When Managing Committees approve expenditure, they usually ask three questions:
Is the work necessary?
Is the cost reasonable?
Is the vendor reliable?
There is a fourth question that often gets missed and carries the highest risk:
Is our decision process legally compliant?
Under the Maharashtra Cooperative Societies Act, Section 79A, housing societies must follow a prescribed tendering process for expenditures above the notified threshold, commonly ₹25,000 and above. These guidelines are not advisory. They are binding directions issued by the Registrar of Cooperative Societies.
Compliance is about process, not outcome. Even if the selected vendor is competent and fairly priced, a flawed procedure can still be questioned.
Why This Matters
79A was introduced to prevent opaque spending decisions. Historically, many societies approved significant expenses based on informal quotations, personal relationships, single bids, or undocumented reasoning. This created room for disputes, allegations of favouritism, and financial risk.
The law standardises decision-making to ensure transparency, comparability, and defensibility when member funds are being spent.
A Simple Example
A society finalises a waterproofing contractor based on WhatsApp quotations.
One vendor quotes for complete terrace treatment.
Another quotes only for patch repairs.
The committee selects the lower price.
Even if the decision appears practical, the approval can be challenged because the scopes were not comparable and the selection rationale was not formally recorded. The weakness lies not in the vendor but in the process.
The Three Essentials of 79A Compliance
-
Inviting sealed and traceable bids against a clearly defined and common scope shared with all vendors
-
Preparing a proper comparative statement, reflecting scope alignment, specifications, timelines, and exclusions, not just total amounts
-
Recording documented reasons for selection in the meeting minutes, especially if the chosen vendor is not the lowest bidder
These three steps form the backbone of defensible decision-making.
The Real Risk of Ignoring 79A
Non-compliance can result in contracts being questioned, payments being stalled, and committee members being held accountable. Importantly, liability does not automatically end when a committee’s term ends. Past decisions can still be reviewed.
Most violations are not intentional. They occur because manual systems create inconsistencies. Different quote formats, rushed comparisons, and incomplete documentation make procedural discipline difficult to maintain.
The Governance Perspective
79A compliance is not bureaucracy. It is protection.
Housing societies today manage multi-crore assets. With rising costs and increasing scrutiny, structured processes are no longer optional.
Good governance is not about avoiding trouble.
It is about doing the right thing, correctly, every time.