A society may collect a cultural fund if the general body approves it

The facts

At its annual general meeting of 11 November 2006, Shreeji Ville CHS resolved to set up a cultural fund and to collect ₹70 per flat per month, through the monthly bills, for cultural events and the annual gathering. One member challenged the resolution before the Co-operative Court, Thane. Her application for interim relief was rejected, the Maharashtra State Co-operative Appellate Court confirmed the rejection, and she then filed a writ petition under Article 227.

Her case was that the compulsory charges listed in Bye-law 65 do not include cultural activities, and that Bye-law 148 allows only a part of the society’s profit to be placed in a common welfare fund for such purposes.

What the Court held

The Court read the model bye-laws together. Bye-law 65 lists the charges a society may collect, and includes “any other charges”. Bye-law 66(m) requires such charges to be approved by the general body and not to contradict the Act, Rules or bye-laws. Bye-law 67(a)(xvi) lets the committee apportion them as the general body decides. Since Bye-law 5(d) makes cultural and recreational activities an object of the society, and the general body had approved the levy, the charge was valid. Bye-law 148 did not mean that such activities could be funded only out of profit. The Court noted that only 1 of the society’s 100 members had challenged the resolution, and dismissed the petition.

Why it matters

Committees often ask whether they can collect for festivals, events or similar activities. This judgment indicates that a charge of this kind is permissible when it serves an object in the bye-laws and is properly approved by the general body. The decision was given while reviewing an interim order under Article 227, and the dispute itself was pending before the Co-operative Court.

Twenty-one-page judgment in English. This page summarises the decision for general information; it is not a substitute for the full text and not legal advice. Check whether the decision has since been appealed, modified or overruled.

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