The procedure for recovery of dues is as under:

1) If a member fails to pay the dues after issue of the notice for a
period exceeding 3 months is termed as a defaulter as per the
Maharashtra Co-operative Societies Act 1960 and as per Bye-laws of
the society. The member should be classified as “Defaulter” in Society’s
records and accounts.
2) The society has to give a notice (1 plus 2 Reminders) to the
defaulter member, giving him an opportunity to make payment of
dues (including up to 21% interest), within such period, as the society
may allow with a warning therein that on failure to make payment of
the same, an application would be made to the Registrar under
Section 154(b)-29 (old section101) of the Maharashtra Co-operative
Societies Act, 1960 for recovery of the outstanding dues. Societies
cannot recover compound interest from defaulting members
3) Issue a notice for payment of dues (including up to 21% interest
or any lower % fixed in AGM) to the defaulter, with a warning therein
that on failure to make payment of the same, an application would be
made to the Assistant Registrar/ Deputy Registrar under section
154(b)-29 (old section101) of MCS Act, 1960 for recovery of the
outstanding dues. The Registrar of Co-operative Societies is a
quasi-judicial authority. One does not have to appoint an Advocate
to initiate action u/s 154(b)-29 (old section101) of the MCS Act, 1960
and any member of Managing Committee or any member nominated
by them can also sign the petition and represent the Society before
Deputy Registrar. Even a practicing Chartered Accountant can also
issue notice and represent the Society before the Deputy Registrar and
argue Society’s case.
4) Pass the resolution to recover the dues in the Managing
Committee Meeting and initiate actions u/s 154B-29.
5) Issue a final notice to the defaulter, indicating that failure to make
payment would invite actions under Section 154(b)-29
6) If member has not settled, with in time period specified, the
overdues after issuing the final notice, apply to the Deputy Registrar
(of your range) for initiating the recovery of dues.
7) Pay the prescribed fee (Rs 15 to Rs. 1000 max) through a challan
payable at the RBI.
8) The Deputy Registrar would issue a Recovery Certificate for the
amount due, after making a hearing and a summary inquiry on the
basis of the affidavits filed by the disputant and the respondent.
9) On receipt of the Recovery Certificate, the Recovery Officer shall
prepare demand notice for being sent to the Sale-Officer for attaching
the movable property of the member concerned.
10) The Sale Officer, on receipt of recovery paper from the Recovery
Officer, shall visit the flat of the member concerned for preparing an
inventory of the movable property and handover such list to the
member concerned and serve the demand notice on the defaulter
member.
11) If the amount not paid by the member concerned immediately on
service of the demand notice, the Sale Officer will seize the movable
property (Flat).
12) Thereafter, the Sale Officer will fix the date, time and place for
such auction of the movable property seized and auction out the same
and pay the sale proceeds thereof to the Society, in satisfaction of the
outstanding dues payable by the defaulting member to the society
Documents Required for Recovery of Dues from defaulters
1. Application in prescribed format
2. Stamp Paper of Rs 100/- (please verify current rate from
Maharashtra Stamp Act)
3. Membership entrance Date proof
4. Extract of defaulter members ledger (3 certified copies)
5. Final Notice issued by the Society (sending bill is sufficient &
sending separate notice is not required)
6. Resolution copy if an authorized officer appointed by managing
committee or Vakalt Nama in favour of Lawyer.
7. Resolution copy for maintenance fee structure and interest
charges or a copy of respective Bye-Laws.
8. Copy of resolution about initiating recovery process under sec.
154(B)(29) (formerly known as 101)
9. Payment of Notice fee to be deposited with government treasury
after the challan is approved by DR/AR
Check list for Housing Society
Ø Member outstanding dues for a period exceeding 3 months
Ø Member outstanding dues for a period not exceeding 3 years
Ø Prepare statement of Account in respect to defaulting member.
Ø Has dues been clearly established, crystalised?
Ø Any Disputes with regard to dues with defaulting members? Try and
resolve it or establish that member’s concerns have nothing to due
with accounts.
Ø Has defaulting members pending points been addressed and
recorded in Committee minutes along with correspondences as most
of the time the member is likely to take shelter under “disputes”
As per the provisions of the bye-law:
a) A defaulter cannot contest the election to be held for the post
of Committee Members. However, a defaulter can propose or second
candidate for the election.
b) A persistent defaulter can also be expelled by the society.
Even the High Court has held that a persistent defaulter can be
expelled. If the member is expelled and the same is approved by the
registrar and other higher authorities, the concerned member can be
evicted from the premises for his failure to pay society’s dues.
c) The concerned defaulter will have to defend his legal cases at his
own cost. Further any expenses incurred by the society in filing the
cases & engaging a lawyer will be recovered from the concerned
member and the same will be included in the Certificate of recovery
given by the registrar. Upon granting such Recovery Certificate, the
Stamp Duty, Court enquiry fees and surcharges will have to be paid by
the respective defaulter member. Further a portion of the Legal
expenses incurred by the society will be included in the share of
contribution given by the defaulter member. Besides, attending the
Court cases and Registrar’s office is a time-consuming process for the
Defaulter.
d) If the defaulter has some complaints or grievances against the
society or Managing Committee, defaulter’s complaints will not be
entertained by the Office of Registrar unless and until he pays the
society dues.
e) In the General body meeting (AGM) the members can frame &
approve certain rules with respect to parking and resolve to not to
allow or allot parking to a defaulter.
f) The concerned defaulter member cannot avail of any loan which
he wants to take by mortgaging his premises on which dues are
pending, as the financial institution will always ask for a No-dues
Certificate from the Society.
g) A defaulter member cannot sell his/ her flat unless and until he
clears-off the dues to the Society as the Society would refuse the NOC
& also to transfer the premises unless & until the dues are cleared.
h) If he wishes to rent or sub-let his premises the society might not
grant him permission to do so unless and until he pays all the dues.

Common grounds of “Disputes” for Default

A. NOC charged beyond 10% of Service Charges
B. Transfer or Transmission of Flat not happened
C. Compound interest charged instead of Simple Interest
D. Leakage of Flat-from outside, from upper flat or adjoining flat
E. AGM are not conducted in time or regularly, Accounts not
circulated
F. Repairing of common areas not done to the expectation of some
members
G. Major Repair, panting not carried out
H. Attending to complaints-not done properly or not done at all
I. Levy of fines, penalty for breach of bye laws
J. Intra Members disputes resulting in major altercation.
K. Legal heir/Nominee not admitted as member of Society
L. Funds misappropriated by members of the Managing
Committee, office bearers
M. Dues from Builder as regards unsold flats
N. Penalty/Charges/Fines are levied which are not specified in Bye
laws, Rules or MCS Act.