Cooperative Appellate Court – Legal Fees Must Be Equally Shared

Judgment dated 12.10.2026 of the Maharashtra State Cooperative Appellate Court, Mumbai, Member-2 Shri A.S. Wanve, in A.O. No.64 of 2026 of Shri Dinananth Kanade and others  Vs. Vallab Darshan Cooperative Housing Society Ltd and others

Appellants/Disputants are members of the opponent No.1 Society which is a co-operative housing Society registered under the provisions of the Maharashtra Co-operative Societies Act, 1960 (M.C.S. Act). Opponent Nos. 2 to 9 are office bearers of the opponent No.1 society. Dispute is filed to challenge alleged high handed, arbitrary and patently illegal functioning, management and actions of the Opponents who are taking undue advantage of the posts of managing committee members, having indulged into various offenses of cheating, fraud, writing false and bogus accounts, falsification of accounts, financial irregularities and misappropriating the huge amounts of funds of the Society causing a loss of around Rs.3.08 crores.

Thereafter, the Disputants filed another interim application Exh.21 seeking interim relief to restrain the Society from levying legal fees and arbitrary bills, on the allegation that the Opponent Society in its AGM dated 03/09/2024, by agenda No.4 resolved that the legal expenses will be charged on the members who have put case on the managing committee from F.Y. 2023 as well as future financial years. The Disputants alleged that the said act of charging the legal charges against the Disputants’ only is unfair and against the bye-laws of the society. The Opponent Society has also issued maintenance bills adding the legal expenses for the month of Jun, July and August 2024 of Rs.71,429/- each and also in the bill some amount is charged as interest for late payment and interest arrears. These charges are illegal and charged in the maintenance bill of the Disputants only with a view to declare them as defaulter. Disputants prayed to restrain the Society from charging legal expenses and interest thereon in the maintenance bill.

Model Bye laws for co-operation housing societies, chapter IX provides levy of charges of the society. The relevant Bye law is 65, 66 (k) and 67(vi) and as per the model bye laws updated later on these bye law numbers changes as Model Bye law Nos.64, 65 (k) and 66 (vi). For ready reference these Bye-laws are reproduced hereunder:“64. The contribution to be collected from the Members of the Society, towards outgoing and establishment of its funds, referred to in these bye-laws as ‘the charges’ may be in relation to the following : (i) Property Taxes, (ii) Water Charges, (iii) Common Electricity Charges, (iv) Contribution to Repairsand Maintenance Fund, (v) Expenses on repairs and maintenance of the lifts of the Society, including charges for running the lift. (vi) Contribution to the Sinking Fund, (vii) Service Charges, (Viii) Car Parking Charges, (ix) Interest on the defaulted charges, (x) Repayment of the installment of the loan and interest, (xi) Non-occupancy Charges, (xii) Insurance Charges, (xiii) Lease rent, (xiv) Nonagricultural tax. (xv) Education and Training Fund (xvi) Election Fund (xvii) Any Other Charges 65. The Service charges of the Society referred to at 64 (vii) above shall include: a. ….. b. ….. k. Retainer fees, legal charges, statutory enquiry fees. 66. a. The Committee shall apportion the Share of each Member towards the charges of the Society on the following basis: i. ……. ii. …… vi. Service Charges: Equally divided by number of flats / units.” 21) In view of above mentioned bye laws, it is prima facie seen that legal charges are included in service charges of the Society and as perbye law service charges should be recovered by equally divided by number of flats / units. 22) In the light of Bye laws, it is prima facie seen that legal charges can be recovered equally from all members. For the sake of argument, if it is presume that the Society is empower to recover legal expenses from any particular member, by passing the resolution in its General body meeting, then also, it is necessary to give a chance to the concerned member to put up his defence before the General body and such charges will be charged in accordance with the directions of concerned Court or forum which adjudicate the dispute and pass the order in respect of the cost i.e. who has to borne the cost of proceedings. 23) It is prima facie seen that the Disputants have filed the proceedings against the managing committee of the Society which is in the nature of creating personal liability of payment on the managing committee members and the interim injunction application was partly allowed and the Disputants succeed in getting interim relief and after that the Society has debited the legal expenses in the bill of the Disputants from the month of June 2024. This conduct of Society prima facie shows that Society is adopting extra judicial methods against the Disputants to pressurize them and deprive them from pursuing the legal remedies. The act of Society to debit the legal expenses in the maintenance bill of the Disputants is not consequences of AGM resolution dated 03/09/2024, as the legal expenses are already debited in the maintenance bill of the Disputants in the month of June 2024, itself.

In view of above discussion, it is prima facie seen that the Opponent Society has debited the legal expenses in the maintenance bill of the Disputants without there being any resolution or proper procedure and it is prima facie seen that the legal expenses are debited in the maintenance bill of the Disputants as an extra judicial method against the Disputants to pressurize them and deprive them from pursuing the legal remedies and to declare them as a defaulter.