Non Occupancy Charges should be 10% of Service Charges By Societies

lawBy Advocate S R Agarwal

Accommodation Times Bureau

The levy of non-occupation charges has been a
controversial issue for a long time, which resulted into
disputes between members and the Societies flooding
the offices of the Deputy Registrar and the Courts.
Therefore, attempts have been made by the State Govt
from time to time to regulate it. The commissioner for Cooperative
Societies, Maharashtra State, issued a Circular
on 13.3.1992 laying down that the Societies could levy
non-occupation charges upto a maximum of 25% of
service charges and, accordingly, clause No: (C) of Byelaw
No: 45 (2) (iii) of the old bye-laws was replaced by
the following words.
“He shall pay non-occupancy charges to the Society at a
rate of not exceeding 25% of the service charges as will
be determined by the meeting of General body of the
This Circular was challenged in Writ Petition No: 1618 of
1993, but it was disposed off as the said Circular was
withdrawn. In exercise of the powers vest in the State
Government under Section 79 A of the Maharashtra Co-
Operative Societies Act, the State Government issued
an Order on 9.3.1995 laying down that the non occupation

charges shall not be fixed beyond 100% of the
maintenance charges. But this Order was also challenged
in Writ Petition No: 1398 of 1996. Therefore, the State
Government appointed a Committee on 19.6.1997 to look
into the whole gamut of non-occupancy charges. The
Committee submitted its report to the State Govt on
31.7.1998 and when the said Writ Petition came up for
hearing in January 2000, it was dismissed as withdrawn,
as the State Govt submitted that the report of the said
committee was under consideration of the State
Government and, in the meanwhile, the earlier Order
dated 9.3.1995 was not being applied.
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 said Act, there
by directing the Societies not to charge non-occupancy
charges beyond 10% of the Service charges (excluding
Municipal Taxes). Agian a number of the Societies led by
Palm Beach Riviera CHS Ltd., challenged this
Government Order dated 1.8.2001, fixing the non occupancy
charges not more than the 10% of the service
charges, before the Hon’ble High Court during the years
2002 and 2006 on various grounds such as, that this
Order was against the interest of the Societies, arbitrary,
not in public interest and unwarranted interference in the
affairs of the Societies and there is no legislative policy
enabling the Govt or Registrar to override the bye-laws

of the Societies duly approved by the Registrar enabling
the General Body to fix the non-occupancy charges
payable by the members and that the said Order may
enable a member to use the flat as a vehicle for carrying
out the object of earning money, thereby defeating the
spirit of the co-operative housing.
The State Government, justifying the Order dated 1st
August 2001, submitted before the Hon’ble High Court
that it has been issued in exercise of statutory powers
under Section 79 A of the said Act in public interest as it
serves the interest of the Societies, as well as the
members, because by virtue of a bruit 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 and on the
basis of the income earned by such members, which
amounted to levying the tax on income of the members
and in some cases at the rate of per sq.ft. of the area of
the Flat and the complaints were received by the Govt.
that in case of a few societies, the non-occupancy
charges recovered in respect of two flats were being
utilized towards the property taxes for the remaining 47
members, who were not required to pay anything towards
the Property Tax and the non-occupancy charges
recovered from three to six flats were more than the
property tax bill of the entire society, which levied these
charges @ of Rs. 9/- per sq. ft per month. Therefore, the

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