management of co-operative societies(38 pages)
TRANSCRIPT
INDEX
Meaning Of Co-Operative Society Characteristics of Co-operative Society Advantages of Co-operative Society Limitations of Co–operative Society Types of Co-operative Societies Formation of a Co-opeative Society Registration of Society Who can form a society Restrictions on society with limited liability Bye-laws Model Bye- laws Membership Termination Of Membership Rights and liabilities of members Secretary of the Co-operative Society Duties of the Secretary the Co-operative Society Meetings Held in a Co-operative society Co-operative Society Act 1904 Maharashtra Co-operative Societies Act 1960 Management of society Registered Society is body corporate Audit Inspection of affairs of society
Meaning Of Co-Operative Society:
A co-operative society is an association of persons who have voluntarily joined together to achieve a common economic and social
end through the formation of a jointly-owned and democratically controlled business organisation. Members make equitable contributions to the capital required and accept a fair share of the risks and benefits of the undertaking.
Co-operative societieswork on the principles of self-help and mutual assistance to provide services for their members. These include credit, consumer, medical, insurance, dental, transport, security, food, housing, travel, childcare and welfare services.
Characteristics of Co-operative Society:
A co-operative society is a special type of business organisation different from other forms of organsation you have learnt earlier. Let us discuss its characteristics.
i. Open membership: The membership of a Co-operative Society is open to all those who have a common interest. A minimum of ten members are required to form a cooperative society. The Co–operative societies Act does not specify the maximum number of members for any co-operative society. However, after the formation of the society, the member may specify the maximum number of members.
ii. Voluntary Association: Members join the co-operative society voluntarily, that is, by choice. A member can join the society as and when he likes, continue for as long as he likes, and leave the society at will.
iii. State control: To protect the interest of members, co-operative societies are placed under state control through registration. While getting registered, a society has to submit details about the members and the business it is to undertake. It has to maintain books of accounts, which are to be audited by government auditors.
iv. Sources of Finance: In a co-operative society capital is contributed by all the members. However, it can easily raise loans and secure grants from government after its registration.
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v. Democratic Management: Co-operative societies are managed on democratic lines. The society is managed by a group known as “Board of Directors”. The members of the board of directors are the elected representatives of the society. Each member has a single vote, irrespective of the number of shares held. For example, in a village credit society the small farmer having one share has equal voting right as that of a landlord having 20 shares.
vi. Service motive: Co-operatives are not formed to maximise profit like other forms of business organisation. The main purpose of a Co-operative Society is to provide service to its members. For example, in a Consumer Co-operative Store, goods are sold to its members at a reasonable price by retaining a small margin of profit. It also provides better quality goods to its members and the general public.
vii. Separate Legal Entity: A Co-operative Society is registered under the Co-operative Societies Act. After registration a society becomes a separate legal entity, with limited liability of its members. Death, insolvency or lunacy of a member does not affect the existence of a society. It can enter into agreements with others and can purchase or sell properties in its own name.
viii. Distribution of Surplus: Every co-operative society in addition to providing services to its members, also generates some profit while conducting business. Profits are not earned at the cost of its members. Profit generated is distributed to its members not on the basis of the shares held by the members (like the company form of business), but on the basis of members’ participation in the business of the society. For example, in a consumer co-operative store only a small part of the profit is distributed to members as dividend on their shares; a major part of the profit is paid as purchase bonus to members on the basis of goods purchased by each member from the society.
ix. Self-help through mutual cooperation: Co-operative Societies thrive on the principle of mutual help. They are the organisations of financially weaker sections of society. Co-operative Societies convert the weakness of members into strength by adopting the principle of self-help through mutual co-operation. It is only by working jointly on the
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principle of “Each for all and all for each”, the members can fight exploitation and secure a place in society.
Advantages of Co-operative Society:
A Co-operative form of business organisation has the following advantages:
i. Easy Formation: Formation of a co-operative society is very easy compared to a joint stock company. Any ten adults can voluntarily form an association and get it registered with the Registrar of Co-operative Societies.
ii. Open Membership: Persons having common interest can form a co-operative society. Any competent person can become a member at any time he/she likes and can leave the society at will.
iii. Democratic Control: A co-operative society is controlled in a democratic manner. The members cast their vote to elect their representatives to form a committee that looks after the day-to-day administration. This committee is accountable to all the members of the society.
iv. Limited Liability: The liability of members of a co-operative society is limited to the extent of capital contributed by them. Unlike sole proprietors and partners the personal properties of members of the co-operative societies are free from any kind of risk because of business liabilities.
v. Elimination of Middlemen’s Profit: Through co-operatives the members or consumers control their own supplies and thus, middlemen’s profit is eliminated.
vi. State Assistance: Both Central and State governments provide all kinds of help to the societies. Such help may be provided in the form of capital contribution, loans at low rates of interest, exemption in tax, subsidies in repayment of loans, etc.
vii. Stable Life: A co-operative society has a fairly stable life and it continues to exist for a long period of time. Its existence is not affected by the death, insolvency, lunacy or resignation of any of its members.
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Limitations of Co–operative Society:
Besides the above advantages, the co-operative form of business organisation also suffers from various limitations. Let us learn these limitations.
i. Limited Capital: The amount of capital that a cooperative society can raise from its member is very limited because the membership is generally confined to a particular section of the society. Again due to low rate of return the members do not invest more capital. Government’s assistance is often inadequate for most of the co-operative societies.
ii. Problems in Management: Generally it is seen that co-operative societies do not function efficiently due to lack of managerial talent. The members or their elected representatives are not experienced enough to manage the society. Again, because of limited capital they are not able to get the benefits of professional management.
iii. Lack of Motivation: Every co-operative society is formed to render service to its members rather than to earn profit. This does not provide enough motivation to the members to put in their best effort and manage the society efficiently.
iv. Lack of Co-operation: The co-operative societies are formed with the idea of mutual co-operation. But it is often seen that there is a lot of friction between the members because of personality differences, ego clash, etc. The selfish attitude of members may sometimes bring an end to the society.
v. Dependence on Government: The inadequacy of capital and various other limitations make cooperative societies dependant on the government for support and patronage in terms of grants, loans subsidies, etc. Due to this, the government sometimes directly interferes in the management of the society and also audit their annual accounts.
