Mont Blanc Co-operative Housing Society Limited, Being a Cooperative Society Registered Under the Maharashtra Co. Operative Societies Act, 1960 and Shri Vilas Doshi Vs. the State of Maharashtra (Notice to Be Served) Through the Secretary to the Government of Maharashtra, Co-operation and Textiles Dept. and ors. - Court Judgment

B.H. Marlapalle, J.

1. This petition filed under Article 226 of the Constitution of India prays for a writ of certiorari or an order/direction in the like nature to quash and set aside the Government Order dated 1/8/2001 issued in public interest under Section 79A of the Maharashtra Co-operative Societies Act, 1960 (for short the Act) thereby directing the co-operative housing societies registered under the Act not to charge non occupancy charges beyond 10% of the service charges (excluding municipal taxes).

2. The factual matrix leading to this petition could be briefly stated as under:

The Commissioner for Co-operative Societies, Maharashtra State, issued a Circular on 13/3/1992 laying down that the co-operative housing societies may levy non occupancy charges upto a maximum limit of 25% of the service charges collected from the member and accordingly the first sentence in Clause (c) of bye-law No. 45(2)(iii) to be replaced with the following words,

He shall pay non occupancy charges to the society at a rate not exceeding 25% of the service charges as will be determined by the meeting of the General Body of the society. This Circular came to be challenged by the petitioner-society and one of its members in Writ Petition No. 1618 of 1993 filed on the Original Side of this Court. But the said petition came to be disposed as withdrawn as the impugned Circular was also withdrawn. In the General Body meeting of the petitioner No. 1-society held on 4/2/1995, it was resolved that the non occupancy charges payable under bye-law No. 45(2)(c) should be levied at Rs. 9/-per sq. ft. per month. On 9/3/1995 the State Government issued an order under Section 79A of the Act laying down that the non occupancy charges shall not be fixed beyond 100% of the maintenance charges levied per month and this order came to be challenged in Writ Petition No. 1398 of 1996. On 24/1/2000 when the said petition came up for hearing, the learned Counsel appearing for the State submitted that the State Government had asked the Commissioner for Co-operation to appoint a Committee to examine the question relating to non occupancy charges by the co-operative societies and in response thereto the Commissioner had appointed a Committee on 19/6/1997. It was further submitted that the Committee's report was submitted to the State Government on 31/7/1998 and it was under consideration by the State Government and in the meanwhile the order dated 9/3/1995 issued under Section 79A of the Act and impugned in the writ petition was not being applied. This Court (Single Bench), therefore, dismissed the petition as withdrawn with liberty to challenge the fresh decision that would be taken by the State Government in relation to non occupancy charges upon consideration of the Committee's report and also declared the order dated 9/3/1995 rendered as inoperative. The State Government issued the impugned order and consequently the Deputy Registrar, Co-op. Societies, 'D' Ward, Mumbai issued a Circular dated 13/8/2001 appealing the co-operative housing societies to adopt the amended bye-laws. This Circular dated 13/8/2001 has also been challenged in the instant petition.

3. The crux of the petitioners' challenge to the impugned order is on the grounds that the said order is against the interest of the co-operative housing societies, arbitrary, not in public interest, unwarranted interference in the affairs of the societies, violative of the provisions of the Act and it is illegal and void ab initio. The petitioners mainly rely upon a division bench judgment of this Court in the case of Karvenagar Sahakari Griha Rachana Sanstha Maryadit, Pune and Anr. v. State of Maharashtra and Ors. : AIR1989Bom392 , which came to be confirmed by the Apex Court in the case of State of Maharashtra and Ors. v. Karvenagar Sahakari Griha Rachana Sanstha Maryadit and ors. : JT2000(8)SC68 . In short, it is contended that the order dated 1/8/2001 is against the interest of the members of the society whose views are paramount and secondly there is no legislative policy either under Section 79A of the Act or otherwise enabling the State Government or the Registrar to override the bye-laws of the societies duly approved by the Registrar under the said Act enabling the General Body of the members to fix the non occupancy charges payable by the members who, for some reasons or the other, do not occupy the residential dwellings. It is also alleged that the impugned order is contrary to the norms laid down in respect of subordinate legislation. It is also alleged that the impugned order may enable a member to use the flat as a vehicle for carrying out the object of earning money and thus defeat the spirit of co-operative housing. Lastly, it is contended that though the impugned order is claimed to be in public interest, no material is produced by the respondents to show that public interest has been served by the same. Reliance has been placed on the statement of objects and reasons for incorporating Section 79A in the scheme of the Act and it has been argued that the Government had no power to issue the impugned order as the power is already vested in the Registrar under Section 14 of the Act.

