order as he had passed it on October 23, a day after his anticipatory bail application was rejected by the session's court. The petitioners expressed apprehension that the order was "based on consideration other than merit", according to Mattos.


      According to Mattos, Justice A M Khanwilkar observed that if the petitioners' contention was accepted, the court would have to order an inquiry into the allegations and, if found true, the matter will have to be referred back to the appellate authority for fresh hearing.


      Mattos contended before Justice Khanwilkar that the managing committee was removed on technical grounds as they ceased to be members for non-execution of bonds. Mattos submitted that instead of going into allegations and counter-allegations, it would be appropriate to hold fresh elections to the committee.


      According to Mattos, observing that the removal was technically correct, the court directed that the three members of the seven who had executed the bonds should continue to function as the Board of Administrators (BoA) instead of the single administrator appointed by the Deputy Registrar of Cooperative Societies on July 6.


      Mattos said the HC then directed the Deputy Registrar of Cooperative Societies to issue order in this regard by December 27. The court also directed that elections to the committee should be held within three months. The court has, however, asked the BoA not to take any major policy decisions during this period.


      Dilip Shah

      Counselor and Analyst for Redevelopment of Housing Societies







       Name:Dilip Shah
       Location:Andheri West
       Email 1:dilip7shah@...
       Email 2:dilip777shah@...
       Information about yourself:Counselor and Analyst for Redevelopment of Housing Societies
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    • Swadesh2100
      Maharashtra Cooperative Societies Act 1960 is a biggest blunder and all the Designated officers in the Ccooperation departments are nothing less than jokers .
      Message 2 of 2 , Jan 2, 2011
        Maharashtra Cooperative Societies Act 1960 is a biggest blunder and all the Designated officers in the Ccooperation departments are nothing less than jokers .
        It's my personal experience fighting for my right and justice since last 4 years through which I have experienced a hell and a bell .
        I am mentioning few blunders from the dept :

        1) Ah administrator manufactures 2 different inspection reports one dated 16.10.2007 which is as per the facts and another backdated 15.10.2007 .In the report dated 16.10.2007 , he mentions that there were no elections and in the report dated 15.10.2007 he mentions that there was an elections and 4 people were elected .
        2) The Society ( errant self claimed office bearers who are nonmember/s, defaulter/s,fraudster/s,usurper/s,impersonator/s, imposter/s ) claims that an election was held on 09.04.2007 but and the new committee assumed the office from 27.08.2007 ).
        Society submits four M-20 bonds .Then again society claims that since the tenure of the old committee was supposed to end on 13.10.2007 , so the new committee could not take the charge ??????
        3) Dy Registrar issues an Order dt 05.11.2007 by appointing an administrator u/s 77.A of M.C.S Act 1960.
        4) the gang if idiots files an appeal challending the Order of the Dy Registrar. The Div Jt Registrar Vikas Rasal issues an interrim Order and maintains status quo.
        5) The Div Joint Registrar Shri Kalyankar issues an Order date 05.09.2008 by vacating the interim stay and appointing the Administrator with serious observations of backdated documents,indemnity bonds and false alleged elections etc etc etc.
        The society uses members money for the said appeal to pay for legal fees and I pay my own money from my pocket .
        6) The society files a w.p.in Mumbai High Court 7694/2008 .
        The high court directs the society to Hon'Ble Minister of Cooperation and so the society files a revision application no 517/2008 with Hon'ble Minister of Cooperation .
        everywhere the mischievous self claimed office bearers uses society fund to defend tmselves and i spend my money .The society uses a dirty trick declaring me a defaulter and trying to take undue advantage of the govt circular
        7) Without going into merits and demerits , the Minister vacates the stay that also without allowing me as a party to the matter .
        fact ; the alleged new office bearers never assumed the office of the society from 27.08.2007 till 23.01.2009 i.e. the date on which Miister passes the Order .
        8) Meanwhile the Dy Registrar appoints a cooperative officer on 05.01.2009 to conduct the annual general meeting and to approve the unaudited accounts of the society .
        Whether a cooperative officer can appoint a cooperative officer when an administartor is in place who is not been given the charge of the society ? The members do not know anything till 23.08.2009 when the cooperative officer sends the intimation notice to members for the agm on 30.08.2009 .
        9) I file a writ petition 4487/2009 in Mumbai High Court challenging the Order of the mINISTER OF COOPERATION .