Let us now sum up–ADVANTAGES DISADVANTAGES
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Easy formation Open membership Democratic Control Limited Liability Elimination of Middleman’s Profit State Assistance Stable Life
Limited Capital Problems in Management Lack of Motivation Lack of Cooperation Dependence on Government
Types of Co-operative Societies:
There are two types of co-operative societies.
A primary society is a registered co-operative all of whose members are individual persons who, or institutions which, have the qualifications for membership.
A secondary society is a registered co-operative all of whose registered members are co-operative societies, trade unions, or co-operative societies and trade unions.
Producer cooperative societies. These are formed to eliminate the middlemen and capitalist groups from the industrial production, its main purpose goods for the requirements of its members. Surplus productions are also supplied to out sliders in the open market at profit. All the necessary activities as production, management and marketing are performed by the members themselves. Its members get dividend on the basis of the capital invested by them.
a) To purchases the raw materials and other factors at most economical prices.
b) To produces the goods at the most economical level.c) To supervises the production most efficiently and
effectively.d) To disposes of the surplus production to non members at
maximum price.e) To eliminates the middlemen and capitalists.f) To remove the workers grievances in respect of working
conditions, wages etc.g) To arrange for the democratic control of the industrial
unit.
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Consumer cooperative societies. This society is the voluntary association of ordinary people formed with the object of obtaining daily requirements of the members. It directly purchases the goods at large scale from the producer or wholesalers at whole sale price. It thus eliminates capitalists, retailers and other middlemen from the channel of distribution and members are in a position to make their purchase at cheaper rate. Any one can become member by purchasing one share of the society. Sometimes goods are also supplied to non-members but they do not share in the profit of the society. Profit earned by the store is distributed among the members according to the value of the purchases conducted by the manager who is elected by the members. Generally is two types are popular in the world.
a) Retail cooperative store.
b) Wholesale cooperative store.Formation of a Co-opeative Society: Stage 1: A Pro-tem
CommitteeA Pro-tem Committee (at least 3
members):Undertakes a feasibility study to determine the
economic and financial viability of the proposed society. A
viability statement consisting of the business plan and the
cash flow projections (at least 5 years) is to be prepared.
Considers the objects and the constitution of the society and drafts the By-laws.
Stage 2: Seeking the Registrar's Comments
After completing the feasibility study, the Pro-tem Committee is to submit the viability statement, their particulars (i.e. Name, NRIC No, Date of Birth, Citizenship, Occupation, Address and the Office Tel No.) and the draft By-laws which include matters spelt out in The Schedule of the Co-operative Societies Act for the Registrar's comments.
Stage 3: Preliminary Meeting
After obtaining the Registrar's comments, a Preliminary Meeting of at least 10 persons qualified for membership is convened to:
adopt the By-laws (which have incorporated the Registry's comments); and
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pass the resolution to accept all the rights, duties and liabilities prescribed by the By-laws.
Qualifications for membership:
a) 16 years (12 years for school co-ops)b) registered society or trade unionc) citizen or resident in Indiad) is not legally or mentally disablede) is not an undischarged bankruptf) meet residence, employment, profession requirements as
prescribed in by-lawsg) credit co-op individual membership restricted to those who
belong to pre-existing common bond of association or community of interest
h) has not been convicted of an offence punishable with imprisonment
i) is able to meet such other requirements prescribed by the By-laws.
Stage 4: Application for registration
The following documents are required to be submitted:
SR. No.
Type of Document Signatures Required
Remarks
a) For credit society Form 1 At least 10 persons
Provide: Name PIN No. Nationality Occupation Address
b) For non-credit society Form 2
At least 10 persons
Provide: Name PIN No. Nationality Occupation Address
c) By-laws Not applicable Nild) Viability statement
(business plan and cash flow forecast)
Not applicable Cash flow forecast of at least 5 years. If viability statement is unchanged from earlier
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submission, no need to resubmit.
e) Minutes of the Preliminary Meeting
All those present
Upon registration, the Pro-tem Committee shall continue to manage the affairs of the co-operative society until the First Meeting of its members which is held not later than 3 months after receipt of the Notice of registration. The business of the first meeting shall include the election of officers who shall serve until the first annual general meeting.
No person shall be eligible for membership of the Committee of Management of a co-operative society if:
a) he is under 21 years of age (except in the case of school co-operatives);
b) he is not a Singapore citizen or resident in Singapore, subject to the Registrar's approval;
c) he is an undischarged bankrupt;d) he has been convicted of an offence involving fraud or
dishonesty 5-year disqualification period applicable for non-credit co-ops No time bar for credit co-ops;
e) he has been convicted of an offence under the Co-operative Societies Act;
f) he has been dismissed as an employee of a co-operative society; and
g) he has been found to have previously misused or mismanaged the funds of a co-operative society.
Registration of Society:
State Government will appoint Registrar of Cooperative Societies. State Government can appoint persons to assist Registrar and confer on such persons all or any of powers of Registrar. [section 3]. Function of Registrar starts with registration of a society. He has powers of general supervision over society. Returns of Society are to be filed with Registrar. He can order inquiry or inspection against society. He can order dissolution of society.
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Societies which may be registered
A society, which has as its object the promotion of economic interests of its members in accordance with cooperative principles, can be registered as a Society. Similarly, a society established with the object of facilitating operation of such a society can also be registered under the Act. The society can be registered with limited or unlimited liability. However, unless State Government otherwise directs, (1) Liability of a society of which a member is a registered society shall be limited. (2) Liability of a society of which object is to creation of funds to be lent to members, and of which majority of members are agriculturists and of which no member is a registered society shall be unlimited [section 4]. Thus, a registered society can be member of another society, but liability of such other society must be limited, unless State Government otherwise directs.
