Housing societies can decide on use of sinking fund – ET RealEstate

MUMBAI: Housing society members need not approach cooperatives department for permission to use the sinking fund for other purposes, like repairs and painting.

Cooperatives sector experts said as per a model bylaw of 2014, even if the general body decides on using it by defining its purpose, there is no need for the society to seek the deputy registrar or coop department’s nod. Such permission was mandatory prior to 2014.

The advice came in the backdrop of the arrest of a senior official of cooperative registrar’s office, Bharat Kakad (57) and his son Sachin (32) by Anti-Corruption Bureau while accepting a bribe of Rs 2 lakh and two saris worth Rs7,600 on Monday. The complainant was chairman of Rolex Apts Society, Malad, that had sought permission to use the sinking fund.

“Sinking fund can be utilized by the society for non-routine capital expenditure without permission of the registrar, subject to approval of the general body via a notice, agenda, resolution, under provision,” said Jeby Patel of All-India Cooperative Housing Societies Association (AICHSWA).

Ramesh Prabhu, president of Maharashtra Societies Welfare Association (MahaSeWA), said there was no need to replenish the accumulated sinking fund even as collection of future sinking funds will continue. But the utilisation must be reflected in the balance-sheet and sinking fund registrar, Patel added. “Had society members knew about the law, the incident could have been avoided,” said Prabhu.

Reports said the Malad society was in need of funds to carry out repairs as it allegedly fell short on collecting maintenance. The society chairman and secretary approached Kakad to approve use of the sinking fund, an amount kept in reserve in the society’s fund for contingencies. Kakad, who also operated from a private office close to his department, reportedly threatened them that he would get them to resign citing “failure” in collecting maintenance from members, and thus allegedly forced them to bribe him against permission, which was not in his jurisdiction.

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