Recovering dues from defaulters in a housing society

Every society has a few members who stop paying. The arrears pile up, the honest members end up funding the gap, and the committee comes under pressure to “do something”. The law gives housing societies a strong and fairly quick remedy: a recovery certificate from the Registrar under section 154B-29 of the MCS Act. It works only if the society builds its paper trail properly from the first unpaid bill.

This guide covers recovering dues from defaulters step by step, and what a society must never do.

When is a member a defaulter?

Chapter XIII-B of the Act, added in 2019 for housing societies, treats as a defaulter a member, flat owner or occupier who does not pay within three months of the bill or its due date (s.154B-1; Form Y-6). Before that point the dues are simply outstanding. After it, they are arrears the society can recover through the Registrar.

Interest on late payment must be simple interest at a rate the general body has fixed. Since the MCS (Amendment) Rules 2026 took effect on 22 June 2026, the cap is 12% a year (Rule 106C-12). The old 21% ceiling in the 2014 bye-laws no longer applies. No interest runs within the payment period stated in the bill.

Step 1: bills, reminders and a demand notice

Recovery cases are won or lost on documents. From the start:

Issue a proper bill or demand notice to every member for every period (BL 68).
After the due date, send a written demand notice, then two reminders by registered post. The last should warn that the society will apply under s.154B-29.
Keep copies and postal proofs of everything.

The Secretary must place defaults before the committee (BL 69(a); dBL 65(a)). A member who has not paid three months after a written demand is also disqualified from the managing committee (s.154B-23; BL 116(b)).

Step 2: committee resolution

The managing committee passes a resolution:

recording the arrears;
deciding to apply under s.154B-29;
authorising an office-bearer to sign and appear before the Registrar.

The 2014 bye-laws (BL 69(b)) still name the old s.101. For housing societies, s.154B-29 is the provision that applies now. The draft 2026 bye-laws name it expressly (dBL 65(b)).

Step 3: application in Form Y-6 under Rule 106C-14

The application goes to the Registrar (in practice the Deputy or Assistant Registrar for your ward or taluka) in Form Y-6, with a court fee of ₹100 (Rule 106C-14(1)). It must state whether the opponent is a member. Attach:

the authority letter for the office-bearer;
a certified, up-to-date copy of the member’s ledger;
certified copies of the general-body and committee resolutions that approve the charges and the rate of interest;
the fee challan;
copies of the notices sent to the member (Rule 106C-14(2)).

A missing resolution approving the levy or the interest is the most common defence. Check this before you file.

Step 4: the Registrar’s hearing

Rule 106C-14 sets the procedure:

The Registrar scrutinises the application and gives 7 days to cure any defects, then registers it.
Notice goes to the opponent within 15 days of registration, by hand, registered post AD or newspaper publication.
The opponent files a written statement. The first adjournment for this is no longer than 15 days.
Documents are produced and both sides are heard.
The Registrar should decide within three months of the first hearing and passes a reasoned order.

Step 5: recovery certificate in Form Y-7

If the claim is proved, the Registrar issues a recovery certificate in Form Y-7 (Rule 106C-14(7)). Under s.154B-29 the certificate:

is recovered as arrears of land revenue, without a separate execution application;
is final, and can be challenged only in revision under s.154.

The Collector and the Registrar can also take precautionary measures such as attachment. The Bombay High Court has confirmed that s.154B-29 is a special remedy for housing societies. The Registrar cannot send the society to the Co-operative Court instead (Legacy CHS v Deputy Registrar, 2024).

What a society must not do

The Act gives a strong legal route. It does not give the committee self-help powers.

Do not cut water, electricity or lift access. Nothing in the Act, the Rules or the bye-laws allows it. Electricity can be disconnected only by the distribution licensee. The High Court has described cutting water as conduct that paralyses collective life (Tungare, 2026).
Do not use expulsion as a recovery tool. The same judgment called expulsion “not a substitute for recovery”.
Be careful about naming defaulters on the notice board or in WhatsApp groups. Nothing authorises it, and from 13 May 2027 the DPDP Act restricts using members’ personal data beyond its purpose. Report arrears to the committee and the general body, without names where possible.
Do not refuse a sale arbitrarily. A transfer is not effective until dues are cleared (s.154B-7), and the society has a charge on the share and interest (s.154B-14). Give a clear dues statement promptly.

Recovery checklist

General-body resolution fixing the charges and the interest rate (≤ 12% simple).
Bills issued every period; ledger kept current.
Demand notice plus two registered reminders warning of s.154B-29.
Committee resolution authorising the application.
Form Y-6, ₹100 fee, certified ledger, certified resolutions, notice copies.
Hearing attended; order and Form Y-7 certificate collected.
Certificate sent for execution; recovery recorded in the ledger.
Write-off only after every step, with the auditor’s certificate and a general-body resolution (BL 148–149; dBL 144–145, draft).

What the law says

MCS Act s.154B-1, 154B-7, 154B-14, 154B-23, 154B-29: defaulter, transfer and charge, disqualification, recovery certificate.
Rule 106C-14 and Forms Y-6, Y-7 (MCS (Amendment) Rules 2026): procedure, documents, fee and time limits.
Rule 106C-12: interest capped at 12% simple.
BL 68–69, 116(b), 148–149 (2014): bills, recovery duty, disqualification, write-off.
dBL 65, 144–145 (draft 2026): recovery under s.154B-29; register of written-off dues. These are draft only.

This is general information. For a contested claim, consult an advocate.

More questions on arrears and recovery are answered on the defaulters and recovery FAQ page.

Sources

General information, not legal advice. Your society's registered bye-laws may differ; for a dispute or a decision with legal or financial consequences, consult the Registrar's office, an advocate or a chartered accountant.