Who can form a society:A society can be formed with at least 10 members of age above 18 years. If object of society is creation of funds to be lent to its members, all the members must be residing in same town, village or group of villages or all members should be of same tribe, class, caste or occupation, unless Registrar otherwise directs. - - The provision of minimum 10 members or residing in same town/village etc. is not applicable if a registered society is member of another society. - - The last word in name of society should be ‘Limited’. If the Society is registered with limited liability. [section 6]. Registrar is empowered to decide whether a person is agriculturist or non-agriculturist or whether he is resident of same town/village or whether the members belong to same caste/tribe etc. and his decision will be final. [section 7].
Restrictions on society with limited liability:
If a society has limited liability, any individual member of such society cannot have share capital more than one-fifth of total capital. An individual member cannot have interest in shares exceeding Rs 1,000. - - This restriction of 20% shares or Rs 1,000 shares value is not applicable to a registered society which is member of another society. [section 5]. - - Thus, if a registered society is member of another society, it can hold shares exceeding 20% or exceeding Rs 1,000 in value.
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Bye-laws:
Any Amendment to bye-laws shall be registered with Registrar. If Registrar is satisfied that the amendment is not contrary to Act or rules, he will register the amendment. He will issue a certificate of registration along with copy of amendment certified by him, which is conclusive evidence that the amendment has been duly registered. [section 11].
Model Bye- laws:
If your co-operative society is old it may continue to follow old byelaws. But when a new co-operative society approaches the registrar it would have to compulsorily adopt the new byelaws.
Under the Maharashtra Co-operative Societies Act 1960, a housing society is free to adopt its own set of laws that governs its members. These are called byelaws and are limited to the Maharashtra state.
Byelaws are the rules that govern a co-operative society and its members and these undergo changes from time to time through amendments whenever the government feels the need for changes.
For instance, the cash on hand limit under the old byelaws was Rs 300. Cash on hand is maintained by the society for day to expenses such as plumber's payments for instance. Over the years it was felt that the amount was not sufficient. And hence in the new byelaws the same has been increased to Rs 4,500.
Such changes under various headings become imminent and that is how the new model byelaws came into effect from July 2, 2001. Since then, the government has made it mandatory for co-operative societies in Maharashtra to adopt the new byelaws.
Byelaws are district specific. In other words while these are more or less the same there could be minor changes depending on which district you fall in whether it is Mumbai, Pune or Thane.
Enumerated here are some of the differences between the old and the new byelaws.
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Transfer of flat: Under the old byelaws in case you were to transfer your flat, a charge of 2.5% of the difference in the purchase value minus sale value would be levied as transfer charges. But under the new model byelaw number 45 all that has been scrapped and a common charge is levied as per the general body resolution subject to the condition that it is not above Rs 25,000.
Maintenance: Under the old byelaws the maintenance charged varied among members. For instance, let us say the monthly maintenance amount payable was Rs 500. Now if the flat was given on leave and licence, the maintenance charge would be hiked to Rs 1,000.
But as per the new byelaws, maintenance is 10% of service charges. Service charges include salary of the office staff, liftmen, watchman, the property taxes, electricity charges, water charges, etc. in case the society has an independent office.
That apart it also includes entrance fees for affiliation to the housing federation and any other co-operative institution, audit fees for internal, statutory and re-audit if any besides expenses incurred at meetings of the general body, the committee and the sub-committee retainer fees, legal charges, statutory enquiry fees among others.
Purchase of second flat: Under the old byelaws there were restrictions on holding more than one flat. You needed to obtain the registrar's permission to purchase a second flat in the same society or within the limits of a certain district.
You were also needed to submit an affidavit saying that you do not hold any other flat in the same district. For instance, if you were the owner of a flat in Mumbai you could not own another flat in the same city. But another flat in Pune or Thane was allowed.
In the new byelaws the same has been done away with. So you can very well purchase a flat in the same society. Under Byelaw number 62 of the new model byelaws all you need to do is make an application to the society saying that you intend to purchase another flat. It's the society's consent that matters.
Transfer among family members: Under the old byelaws there were transfer charges applicable even if the transfer was between family members.
But then under Section 6 read with byelaw number 3 of the model byelaws, no transfer charge is to be levied in case of transfer of flat to any one of the family members. Under byelaw number 3(25) family
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members means the following group of persons: husband, wife, father, mother, sister, brother, son, daughter, son in law, brother in law, sister in law, daughter in law, grandson, granddaughter
Membership:The members of an association are the subscribers and the persons and eligible organizations admitted to membership in the association according to its rules.
Membership share requirement
An association, in its rules, must designate a class of shares as the membership shares and provide, as a condition of the admission of a person or eligible organization as a member of the association, that the person or eligible organization subscribe for a minimum number of membership shares.
Members under 19 years of age
(1) An association may provide in its rules for the admission to
membership in the association of persons under 19 years of age
who are at least 16 years of age.
(2) Rules referred to in subsection (1) are subject to subsection (3).
(3) Despite the Infants Act, the Age of Majority Act or the common
law and subject to subsection (4) of this section, an individual
admitted to membership in an association who is under 19 years of
age and who is at least 16 years of age
(a) has the same obligations, rights and legal capacity as a
member of the association who has reached 19 years of age, and
(b) may be sued,but only in respect of membership in an
association and of any indebtedness or obligation to the
association.
(4) An individual under 18 years of age is not eligible to be a
director or officer of an association.
Termination Of Membership:
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(1) This section applies only to an association other than a housing
cooperative.
(2) An association may provide in its rules for the termination of
the membership of a member.
(3) Rules referred to in subsection (2) are subject to this section
and sections 36 to 39.
(4) Subject to any rules of an association for termination of
membership, and to subsections (5) and (6) of this section and
sections 36 to 39, an association may terminate the membership of
a member if
(a) the member has engaged in conduct detrimental to the
association,
(b) the member has not paid money due by the member to the
association within a reasonable time after receiving written
notice to do so from the association, or
(c) in the opinion of the directors, based on reasonable grounds,
the member
(i) has breached a material condition of an agreement
with the association, and
(ii) has not rectified the breach within a reasonable time
after receiving written notice to do so from the
association.