4. The respondents State authorities while pointing out that similar challenge has been raised in several other writ petitions, including Writ Petition No. 620 of 2003, has opposed the challenge raised to the order dated 1/8/2001 by filing an affidavit in reply. At the same time, the detailed affidavit in reply filed in Writ Petition No. 620 of 2003 has also been adopted. It is stated that the impugned order has been issued while exercising statutory powers under Section 79A of the Act in public interest in as much as the said order serves the interests of the co-operative housing societies as well as the members. The State claims that a large number of complaints were being received by its authorities from the members of the co-operative housing societies alleging that by virtue of a brute majority and with a view to extract more money from the members not occupying the flats, non occupancy charges were being imposed at whimsically exorbitant rates and on the basis of the income earned by such members and such imposition virtually amounted to levying tax on the income of the member. The co-operative housing societies were alleged to be exercising its authority arbitrarily for collection of non occupancy charges causing serious hardships to the members of the co-operative housing societies who were not in a position to occupy the premises allotted to them for their bonafide personal reasons and who were, in fact, permitted their flats to be occupied on leave and licence basis out of necessities. There were also complaints with regard to the demand of unreasonable amount as transfer fee or donation from members when they sought to transfer their flats. Under these circumstances the State Government was satisfied about the need in public interest and for the purpose of securing proper implementation of the co-operative principles as well as to secure the proper management of the business of the co-operative housing societies generally to take some decisions so as to issue directions in regard to the imposition of non occupancy charges. The State Government was satisfied that for preventing the affairs of the society being conducted in a manner detrimental to the interest of the members and to avoid spate of litigation/complaints being received from the members of the co-operative housing societies, it was imperative to issue directions and, therefore, to begin with, a committee was constituted for studying the issue of levying non occupancy charges and to make recommendations so as to bring out a uniform policy. The Committee submitted its report on 31/7/1998 and the data collected by the Committee indicated that co-operative housing societies all over the State were charging different amounts towards the non occupancy charges and such different rates being levied were giving rise to disputes, as a result of which the office of the Deputy Registrar for Co-operative Housing Societies was clogged with numerous complaints relating to exorbitant non occupancy charges. The need for intervention by the Government was also admitted in the report of the Committee. The said report was considered and the State Government found it appropriate to accept some of the recommendations and more particularly levying of uniform rate of non occupancy charges all over the State of Maharashtra without linking the said charges to rateable value or the income derived by the member concerned. As per the State Government, charging of such exorbitant non occupancy charges means unjust enrichment of majority members at the cost of the members who had not occupied their flats. Two specific examples have been given, pointing out that the members who were not able to occupy the flats and given on leave and licence were being made to pay such huge amounts that the co-operative housing societies concerned started making money/profits from such charges. It has been pointed out that Bhartiya Friends Co-operative Housing Society Ltd. in Writ Petition No. 1374 of 2002 had collected a sum of Rs. 2,50,578/-during the period from August 2002 to January 2004 only from two out of 49 flats which were not occupied. The remaining 47 members were not required to pay anything towards the property taxes and, in fact, their property taxes were borne from the amounts collected from the remaining two members. This was highly unethical, unjust and arbitrary as per the State Government. Similar was the case of the present petitioner-society which has in all 51 flats and from the years 1999-2000 to 2003-2004 the total flats let out were between 3 to 6, whereas the amount of non occupancy charges collected varied from Rs. 3,03,804/-to Rs. 24, 73,488/-. As against this amount the total property taxes bill of the entire society comes to Rs. 16,55,986/-per annum and at the time when the impugned order is issued the petitioner-society was admittedly charging non occupancy charges at the rate of Rs. 9/- per sq. ft. per month.

5. The respondents State authorities claim that the impugned order dated 1/9/2001 is aimed to achieve the following objects:

(a) The disputes between members and societies in respect of non occupancy charges were clogging the Court's and Office of Registrar. This source of disputes comes to an end.

(b) A society and its members are stopped from profiteering at the cost of the concerned member who gives his flat on leave and licence/rental basis. The impugned order prevent unjust enrichment.

(c) The order prevents Society from acting to the detriment of the member who gives his flat on leave and licence basis.

(d) It protects minority members from oppression by majority. The power under Section 79A can be used to protect minority members.

(e) A flat is the property of a member concerned and he is entitled to return from the same as he has invested his money for acquiring the same.

