Housing societies cannot overcharge: SC

The Supreme Court has upheld the notification issued by Maharashtra Government in 2001, which prevents co-operative housing societies (CHS) from demanding more than 10 per cent of the society’s maintenance charges as non-occupancy charges (NOC) from flat owners.

The maintenance charges are meant to cover the day-to-day expenditure for maintaining common amenities, cleanliness and common equipment in the society. Justice HK Sema and Justice Lokeshwar Singh Panta of the apex court expressed this view in the interim order passed on April 30, while hearing a Special Leave petition (SLP) filed by Mount Blanc CHS located at Peddar road. The SLP had challenged the March 2007 order of the Bombay High Court which upheld the 2001 circular.

The High Court had accepted the State’s contention that many societies were charging exorbitant amounts as NOC. The State had argued that its decision was aimed at preventing societies from recovering such unreasonable charges and encouraging release of locked-up premises for leave and license.

Asking the State to file its reply, the apex court in the interim relief, has allowed Mount Blanc (the petitioner) to collect 10 per cent of the rent receipt as NOC from the flat owners who lease their flats. The petition will come up for hearing next month.

The issue (of NOC) is a major bone of contention for thousands of CHS in the city. About 30 societies, which had challenged the circular in the High Court, argued that since the flat owners were charging exorbitant rents from total strangers whom they sub-let, the society had a right to collect NOC as decided by the society’s managing committee.

“Ten per cent of the services charges is peanuts. In a middle class society, where a flat owner pays Rs500 per month as maintenance charges, the amount of Rs50 does not cover even the administrative cost. It is naturally not a fair deal considering the tenant enjoys the same facilities like lift available to other flat owners,” says Mohanraj Y, a suburb-based society management consultant.

The State had estimated that there are around 65,000 flats, which are neither occupied by flat owners nor let out. In their defence, a senior officer of the Co-operative Department said that societies, especially those located in South Mumbai, were misusing the power given to them under the by-law to hike the NOC at their whims and fancies.

“In fact, societies used this power to make huge profits. In one case, a society had earned Rs2.5 lakh as NOC from 2 flat owners in 18 months,” the officer said. “The circular in fact brought uniform levy of NOC, without linking it to the income derived by the members who cannot occupy the flats,” he added.