Is it correct to stop Association’s services to defaulters, in case of apartments?
Question asked by Narayan Aras from Karnataka, India:
BACKGROUND:
Our nearly 3 years old apartment is registered under Karnataka Apartments Ownership Act, 1972.
(available here: http://www.karnataka.gov.in/dpal/pdf_files%5CAPARTMENT%20OWNERSHIP%20ACT,%201972-new-9.pdf)
(hereinafter, called KAOA in short)
All our expenses are shared through (a) interest on the corpus collected by the builder, and (b) monthly contribution. (The interest on corpus pays for 40% of the total monthly requirement.)
PROBLEM:
Some owners are not paying their monthly dues for more than 3 months.
Because of the corpus, this amounts to non-payment of 60% of the monthly dues.
CAUSE:
There is no reason for the non-payment, as explained below:
We provide the following opportunities for anyone to raise objections about budget, accounting or management:
• We have weekly association meetings and the annual AGM.
• Our monthly financial statement is published in the Yahoo Group, for all to see and comment.
• Even the petty cash account is kept open for scrutiny in the office.
The defaulters have not used any of these mechanisms to express their objections.
Our accounts are subjected to annual audit; which have not attracted any adverse comments.
Thus the defaulters have no possible reason for withholding the payment.
They have not replied to any of the public notices, emails or Yahoo Groups posts urging them to pay up.
Our estate manager has personally visited them to get the dues, but they have not responded.
Looking at their financial status and lifestyle, lack of funds is not the reason for the non-payments.
POSSIBLE SOLUTION:
We have provision in our bye-laws to stop our own services (which we provide at our shared expenses) to such people. The intention is to force them to pay up.
Examples are :
(a) water (which is bought in tankers, treated in our own water-treatment plant and then pumped to overhead tanks)
(b) DG backup in case of power failure (each apartment gets 500 VA which is not metered)
(c) Electrician
(d) Plumber
(e) Clubhouse+swimming pool+gym
We have no intention of interrupting the services provided by third-parties (e.g. electricity, newspaper, milk, etc.). The cutting of services is not permanent (only till the dues are paid).
DOUBTS:
Some of the committee members have a doubt whether stopping of services is lawful.
They think these may be considered as “essential services”, which have to be provided even to non-payers.
But other members think that even BESCOM and BWSSB cut off electricity and water to defaulters.
Therefore, it should be OK if we cut our services too.
Personally, I think the Karnataka Essential Services Maintenance Act does not apply to our situation.
http://164.100.80.70/acts/ACTS%20E/58e.pdf
Is that correct?
KAOA does not mention what to do in case of (partial) non-payment..
So is there any state/central act that allows or prohibits this?
The BESCOM electricity comes through our own substation, for which we have to pay maintenance and inspection charges.
Considering that, can we rightfully cut electricity supply?
We do not want to take the defaulters to court for the simple reason that it would be costlier than what is due!
Is that a free/cheap alternative? (fast courts, arbitration, etc?)
Please provide reference to the applicable laws/acts.
Thanks and regards,
Narayan Aras
Vatsala Answers:
There is a precedent declaring that it is not lawful for the Association to cut off essential services. It is required that you go to court for collecting the same. However you can try to settle the matter through arbitration or mediation. In any case the unpaid dues will constitute a lien on the property which can be enforced. Unfortunately there are no short cuts to the legal system.
Vatsala
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