The justification to fix 10% of the service charges as non-occupancy levy is set out as follows:

(a) Society does not spend any extra money on account of member giving his flat on leave and licence or rental basis and therefore society is only entitled to a nominal amount as non-occupancy charges.

(b) The Notification in question is a policy of the Government. The said Notification will help the Government in solving the housing problem.

(c) The exorbitant non-occupancy charges run counter to the basic concept of co-operative movement.

(d) There should be uniformity in the entire state as regards non-occupancy charges.

6. Section 14 and Section 79A of the Act are reproduced as under:

14. Power to direct amendment of bye-laws

(1) If it appears to the Registrar that an amendment of the bye-laws of a society is necessary desirable in the interest of such society, he may call upon the society, in the manner prescribed, make the amendment within such time as he may specify.

(2) If the society fails to make the amendment within the time specified, the Registrar may after giving the society an opportunity of being heard and after consulting such State federal society as may be notified by the State Government, register such amendment, and issue to the society a copy of such amendment certified by him. With effect from the date of the registration of the amendment in the manner aforesaid, the bye-laws shall be deemed to have been duly amended accordingly; and the bye-laws as amended shall, subject to appeal (if any), be binding on the society and its members.

79A. Government's power to give directions in the public interest, etc.

(1) If the State Government, on receipt of a report from the Registrar or otherwise, is satisfied that in the public interest or for the purposes of securing proper implementation of co-operative production and other development programmes approved or undertaken by Government, or to secure the proper management of the business of the society generally, or for preventing the affairs of the society being conducted in a manner detrimental to the interests of the members or of the depositors or the creditors thereof, it is necessary to issue directions to any class of societies generally or to any society or societies in particular, the State Government may issue directions to them from time to time, and all societies or the societies concerned, as the case may be, shall be bound to comply with such directions.

(2) The State Government may modify or cancel any directions issued under sub-section (1), and in modifying or cancelling such directions may impose such conditions as it may deem fit.

(3) Where the Registrar is satisfied that any person was responsible for complying with any directions or modified directions issued to a society under sub-sections (1) and (2) and he has failed without any good reason or justification, to comply with the directions, the Registrar may by order

(a) if the person is a member of the committee of the society, remove the member from the committee and appoint any other person as member of the committee for the remainder of the term of his office and declare him to be disqualified to be such member for a period of six years from the date of the order;

(b) if the person is an employee of the society, direct the committee to remove such person from employment of the society forthwith, and if any member or members of the committee, without any good reason or justification, fail to comply with this order, remove the members, appoint other person as members and declare them disqualified as provided in clause (a) above:

Provided that, before making any order under this sub-section, the Registrar shall give a reasonable opportunity of being heard to the person or persons concerned and consult the federal society is affiliated. Any order made by the Registrar under this section shall be final.

Rule 10 of the Maharashtra Co-operative Societies Rules, 1961 deals with the classification and sub-classification of societies and so far as the housing societies are concerned they have been divided in three sub-classes, namely, (a) Tenant Ownership Housing Society, consisting of Housing Societies where land is held either on lease-hold or free-hold basis by Societies and houses are owned or are to be owned by members, (b) Tenant Co-partnership Housing Society, consisting of Housing Societies which hold both land and buildings either on lease-hold or free-hold basis and allot them to their members and (c) Other Housing Societies which consist of House Mortgage Societies and House Construction Societies.

7. The bye-laws adopted by the petitioner-society at the relevant time provide for sub-letting etc. flats under bye-law No. 45 and the same reads as under:

45. (1) A member may, with the previous permission in writing of the Committee, sub-let or give on leave and licence basis or care-taker basis his flat or part thereof or part with its possession in any other manner under the following circumstances:

(i) Where the member is required to go out of the area of operation of the society for a long duration on account of exigencies of service or business or on account of the prolonged illness;

(ii) Where the member is unable to occupy the flat owing to absence of facilities for education of his children or is unable to secure admission to the school in the locality for them.

(iii) Where his employer, with a view to ensure efficient discharge of duties, requires him to stay in the accommodation allotted to him by his employer.

