Despite Cooperative Ordinance II 2013, the Maharashtra State Cooperative cadre yet to come to terms with changed legal scenario. The Managing committee of St Sebastian Homes Co-operative Housing Society Ltd in Bandra  was dissolved by the deputy registrar of co-operative societies, S M Patil, following allegations of mismanagement.

Almost in the same week in Mumbai’s Sub-urban District (3) the Joint Registrar accepting in appeal, the plea of a Committee of one Premises Co-op Society dismissed last September, set aside the dismissal order and quashed the appointment of an administrator – an example of demonstrating due respect to 97^th CAA and the Maha Ordinance II 0f 2013. This case was brought up by the Society before the CM a few months back. This order could a result thereof the Committee feels. Further the Jt. Registrar advised the department to be a guide to the committees in case of procedural flaws rather than resorting to their dismissal.

Reverting to main story, in a sheer contempt of Proviso 2 to Article 273ZL(1) of the Constitution, and Proviso 3 to Section 78A(2)(ii) as inserted the M. C. S. Act 1960 by Maha Ordinance Ii of 2013 on 14 2 2013, the H/West ward deputy registrar has appointed an administrator to govern the 94-year-old society’s functioning near Mehboob Studios, St Sebastian having 121 plots comprising bungalows and buildings.

The DR was reportedly prompted to dismiss the entire Committee in order to do justice to the three elected committee members—Royce Periera, Rita Pinto and Joseph D’souza who were removed by the Committee in an “unlawful” manner as per the DR. The Committee was also alleged to have deprived the trio of their rights to inspect some documents on some flimsy grounds.  The Committee has challenged DR’s order in the Bombay high court. The society’s plea is scheduled to be heard on Monday.

The reports add that the three members, were suspended for allegedly spending more than the sanctioned Rs 1.5 lakh-Rs 1.83 lakh on repair and renovation of the society’s clubhouse. The society, based on the recommendations of an inquiry committee, asked the three to reimburse Rs 30,000 each in lieu of the additional expense of over Rs 93,000 incurred on renovation. The trio was later removed.

If the reports are to be believed the D R viewed the removal as unlawful as it was necessary for the society to table a no confidence motion against the three members, get the same approved by the general body and obtain the approval of the deputy registrar. As this was not done, the DR viewed this as high-handed manner in which the society was being managed,” as stated in his dismissal order as per the news paper reports. { Although in the M. C. S. Act 1960 no such power is vested in GBM)

Official version of dismissed Committee reportedly is that the DR overlooked the fact that it was the general body that had held the three members guilty for overspending and passed a resolution to recover the amount from them. According to the Secretary the aggrieved trio could have challenged the resolution of the general body meeting before the co-operative court,”

- contributed by I C Naik

Following account gives a true picture of functioning of housing cooperatives in the country. Apathy from the general members emboldens the vested interest to control the levers of power. Any well-meaning member caught in such situation soon finds himself being sidelined rather impolitely-Editor

I have been elected as a committee member in a co-op housing society in the year 2010. I have observed that the Secretary of the society who has been holding the post for the last 12 years is not doing the society’s work as per the Maharashtra Societies Act. Neither does he follow the Resolution passed in the General Body of the society.

He does not know the account of the society. He cannot explain anything to the committee members as well as to the members present in the G.B. I saw that the auditor has made many queries but the queries have not been answered.

They have not submitted the compliance reports to the Dy Registrar over the last five to six years. The Secretary is not placing the monthly Income & Expenditure statement before the committee for approval.

He himself is taking the decision regarding expenditures. The society is charging Non- Occupancy charges more than 10 % of the service charges. I have pointed out the orders of the Govt in this connection. However, he said he would charge as per the G.B’s orders.

The Chairman and other committee members are giving him support for doing such things. My insistence on the work being done according to the rules has been to no avail.

In the last General Body meeting the members present asked about the accounts. The Secretary was unable to explain. So they asked the committee members. However, nobody explained.

At that time I told the members present that the Annual Income & Expenditure statements have not been approved by me as well by the committee in its monthly meetings. So in the General Body meeting, the chairman directed me to resign from the Committee and asked me not to raise any question.

After a few days I have received a letter signed by all the committee members including the office bearer of the society, stating that why I should not be removed from the committee for the reasons mentioned above.

I have given reply to the letter through courier giving all details and pointed out the things which the secretary has not done for the last five to six years.

But even then the Chairman had issued a letter mentioning that they have not received my reply and thus I cease to be a committee member and this information has been put on the Society’s notice board.

Vinayak Mahamunkar

Malad (West)
Mumbai 64

KL Hariharan, Mumbai

Dear Sir,

My share certificate allotted by the Co-op. Hsg. Society in Mumbai stands in the name of 3 of my family members.  If a person dies, what the MCS Act says about the ownership of other two members in the Society.

I C Naik

A member of a CHS holds shares jointly with two other members of his family whose names stand at number 2 and 3 and he dies. How is the ownership of the flat governed under the M. C. S. Act 1960?