(5) An association may exercise the powers under this section to
terminate the membership of a member only by a resolution of the
directors requiring a majority of at least 3/4 of all the directors and
passed at a meeting of the directors called to consider the
resolution.
(6) Sections 156 and 208 do not apply to termination of a
membership in an association on the grounds described in
subsection (4) (b) or (c).
Termination of membership in a housing cooperative:
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(1) A housing cooperative may provide in its rules for the
termination of the membership of a member.
(2) Rules referred to in subsection (1) and the rules that a housing
cooperative may adopt under subsection (3) of this section are
subject to this section and sections 36 to 39.
(3) A housing cooperative by its rules may adopt either of the
following grounds as constituting grounds for termination of the
membership of a member who has a right to possession or
occupancy of residential premises that is dependent on the
member's membership:
(a) the member has not paid rent, occupancy charges or other
money due by the member to the housing cooperative in respect
of the residential premises and has not rectified the nonpayment
within a reasonable time after receiving written notice to do so
from the housing cooperative;
(b) the member
(i) has not paid rent, occupancy charges or other money
due by the member to the housing cooperative in respect
of the residential premises, or
(ii) in the opinion of the directors, based on reasonable
grounds, has breached a material condition of an
agreement between the member and the housing
cooperative relating to the member's
(A) possession or occupancy of the residential
premises, or
(B) use of the property of which those premises
form part,
and has not rectified the nonpayment or breach
within a reasonable time after receiving written
notice to do so from the housing cooperative.
(4) Subject to any rules of a housing cooperative for termination of
membership, and to subsections (5) and (6), a housing cooperative
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may terminate the membership of a member if the member has
engaged in conduct detrimental to the housing cooperative.
(5) A housing cooperative may exercise the powers under this
section to terminate the membership of a member only by a
resolution of the directors requiring a majority of at least 3/4 of all
the directors and passed at a meeting of the directors called to
consider the resolution.
(6) Sections 156 and 208 do not apply to termination under this
section of a membership in a housing cooperative.
Notices respecting the termination of members:
(1) A member of an association whose membership is proposed to
be terminated by a resolution of the directors
(a) is entitled to at least 7 days' notice of the meeting at which
the resolution is to be considered, together with a statement of
the grounds on which the member's membership is proposed to
be terminated, and
(b) may appear, either personally or by or with an agent or
counsel, to make submissions at the meeting.
(2) Within 7 days after the date on which a proposed resolution to
terminate a membership referred to in subsection (1)
(a) is withdrawn,
(b) is defeated because it does not receive the required majority,
or
(c) is passed by the required majority,
the directors must deliver written notice of the outcome to the
member.
Appeal from termination of membership:
(1) A person whose membership in an association is terminated
under section 34 or 35 may appeal the decision of the directors at
the next meeting of the association, by delivering a notice of appeal
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to the association within 7 days after delivery of written notice
under section 36 (2).
(2) A person whose membership in an association is terminated
and who, under and within the time limited by subsection (1),
appeals the termination of the membership, continues, despite the
resolution of the directors terminating the membership, to be a
member of the association unless the members at the general
meeting to which the appeal is brought confirm the termination of
the membership
(a) in the case of a membership in an association other than a
housing cooperative,
(i) if the membership is terminated for any of the reasons
referred to in section 34 (4) (b) or (c), by a resolution
requiring a simple majority or, if provided by the
association's rules, a greater majority, or
(ii) if the membership is terminated for the reason referred
to in section 34 (4) (a), by a special resolution, or
(b) in the case of a membership in a housing cooperative,
(i) if the membership is terminated for any of the reasons
referred to in section 35 (3), by a resolution requiring a
simple majority or, if provided by the housing cooperative's
rules, a greater majority, or
(ii) if the membership is terminated for the reason referred
to in section 35 (4), by a special resolution.
(2.1) If the members of a housing cooperative confirm the
termination of a person's membership under subsection (2) (b), the
housing cooperative must
(a) promptly serve the person with
(i) a notice that the resolution or special resolution
confirming the termination was passed by the members,
and
(ii) a notice in the prescribed form of the person's right to
appeal the termination under subsection (3), and
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(b) comply with other prescribed conditions.
(3) A person who has been served with a notice under subsection
(2.1) (a) (i) may appeal the termination to the court before the
expiry of the 30 day period beginning on the day after the person is
served with the notice on any of the following grounds:
(a) the housing cooperative failed to observe the principles of
natural justice in terminating the membership;
(b) the decision of the housing cooperative is not reasonably
supported by the facts;
(c) the decision of the housing cooperative is not authorized by
section 35.
(3.1) Despite section 171, a person who has commenced an appeal
in accordance with subsection (4) of this section continues to be a
member of the association for the purposes of an application under
section 172.1, and may include with the appeal an application
under section 172.1 for an order of possession.
(4) An appeal to the court under subsection (3) must be
commenced in accordance with Rule 49 of the Rules of Court by
notice of appeal in Form 59
(a) filed in a registry of the court before expiry of the 30 day
period referred to in subsection (3), and
(b) served on the housing cooperative before expiry of the 14
day period beginning on the day after the notice of appeal is
filed in the registry of the court.
(4.1) If a person commences an appeal under subsection (3) from a
decision of a housing cooperative to terminate that person's
membership, the housing cooperative may file an application under
section 172 (1) with its appearance under Rule 49 (6) of the Rules
of Court.
(4.2) If an appeal is commenced under this section,
(a) any application by the housing cooperative for an order
under section 172 (1) must be filed with the appearance, and
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(b) any application by the member under section 172.1 must be
filed with the notice of appeal so that the court may determine
at the same time all the issues between the parties relating to
the termination.