(iv) Where a member satisfies the Committee about his inability to occupy or continue to occupy the flat for any other genuine reasons;

(2) No member shall be permitted by the Committee to sub-let, give on leave and licence basis or care-taker basis his flat or any part thereof or part with its possession in any manner unless:

(i) he has made an application in the prescribed form;

(ii) he has furnished the application for nominal membership of the proposed sub-lettee, licensee, care-taker or possessor in the prescribed form;

(iii) his application contains the undertaking that

(a) he shall, by joining the society as a party to the proceedings, initiate necessary legal proceedings against the sub-lettee, licensee, caretaker or possessor, on the failure to get vacant possession of the flat or part thereof on expiry of the period of sub-letting, giving on leave and licence or care-taker basis the flat or part thereof or parting with its possession in any other manner and meet the cost of the legal proceedings required to be incurred by the society;

(b) he shall pay the charges of the society every month during the period of sub-letting, licence etc.;

(c) he shall pay non-occupancy charges to the society at such rate as is decided by the meeting of the general body of the society;

Provided that while permitting sub-letting, giving on leave and licence or care-taker basis the flat or part thereof or permitting parting with its possession in any other manner, the Committee shall restrict the period thereof to 11 months, which may, on the request of the member be extended for similar period or part thereof from time to time.

The State Government amended the model bye-laws subsequently and Clause 43 of the amended bye-laws reads as under:

43. (1) A member may, apply to the society, of his intention of sub-letting of his flat and on receipt of the permission in writing of the Committee, sublet or give on leave and licence basis or care-taker basis his flat or part thereof or part with its possession in any other manner under the following circumstances:

(i) Where the member is required to go out of the area of operation of the society for a long duration on account of exigencies of service or business or on account of the prolonged illness;

(ii) Where the member is unable to occupy the flat owing to absence of facilities for education of his children or is unable to secure admission to the school in the locality for them;

(iii) Where the employer, with a view to ensure efficient discharge of duties, requires him to stay in the accommodation allotted to him by his employer;

(iv) Where a member satisfies the committee about his inability to occupy or continue to occupy the flat for any other genuine reasons.

(2) No member shall be permitted by the Committee to sub-let, give on leave or licence basis or care-taker basis his flat or any part thereof or part with its possession in any manner unless:

(i) he has made an application in the prescribed form;

(ii) he has furnished the application for nominal membership of the proposed sub-lettee, licensee, care-taker or possessor in the prescribed form;

(iii) his application contains the undertaking that

(a) he shall, by joining the society as a party to the proceedings initiate necessary legal proceedings against the sub-lettee, licensee, care-taker or possessor, on his failure to get vacant possession of the flat or part thereof on expiry of the period of sub-letting giving on leave and licence or care-taker basis the flat or part thereof or parting with its possession in any other manner and meet the cost of the legal proceedings required to be incurred by the society;

(b) he shall pay the charges of the society every month during the period of sub-letting, licence, etc.

(c) he shall pay non-occupancy charges to society. Non-occupancy charges shall be charged in accordance with the circular issued by the Government of Maharashtra/Commissioner for Co-operation from time to time and shall not be levied if the flat is occupied by the 'Family' of the member as defined under these bye-laws. Provided that while permitting the sub-letting, giving on leave & licence or care-taker basis the flat or part thereof or permitting parting with its possession in any other manner, the Committee shall restrict the period thereof to 11 months or for more period as desired by the Managing Committee which may, on the request of the member be extended for similar period or part thereof from time to time.

(d) Non-occupancy charges shall not be levied to the flat purchaser who is intending to become a member and who submits the documentary evidence thereof.

8. At the same time it is necessary to note that in the old bye-laws as well as amended model bye-laws there is a specific provision for disposal of applications for sub-letting etc. and for restriction on assignment of occupancy rights in the flats. They are in bye-law Nos. 46 and 47 of the old model bye-laws whereas bye-law Nos. 44 and 45 in the amended model bye-laws. The procedure remains the same and it states, no member of the society shall assign, mortgage or create any charge on his occupancy right in the flat without the previous permission in writing of the Committee, provided that such permission of the society will not be required for assigning, mortgaging or creating any charge on the occupancy right in the flat for the purpose of obtaining loan, either for purchase of the flat or for liquidating the liability incurred by him for the said purpose by way of loan or advance from the employer of the member or from the Life Insurance Corporation of India or from a Bank or the Society or any other agency approved by the Commissioner for Co-operation and Registrar, Co-operative Societies, Maharashtra State. Thus, the bye-laws themselves enable any member of the society to assign, mortgage or create any charge on the occupancy right in the flat with the previous permission in writing of the Committee and giving the flats on leave and licence basis or by any other mode to non members is not prohibited per se.

