Sinking Fund Method & Related Laws - Co Operative Housing So


05 November 2010  

Any building require some or the other kind of repairs after every 6-10 years. Depending upon the nature of the repairs to be undertaken, the cost may start from about Rs 1 lakh to Rs 2 lakh and can go as high as Rs 15 lakh to Rs 20 lakh. While the funds for a small repair job can raised, sometimes members may have a problem raising funds for serious structural repairs.

Members though, do have a reprieve if the society is unable to raise funds. Under the Cooperative Societies Act, all cooperative housing societies should collect a sinking fund, so that, when the society's building is in need of repair or reconstruction, the society can use money from the sinking fund. As per bylaw no 14 (c), when there is a need to withdraw money from the sinking fund, it is necessary to get a prior permission of the registering authority. To do this,

·         Firstly, an architect should be appointed at a general body meeting to inspect the building and to specify the nature of the structural repairs.

·         Then, the society should enter into a contract with the architect subject to the terms and conditions approved by the general body meeting. The architect should prepare plans and estimates, with specifications of structural changes required to be carried out.

·         On receiving the report which includes the plan estimates and specifications from the architect the managing committee of the society should invite tenders for the works in consultation with the architect. The committee should then examine the tenders received and make its recommendations on which tender should be accepted.

·         The plans, the estimates with specifications, the tenders received and the committee’s report should now be placed before a general body meeting. The general body can now authorize the committee to make an application to the registering authority for permission to draw the required amount from the sinking fund and to create additional charge on the sinking fund investment, to the extent required.

·         The society can then enter into a contract with a contractor whose tender has been accepted on the terms and conditions set out by the general body.