Can association use maintenance funds for Festivals if passed by AGM

Dear Client,

Maintenance charges in an apartment or housing society are generally meant for building upkeep and common services, and using them for festivals or cultural events is legally questionable unless the registered bye-laws specifically permit such use. Even if an AGM passes a resolution, it is binding only if it does not violate the Societies/Apartment Act or the society’s bye-laws; a general body cannot legally approve something contrary to law. Many courts have observed that cultural expenses may be collected through a separate fund or voluntary contribution, not by diverting maintenance meant for essential services. Therefore, if your bye-laws do not allow such use of maintenance funds, you may have valid legal grounds to challenge the resolution before the appropriate authority or Cooperative Court in Bangalore.

Dear client,

In Bangalore, apartments are generally governed either by the Karnataka Co-operative Societies Act or, more commonly, the Karnataka Apartment Ownership Act (KAOA, 1972).

The legality of using maintenance funds for festivals is a frequent point of contention. Here is the legal breakdown of your situation.

1. Is it legal to use "Maintenance" for Festivals?
Strictly speaking, No. "Maintenance" is legally defined as the funds required for the preservation, safety, and administration of the common areas and facilities.

Common Expenses: Under the KAOA and the Model Bye-laws, common expenses include insurance, repairs, security, electricity for common areas, and water.

Nature of Funds: Maintenance funds are "Common Expenses" used for the upkeep of the property. Festivals are considered "Social/Cultural Expenses," which fall outside the definition of property maintenance.

2. Is an AGM Resolution legally binding?
Only if it is within the "Scope of the Act." While the AGM is the supreme body of a society, it cannot pass a resolution that violates the underlying Law or the registered Bye-laws of the Association.

The "Vires" Rule: A resolution is Ultra Vires (beyond the power) if it forces a member to pay for something not mandated by the Act.

Religious Neutrality: Courts have often held that a housing society/association is a secular entity. Forcing a member to contribute to a specific religious or cultural festival via a mandatory maintenance fee can be challenged as a violation of your rights.

3. Is the law on your side?
If you challenge this in the Cooperative Court or the District Registrar (depending on where your association is registered), you have a strong standing, provided:

Separate Headings: You argue that the "Maintenance Fund" is a statutory requirement for building health, whereas festival funds should be "Voluntary" or collected under a separate "Cultural Fund" head.

Bye-laws: Your registered Bye-laws likely do not list "Festival Celebration" as an object of the Association.

4. Preceding Judgments and Legal Principles
While many cases are settled at the Registrar level, you can cite the following principles often upheld by Indian Courts:

The Secular Nature of Societies: In various rulings, courts have noted that Co-operative Societies are formed for the "common economic interest" and management of property, not for the promotion of religion or culture at the cost of dissenting members.

Nahalchand Laloochand Case (Principle): Although regarding parking, the Supreme Court emphasized that associations must act strictly within the definitions of "Common areas and facilities" provided in the law.

The "Voluntary" Principle: Legal precedents suggest that while a society can facilitate a festival, the contribution must be voluntary. It cannot be bundled with maintenance because non-payment of maintenance can lead to the disconnection of essential services (water/electricity), and you cannot be deprived of essentials for refusing to pay for a party.