9. Section 79A was inserted in the Act by Maharashtra Act No. 27 of 1969 and its constitutional validity has been upheld by this Court in the case of Sangli Zilla Nagri Bank's Association v. State of Maharashtra 1989 Mh.L.J. 173 and Hingna Taluka Sahakari Shetki Kharedi Vikri Sansatha v. State of Maharashtra 1993 (2) Mh.L.J. 1716. Any decision of the State flowing from a statutory provision, as has been held in the case of State of U.P. and Ors. v. Hindustan Aluminium Corporation and Ors. : [1979]3SCR709 , can be challenged on any of the following grounds, namely,

(a) the power to make the rule could not have been exercised under the circumstances which were or, prevailing at the time when it was made; legislation

(b) the did condition precedent not to the making exist; ofor

(c) the authority which made the order was not competent to do so; or procedure

(d) the prescribed order by is not in the accordance law; with theory parent Act;

(e) the order is outside the scope of theory legislation.

(f) the order was in violation of any existing We impugned of the accordance whether are, therefore, required to examine order has been passed within State Government, whether it has with the procedure prescribed the order is outside the scope it is in violation of any whether the competence been passed in by the law, of the Act and existing statutory provision. We also need to examine whether in fact the impugned order has served public interest, it is in the interest of members, it has not deprived the housing societies from their legal and just earnings, and it prevents mismanagement of the societies and curbs avoidable litigation and disputes among the members. We also need to examine the challenge on account of arbitrariness.

10. The Committee constituted by the State Government in its recommendations suggested to levy non-occupancy charges to a member out of his gross earnings from the premises which were not occupied by that member but were allowed to be used by a stranger or a third person for certain agreed consideration and further provided that such charges would not be levied if the premises were used by any members of the family like wife, husband, father, mother, son, daughter (married or unmarried), brother and sister. In its observations it found that in some area levying of non-occupancy charges had become a profit making business by earning income from the members who had not occupied the flats and the Committee, therefore, suggested that the co-operative housing societies ought to be discouraged from earning profits as it was not the motive behind establishing such societies. The main object of the housing societies is to provide dwelling houses to its members and the members are supposed to participate in the functioning of the societies. It, therefore, suggested that an amount equal to total earnings i.e. total monthly expenditure incurred by the society towards various items of charges and taxes or 10% of the gross earnings as agreed between the member and the user of the premises, whichever is more. The Committee recorded its opinion that the linking of non-occupancy charges to rate able value determined by the Municipal Corporation/Council would not be justifiable because rate able value in respect of old buildings, even in 'A' Class locality is very low, whereas rate able value in respect of new buildings, even in 'C' class or other under developed or undeveloped area is comparatively higher. Similarly, in 'A' class area or developed area the prevailing market rates of the premises would be very attractive, whereas in the developing areas they would be comparatively less.

11. The State Government considered these recommendations and also invited opinion of the Urban Development Department and it accepted the recommendations of the Committee that the levy of non-occupancy charges should not be linked with the rate able value. It also noted, as a matter of fact, that the rent received on the flats would not be similar in different localities and it may be possible that in the same building, two similar flats may not derive the same rent. In addition, charging of leave and licence fees or rental amount was not based on any scientific formula and under these circumstances, levying of non-occupancy charges linked with the income derived from the flat would not be appropriate. In the impugned order dated 1/8/2001 the Government, therefore, issued the following directions by exercising its powers under Section 79A of the Act in public interest:

(a) Government Order No. CHS-1094/15165/C. No. 317/14-C dated 9th March, 1995 shall stand cancel from the date of issue of this order.

(b) Assessment of the non-occupancy charges should not be more than 10% of service charges (excluding the Municipal Corporations taxes).

(c) The assessment of Non Occupancy charges should not be done to members having given their gala/residence to their mother, father, sister, brother, son, daughter, son-in-law, daughter-in-law, grandson, grand-daughter etc., close relatives and other relatives as approved by the society.

(d) This order shall be applicable to all residential and commercial gala/residences in the co-operative Housing societies of the state.

(e) All the Housing Societies in the state should take necessary action to make appropriate changes as above in their rules/bye-laws. In case of changes as above if not made, the non occupancy charges should not be assessed more than the mentioned maximum limit in this order, effective from date of issue of this order.

(f) The said order shall be implemented from the date of its issue.