(5) An appeal to the court under subsection (3) may be a new
hearing and the court may hear all the evidence the court
considers relevant including, but not limited to, the evidence of the
housing cooperative and the person, and the court
(a) must either
(i) despite section 39, restore the membership in the
housing cooperative of the person whose membership was
terminated by the resolution or special resolution, with the
restoration to be effective on and after a date specified by
the court, and if an application has been made under
section 172.1, the court must make an order of possession
in favour of the member, or
(ii) confirm the resolution or special resolution by which
the members of the housing cooperative confirmed the
termination of the person's membership, and if an
application has been made under section 172, the court
must make an order of possession in favour of the housing
cooperative, and
(b) may make any other order that the court considers
appropriate.
(6) An appeal from a decision of the court under subsection (5) lies
to the Court of Appeal with leave of a justice of the Court of
Appeal.
Requirement to redeem shares on membership withdrawal or
termination:
(1) A person who withdraws from membership in an association is
entitled, subject to section 66 (2), to require the association to
redeem
(a) the person's membership shares, and
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(b) any of the person's investment shares in classes restricted
for distribution to members only within a period and on
conditions the association may establish under its rules, or
immediately and unconditionally, if the association's rules do
not establish any period or conditions.
(2) A person whose membership in an association is terminated
under this Division is entitled, subject to section 66 (2), to require
the association to redeem
(a) the person's membership shares, and
(b) any of the person's investment shares in classes restricted
for distribution to members only.
(3) The entitlement, described in subsections (1) and (2), of a
person who withdraws from membership in a housing cooperative
or whose membership in a housing cooperative is terminated, is
postponed until the person has given up the actual possession and
occupancy of any residential premises in which the person had a
right to possession or occupancy dependent on the person's
membership.
(4) In the case of
(a) a community service cooperative, or
(b) an association to which section 173 or 196 (2) applies, the
refund on account of membership shares must not exceed the
amount paid up on the member's membership shares.
Rights and liabilities of members:
If liability of members is not limited by shares, each member shall have one vote irrespective of amount of his interest in the capital. [section 13(1)]. If liability of members of a registered society is limited by shares, each member will have as many votes as may be prescribed in bye-laws. [section 13(2)]. If a registered society has invested in shares of other registered society, it can vote by appointing a proxy. [section 13(3)]. - - A member of registered society shall not exercise his rights as member, unless he has made payment to society in
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respect of membership or has acquired interest in society, as may be prescribed by rules or bye-laws. [section 12]. Thus, if there is any default in payment to society, the member cannot exercise his rights.
Secretary of the Co-operative Society:
(1) The committee shall appoint a secretary and, unless the person so appointed is a member of the committee, shall have power to fix the remuneration for his services.
(2) The secretary, if a member of the committee, shall be unpaid.
(3) No appointment made under paragraph (1) of this rule shall be valid and effective, and no remuneration fixed thereunder shall be payable or recoverable, unless approved by the Registrar. Every such approval shall be communicated in writing by the Registrar to the committee.
(4) In the event of failure on the part of the committee to appoint a secretary, the Registrar shall appoint a secretary and, unless the person so appointed is a member of the committee, the Registrar shall fix his remuneration. Every appointment made by the Registrar under this paragraph shall be valid and effective, and every remuneration fixed by the Registrar shall be payable and recoverable, as if made or fixed by the committee.
(5) The secretary shall occupy his office until his services are determined by one month's notice in writing given by the committee:
Provided that no determination as aforesaid shall be valid and effective until the approval of the Registrar in writing has been obtained therefor.
(6) The secretary may resign his office by giving one month's notice to the committee in writing.
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(7) On the occurrence of a vacancy in the office of the secretary, the provisions of this rule shall apply mutatis mutandis to the filling of such vacancy.
Duties of the Secretary the Co-operative Society:
(a) to attend all meetings of the registered society and of the committee and to carry out all the instructions of the committee;(b) to be present at the office during the hours of business as fixed from time to time by the committee;(c) to record the whole of the transactions of the registered society in the books provided for that purpose; to conduct correspondence on behalf of the registered society; to prepare the annual statement of accounts and balance sheet; and to have charge of the documents, books and vouchers for payments and receipts on behalf of the registered society;(d) to receive all applications for loans and bring the same before the committee; to prepare receipts and other documents in the form prescribed for signature by borrowers prior to their taking the loans sanctioned; and with the authority of the committee to supply information about the registered society which may be applied for by members;(e) to receive all moneys due or payable to the registered society and issue receipts to the payer for same from a counterfoil receipt book supplied to the registered society for the purpose by the Registrar, obtaining at the same time the signature of the person making the payment on the counterfoil;(f) to deposit with the treasurer from moneys collected by him on behalf of the registered society all sums in excess of an amount to be fixed from time to time by the committee and to obtain from him a receipt on a form to be taken from the prescribed counterfoil book;(g) to keep separate all moneys belonging to the registered society and on no account to mix them with any other moneys; and to produce at all times when called upon to the committee, or the Registrar or any person authorized by him, all moneys in his hands belonging to the registered society;
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(h) to make payments as authorized by the committee, obtaining the payee's signature on the payment book prescribed by the Registrar: Provided that if the payment is made outside the registered society's office the secretary shall, in every instance, obtain from the payee a manuscript receipt and attach it to a separate page of the payment book;(i) to issue a receipt on a form to be taken from the prescribed counterfoil book when receiving money from the treasurer; and(j) to summon meetings as provided in the rules.
Meetings Held in a Co-operative society:
General meetingThe supreme authority of a society shall be vested in the general meeting of its members, at which every member has a right to attend and to vote.
Meeting of delegates
(1) Notwithstanding section 50, if a primary society has more than 3,000 members, the general meeting of members may be replaced by a meeting of delegates, each delegate representing a certain number of individual members. All provisions of this Act referring to general meetings of members shall include a reference to meetings of delegates. (2) Every individual person who is a member of a society may be eligible for election as a delegate. (3) The meeting of delegates shall consist of not less than 20 delegates, elected from among the members. The delegates may not vote by proxy. (4) The society shall make by-laws specifying the method by which the delegates are elected and the number of individual members represented by each delegate and the term of office of the delegates. (5) The Registrar may, on application by a primary society with less than 3,000 members, allow the society to replace the general meeting of members by a meeting of delegates, if for any special reason he thinks fit to do so.
