Relating to co operative society

This query is : Resolved

NIDHI KARIA (Querist)
Follow

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?

Amol S Joglekar

Amol S Joglekar (Expert)
Follow

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.

Message likes : 1 times

NIDHI KARIA

NIDHI KARIA (Querist)
Follow

04 January 2016 Thankyou so much Sir

Amol S Joglekar

Amol S Joglekar (Expert)
Follow

04 January 2016 for a case specific query you may contact me at my e mail id amolshankar@gmail.com

You are most welcome.

NIDHI KARIA

NIDHI KARIA (Querist)
Follow

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.

Amol S Joglekar

Amol S Joglekar (Expert)
Follow

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)

Message likes : 1 times

NIDHI KARIA

NIDHI KARIA (Querist)
Follow

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.

Amol S Joglekar

Amol S Joglekar (Expert)
Follow

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.

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now

Similar Resolved Queries

Unanswered Queries

Popular
Recent

Trending Online Classes

Direct Tax Laws & International Taxation May 26,Sept 26 & Jan 27

CA Arvind Tuli

Enroll Now
Audit Fast Track Recorded Batch For May 26,Sept 26 & Jan 27

CA Aarti Lahoti

Enroll Now
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English

CA Bhanwar Borana & CA Shubham Keswani

Enroll Now

view all classess

Meet our CAclubindia PRO Members

Aayesha mulani

K.S. ANANTHARAJAN

Shailesh Prajapati

K.M. AGGARWAL

Kamaljeet Kaur

Subscribe Now

Relating to co operative society

Similar Resolved Queries

Trending Online Classes

Meet our CAclubindia PRO Members

Quick Links

Browse by Category

Latest Job Openings

Senior Executive

GST CONSULTANCY

GST CONSULTANT

Accountant

CA Final

Manager- Finance and Compliance