12. Section 79A of the Act clearly states that if the State Government, on receipt of a report from the Registrar or otherwise, is satisfied that in the public interest or for the purpose of securing proper implementation of co-operative production or for preventing the affairs of the society being conducted in a manner detrimental to the interest of the members, it is necessary to issue directions to any class of societies generally, it may issue directions to them from time to time and all societies concerned shall be bound to comply with such directions. As per subsection 2 of Section 79A the State Government may modify or cancel any directions issued as above and in modifying or cancelling such directions may impose such conditions as it may deem fit. Subsection 3 of Section 79A provides for a penal action for failure in complying with any directions or modified directions issued to a society under subsections 1 and 2 and failed without any good reasons or justifications to comply with the directions. Whereas Section empowers the Registrar to call upon the society in the manner prescribed to make the amendments in its bye-laws if the same is found to be desirable in the interest of such society and amendments are required to be made within such time as he may specify. In the case of Karvenagar Sahakari Griha Rachana Sanstha Maryadit (Supra), the Registrar had issued directions on 19/1/1985 to the effect that the tenant ownership type of co-operative housing societies should amend their bye-laws so as (i) to enable the plot holders to construct multi-storied building with more than one residential tenement on their plots and (ii) to form a society of the owners of the flats of the multistoried building which shall be a member of the housing society and be represented by its representative in the housing society. When it was informed by the Registrar that the amendments as directed were not carried out, he issued a Circular on 5/12/1985 threatening to take action under Section 14(2) of the Act. These directions/circulars were challenged by the housing societies, inter alia, on the grounds that they completely destroy the basis of such societies and would encourage commercialisation of housing schemes which is meant for individuals on the basis of the tenant-ownership and that they were without authority of law and violative of Article 19(1)(c) of the Constitution. The societies succeeded before this Court and, therefore, the State Government approached the Apex Court. The objects and bye-laws of the society were considered by the Apex Court and it held that though the power is conferred to direct amendment of the bye-laws of the society, yet the paramount consideration, while amending the bye-laws, is the interest of the society. So also the power of the State Government to issue directions in public interest cannot be exercised so as to be prejudicial to the interest of the society. The Apex Court further observed,..In our view, what is in the interest of the society is primarily for the society alone to decide and it is not for an out-side agency to say. Where, however, the Government or the Registrar exercises statutory power of issuing directions to amend the bye-laws, such directions should satisfy the requirement of the interest of the Society....

The petitioners have relied upon the judgment in the case of Zoroastrian Cooperative Housing Society Ltd. and Anr. v. District Registrar, Cooperative Societies (Urban) and Ors. : AIR2005SC2306 . In our considered opinion the said judgment is not applicable in the instant case.

In the case of Sahabro Kacharu Patil and Ors. v. Collector, Aurangabad and Ors. 1983 Mh.L.J. 476, a Division Bench of this Court, regarding the scope of Section 79A of the Act, stated thus:

It can then be seen that Section 79A of the said Act deals with the powers of the Government to give directions in public interest. This section only shows that these directions are issued to the Co-operative Societies for the purpose of securing proper implementation of the co-operative production and other development programmes. They are concerned with the business of the affairs of the society being conducted in a manner detrimental to the interests of the members, or of the depositors or the creditors thereof. The Government is also empowered under this section to modify those directions.

13. The view taken by this Court in Karvenagar Sahakari Griha Rachana Sanstha Maryadit (Supra) was in respect of the directions issued by the Registrar, Co-operative Societies calling upon to amend the bye-laws and the amendments so sought were not only against the bye-laws but also against the aims and objectives of the housing societies concerned. It is not the petitioner's case that its aim and objective is to collect exorbitant charges by way of non-occupancy from its handful of members and thereby raised such an income so that even the property tax liability of all other members is taken care by such income. It needs to be noted that before letting out the premises on leave and licence or on tenancy basis to any third party, it is necessary for the member concerned to obtain the society's no objection in writing and while applying, undoubtedly, the member is also required to show the reasons forcing him not to occupy the flat for the time being. Looking at the housing costs even as at present, the member concerned must be allowed to earn some income on the investment he has made in purchasing the flat, though such an investment cannot be allowed to be for profit making by such member. In addition, the Government in its affidavit has also come out with an acute problem of housing buildings in urban areas and it is common knowledge that a good number of flats remained unoccupied for various reasons. If the petitioners-society and other similarly placed societies are allowed to charge non-occupancy charges at the rates the majority decides, it would be an additional impediment in such flat being available on leave and licence or on tenancy basis. Giving such flat on leave and licence and/or tenancy basis does not in any way violate the provisions of Maharashtra Ownership of Flats Act (MOFA). The Government has also pointed out that the brute majority of members has passed resolutions and decided to levy the non-occupancy charges at exorbitant rates in a society of 50 members, non-occupancy charges collected from five individuals are good enough to take care of all the financial liabilities of the society in its entirety including the municipal taxes. Not only this, but in some cases it has been shown that the majority of the members were in receipt of the dividend from the society and the income is derived mainly from the non-occupancy charges. The State Government is, therefore, right in saying that the spate of litigations and the representations received from the Registrar was considerably high and, therefore, it was a clear case of mismanagement of the business of co-operative housing societies and it was necessary for the Government to take appropriate steps to prevent the affairs of the society being conducted in a manner detrimental to the interest of the members who were in minority. It is, therefore, absurd to state that the Government acted arbitrarily or against the interest of the co-operative housing societies by directing that there will be a uniform rate of non-occupancy charges all over the State of Maharashtra i.e. 10% of the service charges.

