Relating to co operative society
This query is : Resolved
04 January 2016
If a member of a co operative Society has not paid the maintenance charges since 2007 and he is liable to pay along with interest. In 2010 he paid an amount of 1,00,000 which has been adjusted as the interest since interest payment is more than the principal. is this correct?
04 January 2016
You need to see the approved bye laws of the said society, if it has any procedure laid down for charging interest and setting off of money received first against interest or against maintenance charges.
In the absence of such a rule passed by the society, the natural rule will prevail. By any stretch of imagination, earining interest can NOT be said to be the objective of co operative society. So, in order to avoid the interest on interest, the money should have been set off against manitenance charges.
In the absence of such a rule passed by the society, the natural rule will prevail. By any stretch of imagination, earining interest can NOT be said to be the objective of co operative society. So, in order to avoid the interest on interest, the money should have been set off against manitenance charges.
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04 January 2016
Thankyou so much Sir
04 January 2016
for a case specific query you may contact me at my e mail id amolshankar@gmail.com
You are most welcome.
You are most welcome.
04 January 2016
Sir since interest charged is simple interest in case of a co operative society the charge of interest on interest would not arise. Will it still be incorrect if interest has been adjusted first.
04 January 2016
See, let us be case specific.
The normal way of charging interest is on monthly basis. which is slightly higher than the rate of interest for the bank deposits. It is bit punitive i nature.
Now the other vertex is...... if a maintenance charges remain unpaid by any member for a continuous period of 6 months, his membership is liable for cancellation.
So I said, keeping in view the various such to and fro provisions, the decision is required to be taken.
(Your point is valid, if there is no any element of interest on interest, then maintenance charges and interest rank pari passu)
The normal way of charging interest is on monthly basis. which is slightly higher than the rate of interest for the bank deposits. It is bit punitive i nature.
Now the other vertex is...... if a maintenance charges remain unpaid by any member for a continuous period of 6 months, his membership is liable for cancellation.
So I said, keeping in view the various such to and fro provisions, the decision is required to be taken.
(Your point is valid, if there is no any element of interest on interest, then maintenance charges and interest rank pari passu)
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04 January 2016
Ok sir then I take this as considering the interest as a penalty the co operative society is correct in adjusting it as interest and not maintenance charges.
04 January 2016
basically you need to check the bye laws. If bye law is silent, the member can direct the society to do a particular thing...say adjust against interest or maintenance charges.
in the absence of any such specific instruction from member, the society is free to adjust the same as it deems fit, subject to however, our above discussion.
in the absence of any such specific instruction from member, the society is free to adjust the same as it deems fit, subject to however, our above discussion.
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