Documents for redevelopment should plug holes

Our society is contemplating redevelopment of the property. What should be the sequence of events?
First of all, a project management consultant should be appointed and the feasibility report should be prepared. Based on the feasibility report and expectations of the society, tender/quotation forms should be framed so that the offers come in a uniform manner. Scrutiny of the offer forms should be with reference to reasonable terms and clarity in offer as against vagueness.

When the developer is selected, a carefully drafted letter of intention (LOI) may be issued. Thereafter, the documents should be drafted by the consultant of the society in the best interests of the members and in an iron-clad manner. The documentation should be such that there is no vagueness, defaulter suffers so much that he does not misventure to default, possible loopholes in the process of redevelopment project should be plugged on consideration of construction and property laws and practical experiences. While structuring the redevelopment transaction, member should be treated as owner of the property rather than the society and all legal and tax implications analysed beforehand.

Model bye laws provide for purchase of parking space/stilt by flat purchasers. How do we reconcile this if the same are not salable by a builder?
Model bye laws are only the suggested, standard and model set of bye laws. It is not compulsory for a society to adopt the same in toto or any of the model bye laws. Legally, bye laws are the constitution of the society and are required on the aspects specified in the Maharashtra Co-operative Society Rules, 1961, and as may be considered necessary by a society. Like in a partnership firm, the partners are privileged to draft a partnership deed; in a company, the promoters are entitled to draft memorandum of association and articles of association of the company; in a trust, the trustees frame the trust deed.  Similarly, in case of a co-operative society, the constitution of the society being the bye laws can be drafted and adopted and amended from time to time by the promoters/ members within the framework of Maharashtra Co-operative Societies Act,1960, and Maharashtra Co-operative Societies Rules, 1961. The bye laws cannot override construction, properties and other applicable laws. Maharashtra Ownership Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer) Act, 1963, is a territorial act under which the apex court has decided that car parking spaces/stilts are not salable.

Therefore, the bye laws in respect of purchase of car parking spaces/stilts are not tenable in law and consequently are not valid. Similarly, bye laws provide that a committee shall comprise specific number of members. However, such number has to be construed as minimum because in the spirit and principals of co-operation, if a society wants to induct more members in a committee, the same cannot be prohibited. Similarly, the model bye laws provide elections at the interval of five years.

A society or committee members may think that five years is too long and consequently may opt for a shorter period either at the time of adoption of bye laws or by way of amendments thereafter. Model bye laws providing that an individual member will own five shares whereas a firm or a company member should own 10 shares is impracticable and devoid of logic. Such a rule becomes more impracticable at the time of transfer of a flat held by a firm/company to an individual and vice versa.

Tarun Ghia is a chartered accountant and can be reached at ghiatarun@rediffmail.com. Pradnya Vairale is an advocate and can be reached at advpradnyag@gmail.com.