14. The term 'service charges' has also been defined in the bye-laws and it does not include the municipal taxes. By and large the outgoings on the common amenities/service could be included within the meaning of service charges. For example house keeping of the premises, electricity charges for the pump and light etc. in the premises, including the stair-cases, security charges, garden maintenance, payment of staff salaries and so on and so forth. The burden of such charges is required to be borne by every member, whether such member is occupying the flat or not. However, the bye-laws have envisaged that a member who is not occupying the flat is required to pay some additional contribution over and above the service charges, whether the non occupation is by way of keeping the flat locked or it being given on leave and licence/lease basis. The Government also seems to be aware that when the flats are occupied by the family members, the element of deriving income does not arise. It is noted that bye-law No. 45(2)(iii)(c) stated that the non-occupancy charges shall be at the rates as decided by the General Body of the society and this provision was being abused by some of the co-operative housing societies. The majority of the members, who are in occupation of their flats, ventured to derive income from the other members who were not in occupation of their flats and who were in minority. The non-occupancy charges were raised from about Rs. 2/-per sq.ft. to Rs. 16/-per sq.ft. over a period of about 5 to 10 years. When the bye-laws enable the society to fix the rate, it was intended that the societies would go on increasing the rates exorbitantly and collect the non-occupancy charges. The State Government, therefore, rightly thought it appropriate to amend the bye-laws and accordingly amended bye-law No. 43(2)(iii)(c). It has been clearly stated that the non-occupancy charges shall be charged in accordance with the circular issued by the Government of Maharashtra / Commissioner for Co-operation from time to time. It was also urged before us that entire property of the society was assessed as one unit for municipal taxes and the flats being given on lease or leave and licence would add to the rateable value component thereby giving rise to increase in such taxes. This submission also is no more of any significance and need not be considered as with effect from 1/4/2006 each flat is assessed separately for municipal taxes and, therefore, there cannot be any additional burden on the society concerned on account of some of the members handing over the flats on leave and licence or on lease basis to third parties. It was also urged that the impugned order passed by the State Government is in breach of the guarantee provided under Article 19(1)(c) of the Constitution. This submission is fallacious as the said order does not come in the way of the formation of associations or co-operative societies. The order in no way discourages formation of co-operative housing societies. On the other hand, the right to levy non-occupancy charges has been recognised by the State Government and originally such charges were uniformly fixed at 25%. However, in view of the outcry raised by the flat owners pointing out that there was no justification to charge non-occupancy charges at 25%, the State Government decided to appoint an experts' committee and submit a report. The Government thought it fit to fix the non-occupancy charges at 10% uniformly throughout State and for securing the proper management of the co-operative housing societies as well as to prevent litigations and exploitation of members who are not able to occupy their flats for bonafide reasons. The levying such non-occupancy charges would not only encourage the flats being given on leave and licence or on lease basis, but, in fact, in reducing the rental charges. Thus it would achieve a double-edged benefit, namely, the person who has invested in the property would get a reasonable income and a person who is looking for leased accommodation would easily find the same. It has been pointed out by some of the respondents that Writ Petition No. 1406 of 2005 was decided by this Court (Single Bench) on 10/8/2005 and it has been held that the order issued by the Government on 1/8/2001 under Section 79A of the Act is binding on the society and, therefore, the non-occupancy charges cannot exceed 10% of the maintenance charges or service charges applicable to the concerned flat. In Writ Petition No. 560 of 2001 decided on 5/12/2005 a similar view as reiterated. In Writ Petition No. 2347 of 2000, the petitioner-society had levied non-occupancy charges at the rate of Rs. 7.50 per sq.ft. per month and the same was challenged before the Deputy Registrar, Co-operative Societies, who by his order dated 10/8/1998 had restricted the liability of the members. The revision application filed before the Divisional Joint Registrar was rejected on 20/6/2000. This Court (Single Bench) by its Oral Judgment dated 25/7/2003 upheld the view taken by the authorities below and an appeal preferred before the Division Bench also failed on 3/2/2004. The Special Leave Petition filed by the society before the Supreme Court was dismissed on 25/10/2004. This Court has taken a concurrent view in Writ Petition No. 1406/05 as well as Writ Petition No. 560 of 2001 that the directions issued under Section 79A of the Act regarding the uniform levying of non-occupancy charges will hold the field and the society will not be permitted to levy the non-occupancy charges at any higher rates. The societies cannot be allowed to use the authority under the bye-laws a vehicle for making money and exploit the minority members. It is not the business of the societies to impose taxes and derive profits by the different modes like the non-occupancy charges etc. The co-operative housing societies cannot be permitted to throw their minority members in hardships and in any case adequate safeguards have been provided in the bye-laws against the letting and sub-letting of flats.