        10)tHE SOCIETY FILES A REPLY dt 16.10.2009 through a stranger claiming to be a manager of the society who claims that the old office bearer has othing to do with the current petition .
        But the fact remains that the self claimed secretary never removed his name from the bank account of the society but falsely claimed to have resigned and a non-member chairman replaces his name in the bank account on 23.04.2009 and not from 27.08.2007 as claimed . The alleged self claimed new chairman occupies the office with the same old secretary from 23.04.2009 . All documentary proof is with the bank and bank refuses to part with the information .For some unknown reason my lawyer withdraws the writ petition without my consent but with aliberty to file it again .

        11) I again lodge a serious complaint to the then Comm of Cooperation
        who Orders fresh investigation .
        12) Another gimmick of the Deputy Registrar:
        He issues a notice u/s 101 to recover Rs 263630 from us without verifying the application and knowing the situation in the society .
        I make 15 point demand so as to file a proper reply .
        Some of them:
        1) Name of the applicants and the name of the office bearers
        2) proof of them being elected
        3) audited balance sheets as per the bylaws
        4) account staements of all so claimed committe membrs
        5)certified true copies of my account and the bills
        6)certified true copies of aaccounts and bills of committee members
        7) copy of M-20 bonds
        8) Other details

        The society and the Dy Registrar fails to provide a single information .Not even the names of the applicants and the office bearers .
        9) But now the Dy Registrar rejects the application of the society after my statement as filed alongwith proof of documentary evidence .

        10) The same investigating officer inspects the society records ( no accounts or bank statements were given ) and finds tonnes of irregularities .The Dy Registrar issues a SHOWCAUSE NOTICE u/s 78(1) of M.C.S Act 1960 on 14.01.2010.

        11) The Dy registrar is pressurized by a Congress MP through a letter to the ex- CM Ashok Chawan .
        12) The members meet the MP and however succeds in convincing him about the fact .
        13) The Dy Registrar issues Order u/s 78(2) of M.CS Act 1960 dt 02.08.2010
        14) The society challenges the Order through a false appeal ( 168/2010 on 3.08.2010 ) filed by a non member . Another interesting blunder :

        The Div Joint Registrar manintains status quo and allows a non-member ( non resident who sold and vacated his flat on 03.04.2010 and resigned from membership of the society ) to withdraw funds for payment of statutory charges .

        15) Meanwhile the Dy Registrar isues an Order dt 26.08.2010 u/s 80(2) of M.C S act 1960 because of non-cooperation of the alleged one member committee .
        16) The Society( one member committee of 59 members ) withdraws appeal after bowing down to the situation .

        The mischievous self claimed advocate secretary steals all society records . He is caught red handed in front of 150 resident members, 15 policemen, MLA while attemting to steal other records on 30.09.2010. On that very day during the incident , Sr PI warned the residents that he will arrest all members for harassing the Secretary ????????
        F.I.R u/s 297/2010 is filed at Samata nagar Police Station u/s 380,511 of IPC but no arrest has been made . Society records of last ten years has been stolen . Society is reeling under -50 degree temp and no one knows what will happen next ??????
        May be police will kill me or the accused will get me killed or
        there will be lots of dirty games with tampered documents ?

        eACH AND EVERY SECTION OF M.C.S Act has been violated along with around 40 criminal offences ?
        Why I should not burn the copies of M.C.S Act 1960 ?
        If I aged 39 dedicate my self by spending around 3000 hours , I am literralu worried of the Sr Citizens, illiterate citizens, and housewives ?

        What if the non-member has withdrawn funds signing as Chairman of the Society ?
        What if S.73 (1) ab is violated ?

        There is corruption and contamination beyond tolerance ?

        All the eroneous have fled the society but I the victim is still unable to sell my premises in the always defunct society .

        Regards ,

        Kamal Shah
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