First meeting
(1) Every society shall within 3 months after receipt of the notice of registration, unless the time is extended by the Registrar, hold a first meeting of its members.
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(2) The business of the first meeting shall include the election of officers who shall serve until the first annual general meeting and shall be eligible for re-election.
Annual general meeting
(1) Every society shall provide in its by-laws for an annual general meeting to be convened by the committee of management and to be held as soon as practicable, but not later than 6 months after the end of the financial year, unless the approval of the Registrar has, within that period of 6 months, been obtained to extend that period, and may also provide for other general meetings. (2) Unless the by-laws otherwise provide, a notice of every general meeting shall be sent to each member or delegate entitled to attend the meeting at least 15 clear days prior to the date of the meeting. The notice shall state the matters for discussion and the resolutions to be proposed and no other subject shall be discussed without the consent of the majority of the members present and voting at the general meeting.
Functions of annual general meeting
The functions of the annual general meeting of a society are — (a) to consider and confirm the minutes of the last annual general meeting and of any other intervening general meeting; (b) to consider the auditor’s report, the reports of the committee of management and any report made by the Registrar or his representative; (c) to approve the financial statements; (d) to consider and resolve the manner in which any available net surplus shall be distributed or invested subject to the provisions of this Act and the by-laws; (e) to consider and adopt any amendments to the by-laws; (f) to elect or remove members of the committee of management; (g) to appoint, where necessary, the auditors of the society; (h) to consider and determine the maximum amount the society may borrow; and (i) to transact any other general business of the society of which due notice has been given to members.
Extraordinary general meeting
(1) An extraordinary general meeting of a society may be convened at any time by the committee of management of the society, except that at least 7 clear days", and in the case of a proposed amendment to by-laws at least 15 clear days", written notice of the meeting and of the
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subjects on the agenda for discussion have been sent to each member or delegate, as the case may be, or given as provided in the by-laws. (2) An extraordinary general meeting of a society shall be convened by the committee of management on receipt of a requisition for such a meeting signed by at least 20% or 60 of the members or delegates of the society, whichever is the less, stating the objects of the meeting.(3) If the committee of management fails to convene a meeting in accordance with subsection (2) within one month of receiving the requisition for the meeting, the members making the requisition shall have power to convene the meeting themselves by notice to all members of the society stating the objects of the meeting and the fact that the committee of management has failed to convene the meeting. (4) The Registrar or his representative may at any time convene a special general meeting of a society and may also direct what matters shall be discussed at the meeting.
Co-operative Society Act 1904:
In India, cooperative societies are regarded as instruments to mobilize and aggregate community effort to eliminate layers of middlemen in any product or service supply chain hence resulting in greater benefit sharing for the grassroot farmer,worker or artisans. The Cooperative Credit Societies Act, 1904 enabled formation of cooperatives for supplying to farmers cheap credit and protect them from exploitation in the hands of the moneylenders. The cooperative act 1912 expanded the sphere of cooperation and provided for supervision by central organization.
Co-operative Society Act 1904:
In India, cooperative societies are regarded as instruments to mobilize and aggregate community effort to eliminate layers of middlemen in any product or service supply chain hence resulting in greater benefit sharing for the grassroot farmer,worker or artisans. The Cooperative Credit Societies Act, 1904 enabled formation of cooperatives for supplying to farmers cheap credit and protect them from exploitation in the hands of the moneylenders. The cooperative act 1912 expanded the sphere of cooperation and provided for supervision by central organization.
Maharashtra Co-operative Societies Act 1960:
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An Act further to amend the Maharashtra Co-operative Societies Act, 1960.WHEREAS it is expedient further to amend the Maharashtra Co-operative Societies Act 1960, for the purpose hereinafter appearing; It is hereby enacted in the Forty-seventh Year of the Republic of India as follows :-
1. This Act may be called the Maharashtra Co-operative Societies (Amendment) Short title Act, 1996.
2. In section 9 of the Maharashtra Co-operative Societies Act, 1960 (hereinafter referred to as “the principal Act”). in such-section (2), after the words “deemed to have been registered” the words” and thereafter the Registrar shall issue a certificate of registration under his seal and signature within a period of fifteen days “ shall be added.Our Comments :-Section 9, had been amended to clarify the provision as regards Registration of Co-operative Society more explicit.
3. In section 22 of the principal Act, in sub-section (2), after the words “deemed to have been admitted as a member of the society”. the words “If any question arises whether a person has become a deemed member or otherwise, the same shall be decided by the Registrar after giving a reasonable opportunity of being heard to all the concerned parties.” shall be added.
4. In section 23 of the principal Act, in sub-section (IA), after the words ‘become a member of such society”, the words, “If any question arises whether a person has become a deemed member otherwise, the same shall be decided by the Registrar after giving a reasonable opportunity of being heard to all the concerned parties”, shall be added.Our Comments : – Section 22(2) and 23 (1A) has been amended to clarify that as regards membership the power shall be exercised by the registrar.
5. In section 27 of the principal Act, for sub-section (9), the following sub-section shall be substituted, namely : –“(9) No nominee of the Governmetn or any financing bank on the committee of any society shall be entitled to vote at any election of officers of such committee such as, the President, Vice President, Chairman, Vice Chairman, Secretary, Treasurer or any other officers by whatsoever designation called, who holds the office by virtue of his election to that office.Our Comments : – Section 27 has been amended so that the powers as regards Governmetn nominees as regards election of office bearers have been 0curtailed.