15. The learned Senior Counsel also invited our attention to Section 3(1)(b) of the Maharashtra Rent Control Act, 1999 and submitted that there would not be any justification in making the impugned order applicable to the premises covered by the said provision, more so when the rental compensation or the licence amount collected runs into lacs of rupees per month in respect of every such flat. Section 3(1)(b) of the Maharashtra Rent Control Act, 1999 states that the said Act shall not apply to any premises let or sub-let to Banks, or any Public Sector Undertakings or any Corporation established by or under any Central or State Act, or foreign missions, international agencies, multinational companies, and private limited companies and public limited companies having a paid up share capital of rupees one crore or more. It was pointed out during the course of arguments that there are some instances where the flats have been let out either to foreign missions, international agencies or the multinational companies and the rental compensation or the licence fees runs into few lacs of rupees every month. It would not be proper for us to record any finding on these submissions, more so when the issue, as raised during the course of arguments, does not appear to have been raised in the petition memo or by an amendment. We, therefore, deem it appropriate to leave this issue to the State Government.

16. So far as the second order dated 13/8/2001 is concerned, it is clearly a circular issued by the Deputy Registrar, Co-operative Societies, 'D' Division, Mumbai and it is an appeal to the co-operative housing societies to update their bye-laws in line with the model bye-laws. It further stated that copies of model bye-laws were available for Rs. 30/-each and every co-operative society was required to purchase two copies of these model bye-laws and it is not an order or a directive issued by the Deputy Registrar. Even otherwise, as noted earlier, Section 79A(3) provides for penal action if the directions issued under Section 79A(1) and (2) are not complied with, without furnishing any good reason or justification. At the same time, the directions issued under Section 79A by the State Government are binding on the co-operative housing societies as has been held by this Court in the petitions referred to hereinabove. We do not see any reason to take a different view.

17. Having given our anxious considerations to the grounds on which the impugned order came to be challenged, we are satisfied that the same is issued to secure the proper management or the business of the co-operative housing societies in general and for preventing the affairs of such societies being conducted in a manner detrimental to the interests of the members of such societies. The order does not suffer from the vice of arbitrariness and it cannot be termed as an unfair or unjust act by the State Government so as to deprive the societies from their legal, just and proper levies. It is a bonafide exercise by the State to avoid litigations/disputes and to bring in a uniform levy of non-occupancy charges without linking the same to the income derived by the concerned member who cannot occupy the premises/flat. It is also an action of the State Government preventing the exploitation of minority members who were called upon to pay exorbitantly high non-occupancy charges. The co-operative housing societies concerned were using the power under the bye-laws to hike the non-occupancy charges at their whims and fancies and, in fact, the societies used this as the source for revenue collections and profits. To bring in an orderly situation, the Government stepped in and exercised its statutory powers under Section 79A by issuing directions to levy non-occupancy charges at 10% of the service charges. However, in clause 3 of the impugned order there appears to be no justification in granting exemption from non-occupancy charges if the flat is occupied by the son-in-law, brother-in-law (sister's husband), sister-in-law (wife's sister) and sister-in-law's (wife's sister) husband. None of these could be called as the members of the family as legally defined. At the same time, the brother's widow could be termed as a member of the family, but the sister's husband or for that matter a deceased sister's husband cannot be treated as a member of the family. We are, therefore, of the view that the exemption granted in clause 3 of the impugned order cannot be made applicable to such relations of the member concerned.

18. In the result, we hold that the challenge to the impugned order dated 1/8/2001 raised in this petition is devoid of merits and the same must fail. The petition is, therefore, dismissed. However, we clarify that Clause 3 of the impugned order regarding exemption from the payment of non-occupancy charges will not be applicable to the near relations like son-in-law, brother-in-law (sister's husband), sister-in-law (wife's sister) and sister-in-law's (wife's sister) husband and the same exemption shall be applicable only to the members of the family, including a married daughter and grand children.

Rule stands discharged with no order as to costs.