Answer

1.   Society’s action in the event of death of a No 1 shareholder (Original member of CHS) is governed by Section 30 a relevant portion is reproduced below:

“On the death of a member of a society, the society shall transfer the share or interest of the deceased member to a person or persons nominated in accordance with the rules, or, if no person has been so nominated to such person as may appear to the committee to be the heir or legal representative of the deceased member.

Provided that, such nominee, heir or legal representative, as the case may be, is duly admitted as a member of the society”

2.   The law does not talk about the shareholders whose name appears at  No 2 and 3.

3.   A question still arise as to how does the managing committee find out the correct person to whom the shares are to be transferred. This is governed by the Bye Laws of the concerned society. Where a society is registered after 2001 this procedure is set out in Bye Law No 35. Interested members can read the Bye Laws in Society office during office hours free of costs.

One of the top urban cooperative banks Abhyudaya co-op bank based in Munbai is also not spared when it comes to RBI’s norms.
The Reserve Bank of India has imposed a monetary penalty on Abhyudaya Co-operative Bank last week. The bank was found to be flouting instructions and guidelines issued by the Reserve Bank of India.

The much-celebrated Chairman Mr Ghandat refused to talk on the matter when Indian Cooperative contacted him. One of the CGMs Mr Naik confirmed RBI’s penalty but wanted Managing Director Mr More to respond on the issue.

MD Mr More did not pick up repeated calls from the cooperative news portal.

The issue related to a special scrutiny conducted in the Vashi branch of the bank to check the operations in the account of M/s Speak Asia Online Private Limited, an online survey company. RBI’s enquiry revealed that the bank had violated KYC / AML guidelines.

The bank had also violated instructions by freezing the account and thus tipping off the customer. It had also closed the audit trail by closing the account.

It was also observed that the bank had not adhered to KYC / AML guidelines on an earlier occasion involving RTGS transactions with Union Bank of India, Zaveri Bazar Branch. Thus there was evidence of recurrence of non-compliance in implementation of KYC norms.

The Reserve Bank of India had issued a show cause notice to the bank, in response to which the bank submitted a written reply. After considering the facts of the case and bank’s reply in the matter, the Reserve Bank of India came to the conclusion that the violations were substantiated and classified as ‘Major’ which warranted imposition of penalty.

The CKP Co-operative Bank based in Mumbai was faulted by the apex bank, RBI.

The bank was found violating Reserve Bank of India’s directive on opening of on-site ATMs.

There is host of other issues on which the RBI has found CKB Bank violating its directives. These included extending finance to borrowers outside area of operations, exceeding exposure to housing and real estate, single party exposure limit.

Also the usual wrong doing of loans to directors, issuing bank guarantee to an entity not banking with them, non-filing of Suspicious Transaction Report (STR) report to Financial Intelligence Unit-India (FIU-IND), exceeding individual limit of unsecured advances, sanctioning overdraft against third party FDs to one of its directors were being indulged into by the CKP bank.

On RBI’ enquiry, CKB bank tried to explain its position which was traced by the apex bank resulting into a penalty of Rs five lakh on the uraban cooperative bank.

Any financial institution including the cooperative banks cannot be viable if the logic of business is not followed. In a court decision which may boost this argument Dr Annasaheb Choughle Urban Cooperative Bank has been given green signal to recover loan from the farmers.

Dr Annasaheb Choughle Urban Cooperative Bank had urged the Bombay High Court to direct the Committee on Petitions not to entertain any application filed by Mohan Joshi MLA and the farmers defaulting on loans from the bank.

The court has ruled that the committee has no power to interfere with the recovery process undertaken by the bank.

The two judge bench said the bank could initiate recovery proceedings and it would be considered legal. The court, however, refused to give its opinion on the legality of the agreement made on the modified interest rate payable by the defaulting farmers.

It bears repetition that the affected bank had given farmers loans amounting to a little less than Rs one crore. As there had been no regular repayment and the amount had become NPA, the bank had no alternative to beginning the recovery process.

The bank started proceedings under Section 101 of the Maharashtra Cooperative Societies Act, 1960. The Registrar of Cooperative Societies heard the bank and the 23 defaulters and then issued Recovery Certificates under Section 101 of the Act.
Equipped with these Certificates, the bank began executing Recovery under Rule 107 of the Maharashtra Cooperative Societies Rules.

The bank had taken the matter to the court as the committee on petitions had stayed its loan recovery proceedings.

The incident of Veera Shaiva Cooperative bank has unnerved numerous innocent depositors who are groping in dark regarding the recovery of their hard earned money.

One small news piece in Indian Cooperative has attracted scores of comment in which the anguish of the helpless victims are evident.

Meanwhile, one of our readers Rakesh Chopra wrote a letter to RBI on the issue of Veera Shaiva Bank. The reply of RBI to Mr Chopra is published below verbatim in the true spirit of cooperative movement. It’s a matter of satisfaction for us to see Indian Cooperative emerging as focal point for both what is good and what is bad in Indian Cooperative movement-Editor