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6. In section 73-1 D of the principal Act. –a) in such-section (I), –i) for the words “two-third majority” the words simple majority” shall be substituted;ii) for the words “for the time being entitled to sit and vote at any meeting of the committee ”the word as” entitled to vote at the election of such President, Vice President, Chairman , Vice Chairman, Secretary, Treasurer or any other officer” shall be substituted.(b) in sub section (2) for the time being entitled to site and vote at any meeting of the committee” the words entitled to elect the President, Vice President, Chairman, Vice Chairman, Secretary, Treasurer or any other officer, as the case may be, of the committee” shall be substituted;(c) in sub-section (7) for the words “six months” the word as “one year” shall be substituted.Our comments :- section 73 (1D) have been amended so that no confidence motion can be passed with simple majority instead of 2/3 majority. Subsection 7 of this section has been amended so that the requisition for a Fresh Motion of no confidence can be brought only after a period of one year. Instead of the previous period of six months. The term of the administrator is now extended upto one year from the previous period of six months.
7. In section 73BB of the principal Act, in sub-section (I) –(a) for the words “union then the selection shall be made by the union with the largest membership, and where there is no union at all, then by an election by such employees from amongst themselves in the prescribed manner” the words “recognised union or unions and where there is no union at all or where there is a dispute in relation to such issues including whether a union is recognised or not, then the seats so reserved shall be filled by an election by such employees from amongst themselves in the prescribed manner” shall be substituted.(b) the following Explanation shall be added at the end, namely :-“Explanation – For the purpose of this section the members of the committee shall mean and include the representatives of the employees”.
8. In section 73BB of the principal Act, –(a) to sub-section (I), the following Explanation shall be added, at the end, namely :-‘Explanation – For the purpose of determining the number of committee members under this sub-section, committee members who are elected, co-opted nominate, appointed or otherwise occupying the position on the committee under 73B, 73BB and under this sub-section shall not be included”,(b) in sub-section (2), for the existing proviso, the following proviso
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shall be substituted, namely :-‘Provided that, where the bye-law of a society already provide for reservation of seats for women on the committee thereof, the total number of seats to be reserved for women shall be equal to the number of seats specified in sub-section (I)”.
9. In section 73H (2), of the principal Act, in sub-section (2), for the words, “where there is a willful failure on the part of the committee to hold election to the committee before the expiration of its term, the committee before the expiration of its term, the committee before the expiration of its term, the committee” the words “ The committee” shall be substituted. Our Committee, to conduct the elections before the expiry of the tenure of the committee. The above said amendment appears to have been made to bring consistency with the provisions of subsection (2B) of subsection 73-G.
10. In section 77A of the principal Act, in sub-section (3), the following proviso shall be added, namely :-“Provided hat, if a new committee is not, or cannot be constituted at the expiry or termination of the term of office of the committee or Administrator, for any reason beyond the control of the committee or Administrator, the term of office of the committee or Administrator, as the case may be, shall be deemed to be extended, until the new committee is duly constituted.”Our Comments :- Section 77 (A) has been amended so that the tenure of office of the Managing Committee or Administrator would be deemed to have been extended if for any reason whatsoever a new committee cannot be constituted before the expiry of the term office.
11. In section 78 of the principal Act, in sub-section (3) the following proviso shall be added, namely:-“Provided that, the member who has been so removed, shall not be eligible to be re-elected, re-appointed, re-nominated, or re-co-opted, as a member of any committee from the date on which he has been so removed or till such lesser period as may be laid down under the provisions of section 73FFF or 144E, as the case may be”.Our Comments :- if a member of the committee has been removed under this section than he cannot be re-elected, reappointed, renominated or recopted as a member of the Managing Committee for one full term from the date he has been removed or for such period as laid down in provisions of sections 73FFF or 144E of the M.C.S. Act 1960.Our comments : – Subsection of 104 has been substituted to specify in which cases the appeal should lie with the registrar and in which places the appeal should lie with the State Government.
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12. In section 104 of the principal Act, for sub-section (I), the following sub-section shall be substituted, namely :-“(1) The committee or any member of the society ordered to be wound up may prefer an appeal against the final order of winding-up within two months form the date of the issue of the order made under section 102.-(a) if made by the Registrar, or the special or Additional or Joint Registrar on whom the powers of the Registrar are conferred, to the State Government ;(b) If made by any person other than the Registrar, or the Special or Additional or Joint Registrar on whom the powers of the Registrar are conferred, to the Registrar.Provided that, no appeal shall lie against order, issued under sub-clause (i), (ii) or (iii) of clause (c) of sub-section (I) of section 102”.
13. In section 112B of the principal Act, in sub section (I) in clause (b), in sub-clause (iv), for the words” such employees”, the following shall be substituted namely :-“such employees. Where there is no recognised union or unions or where there is no union at all, the employees shall elect representatives from amongst themselves. The election shall be held by the Collector in the manner laid down in Chapter XI-A of this Act”.
14. In section 148 of the principal Act, for sub-section (3), the following sub-section shall be substituted, namely :-(3) No prosecution under this Act shall be lodged, except with the previous sanction of the Registrar.
Management of society:
Each society will be managed by Committee. - - Committee means the governing body of a registered society to whom the management of its affairs is entrusted. [section 2(b)]. Officer of society includes a Chairman, Secretary, treasurer, member of Committee or other person empowered under rules or bye-laws to give directions in regard to business of society. [section 2(e)].
Registered Society is body corporate:
A registered cooperative society is a body corporate with perpetual succession and common sea. (just like a company). It can hold property, enter into contracts, institute and defend suit and other
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legal proceedings and to do all things necessary for the purposes of its constitution. [section 18].
Audit:
(1)The Registrar shall audit or cause to be audited by some person authorised by him by general or special order in writing in this behalf the accounts of every registered society once at least in every year. (2) The audit under sub-section (1) shall include an examination of overdue debts, if any, and a valuation of the assets and liabilities of the society. (3) The Registrar, the Collector or any person authorised by general or special order in writing in this behalf by the Registrar shall at all times have access to all the books, accounts, papers and securities of a society, and every officer of the society shall furnish such information in regard to the transactions and working of the society as the person making such inspection may require.
