Home | Legal Advice | Property Law | RERA Cases | Society has embezzled corpus fund

Society has embezzled corpus fund

Estimated Reading Time:

Question: Our housing society has embezzled the corpus fund of five crore. When the officer bearers of the newly elected RWA searched the books of account the embezzlement was revealed. Now, the former officer bearers are refusing to give any information about the corpus fund. They have misappropriated it for their own benefits and now showing reluctance to give details. What should society do in this circumstance?

Question from: Maharashtra

Society is not an owner of the corpus fund. The flat owners contribute and raise a corpus fund for the maintenance of the property. The promoter or builder charges a fixed or variable amount to create a fund for maintaining amenities and hands it over to the society. Thus, society is the trusty of the corpus fund. 

Embezzlement of corpus fund by society

When the society has embezzled the corpus fund the flat owner should file an FIR under section 406. They have committed the offence of criminal breach of trust which is punishable under section 406 IPC. 

It is however, not possible for individual flat owners to lodge FIR against the officer bearers of previous society. Hence, the newly elected society should register an FIR for criminal breach of trust. The president and treasurer are the main culprits because they have control over the fund of society including the corpus fund. They are responsible for any misappropriation of funds.

Also read: No share certificate to illegal flat owner

The society’s bye laws states about the manner and purpose to which the society can utilise the funds. If the expenses were not authorised by the bye laws of society the society will be responsible for the embezzlement. 

Proceeding against society for misappropriation of corpus fund

You should initiate proceedings against the former office bearers of society by sending a legal notice. The newly elected society should demand from them to produce books of account and furnish details of expenses out of corpus fund. If they do not reply to the legal notice within a reasonable time period then society should lodge FIR for embezzlement of corpus fund. 

Call an emergency meeting of society and table the resolution for initiating criminal proceedings against the former officer bearers for embezzlement of corpus funds. Pass that resolution from the society and take steps. The society should take a certified copy of transaction details from the bank. Collect minutes and resolutions passed by the former society for maintenance work. Thereafter lodge an FIR.

Latest Advice

How much share do I get in my father’s property?

My father has died but my mother is alive. I have 5 sisters and we have 4 brothers. Among them 2 sisters and 1 brother are below the age of 18. My father had owned 9 acres of land but he died without any will. And my mother owns 1 acre of land. How much share do I get...

Tenant has promised to clear the dues shortly

I rented my house in March 2021 through a rental agreement. Police verification was done at that time but I couldn't collect the same because of being out of Station due to Corona. Now the man of property dealer who had dealt with this case has all of sudden left the...

Tenant has not been paying rent – Eviction of tenant

My tenant has not been paying rent since November 2019. I am a 68 year old person from Visakhapatnam. I gave my shop on rent to a person for tailoring. He paid the rent for the last time in Aug 2019 through phonepe. From Nov 2019 he stopped paying current bills also....

Tenant owns a house in the same city: Eviction of tenant

Question: Our father had purchased three houses together in a colony, more than 50 years ago. Two on the ground floor, in which we were already living there on rent. And One house is on top of these two houses. A tenant family was on rent, the time we purchased it....

Kanoonirai established in 2014. It provides a facility to consult a lawyer through online media, telephonic consultation and video conferencing.