Co-operative Society
Interest on Interest on maintenance dues

Subject - Co-operative Society - charging of interest on interest.

For certain disputes of my grand parents with the Society they live in, society maintenance dues for 5 years are not paid. They are charging 21% compound interest rate - 1.75 % per month on maintenance and interest outstanding.

As per bye laws 21% simple interest is applicable.

Question - whether the interest to be paid be assumed to be payment outstanding and interest be levied on outstanding interest. is there any time limit for such interest outstanding to be charged interest on?

For example if Rs 500 is outstanding as maintenance dues the total payable amount after 5 years is Rs 500 Rs 500 *21%* 5 years = Rs 500 (principal) Rs 525 (simple interest for 5 yrs at 21%) = total Rs 1025. Or interest on interest will be levied every year.

The society is not accepting the above and is demanding much more than Rs 1025 as calculated above.

They are arguing that any interest outstanding for more than 6 months automatically becomes principal and thus interest will be levied on such interest outstanding.

Request to let me know whether my or society's understanding is correct and what can be done as per law to reach the right conclusion.

Thanks