Inspection of affairs of society:
Registrar can hold an enquiry or direct some person authorised by him to hold enquiry in following circumstances – (a) Of his own motion (b) Request of Collector (c) Application by majority of committee members of society or (d) At least one-third of members of society. [section 35(1)]. All officers and members of society shall furnish necessary information to registrar or person authorised by him. [section 35(2)].
1) The Registrar may of his own motion, and shall on the request of the Collector, or on the application of a majority of the committee, or of not less than one- third of the members, hold an inquiry or direct some person authorised by him by order in writing in this behalf to hold an inquiry into the constitution, working and financial condition of a registered society. (2) All officers and members of the society shall furnish such information in regard to the affairs of the society as the Registrar or the person authorised by the Registrar may require.
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The Birth of Amul and development of India’s Dairy Cooperative Movement:
The birth of Amul at Anand provided the impetus to the cooperative dairy movement in the country. The Kaira District Cooperative Milk Producers’ Union Limited was registered on December 14, 1946 as a response to exploitation of marginal milk producers by traders or agents of existing dairies in the small town named Anand (in Kaira District of Gujarat). Milk Producers had to travel long distances to deliver milk to the only dairy, the Polson Dairy in Anand. Often milk went sour as producers had to physically carry the milk in individual containers, especially in the summer season. These agents arbitrarily decided the prices depending on the production and the season. Milk is a commodity that has to be collected twice a day from each cow/buffalo. In winter, the producer was either left with surplus / unsold milk or had to sell it at very low prices. Moreover, the government at that time had given monopoly rights to Polson Dairy (around that time Polson was the most well known butter brand in the country) to collect milk from Anand and supply it to Bombay city in turn. India ranked nowhere amongst milk producing countries in the world in 1946.
Angered by the unfair and manipulative trade practices, the farmers of Kaira District approached Sardar Vallabhbhai Patel (who later became the first Deputy Prime Minister and Home Minister of free India) under the leadership of the local farmer leader Tribhuvandas Patel. Sardar Patel advised the farmers to form a Cooperative and supply milk directly to the Bombay Milk Scheme instead of selling it to Polson (who did the same but gave low prices to the producers). He sent Morarji Desai (who later became Prime Minister of India) to organize the farmers. In 1946, the farmers of the area went on a milk strike refusing to be further oppressed. Thus the Kaira District Cooperative was established to collect and process milk in the District of Kaira in 1946. Milk collection was also decentralized, as most producers were marginal farmers who were in a position to deliver 1-2 litres of milk per day. Village level cooperatives were established to organize the marginal milk producers in each of these villages.
The Cooperative was further developed & managed by Dr. V Kurien along with Shri H M Dalaya. The first modern dairy of the Kaira Union was established at Anand (which popularly came to be known as AMUL dairy after its brand name). Indigenous R&D and technology development at the Cooperative had led to the successful production of skimmed milk powder from buffalo milk – the first time on a
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commercial scale anywhere in the world. The foundations of a modern dairy industry in India were thus laid since India had one of the largest buffalo populations in the world.
The success of the dairy co-operative movement spread rapidly in Gujarat. Within a short span five other district unions – Mehsana, Banaskantha, Baroda, Sabarkantha and Surat were organized. In order to combine forces and expand the market while saving on advertising and avoid a situation where milk cooperatives would compete against each other it was decided to set up an apex marketing body of dairy cooperative unions in Gujarat. Thus, in 1973, the Gujarat Co-operative Milk Marketing Federation was established. The Kaira District Co-operative Milk Producers’ Union Ltd. which had established the brand name AMUL in 1955 decided to hand over the brand name to GCMMF (AMUL). With the creation of GCMMF (AMUL), we managed to eliminate competition between Gujarat’s cooperatives while competing with the private sector as a combined stronger force. GCMMF (AMUL) has ensured remunerative returns to the farmers while providing consumers with products under the brand name AMUL.
This was possible due to the leadership of the founder Chairman of AMUL, Tribhuvandas Patel and the vision of the father of the White Revolution, Dr. Verghese Kurien who worked as a professional manager at AMUL. Numerous people contributed to this movement which would otherwise not have been possible.
Dr. Verghese Kurien, the World Food Prize and the Magsaysay Award winner, is the architect of India’s White Revolution, which helped India emerge as the largest milk producer in the world.
Impressed with the development of dairy cooperatives in Kaira District & its success, Shri Lal Bahadur Shastri, the then Prime Minister of India during his visit to Anand in 1964, asked Dr. V Kurien to replicate the Anand type dairy cooperatives all over India. Thus, the National Dairy Developed Board was formed and Operation Flood Programme was launched for replication of the Amul Model all over India.
Operation Flood, the world’s largest dairy development programme, is based on the experience gained from the ‘Amul Model’ dairy cooperatives. The facilities at all levels are entirely farmer-owned. The cooperatives are able to build markets, supply inputs and create value-added processing. Thus, Amul Model cooperatives seem to be the most appropriate organizational force for promoting agricultural development using modern technologies and professional
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management and thereby generating employment for the rural masses and eradicating poverty in these undeveloped areas. India has already demonstrated the superiority of this approach.
Webliography:
http://www.accommodationtimes.com/legal/society/maharashtra-co-operative-society-act/
http://www.bclaws.ca/Recon/document/freeside/--%20C%20--/Cooperative%20Association%20Act%20%20SBC%201999%20%20c.%2028/00_99028_01.xml
http://docs.google.com/viewer?a=v&q=cache:uRy7sMwHKlMJ:www.nios.ac.in/Secbuscour/cc09.pdf+cooperative+society&hl=en&gl=in&pid=bl&srcid=ADGEESjV8RrwKlzIug6gA1_Lt1vpdIPIK65g3MCOLgPgcAQDviC3bquX5N-Y8LgwoABoVyIbEqsPUHwwFBoHbSlRRr1hYb5qMM9wXKVlfKcq92JMzLWr-zYlq27ogc2-tlPOkKqzUlNA&sig=AHIEtbTGp2lpHWcxyz5xQib5YlJasXoDmg
http://en.wikipedia.org/wiki/Cooperative
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