CHS wary of referring to Bye-Laws!

By I C Naik

Cooperative society is a creature of a statute. It is not a body established by Statute like public Sector Undertakings. It is registered as a private association of the like minded persons coming together voluntarily and for common economic gain like the maintenance of house property and getting amenities and services un-interruptedly and economically, sharing costs among themselves.

In order to manage its enterprise, with member’s democratic control coupled with autonomy of members in policy framing,  a small group is elected to handle its day to day affairs usually called “The managing committee “.

The scheme of cooperative society law is so nicely designed that the participants (called members) of a well identified cooperative venture can run it with ease and full understanding and mutually sharing the least tension and anxiety on their part. But going by the spate of questions cooperators across the country refer to www.indiancooperative.com anxiously looking forward to getting sincere practical advice tells an entirely opposite story.

The ICA International Cooperative Alliance and our Parliament fervently hope that managements of cooperatives are guided by 7 co-operative principles in their day to day matters and also in long term vision.

India having inherited a top down approach, a British legacy, opposed to several western thinkers of “Bottom-up”  approach has been strangulated by highly motivated political  and bureaucratic interference, the cooperative legislation has been far from a cooperator friendly regime.

“In contrast to the bottom-up evolution of cooperatives in Europe and North America, where cooperative laws generally followed and recognized the initial development of a cooperative sector, colonial administrators in many developing countries sought to promote cooperatives from the top-down.” Writes an U S Lawyer Sean Flynn, Esq. in “A Short History of Cooperative Law and Regulation Reform in Developing Countries”

For several years a host of committees pleaded for simplicity by transferring to cooperators themselves, the disproportionate wholly unjustified power concentrated in the one man authority christened by British as “the Registrar”The Constitution ( 97th Amendment ) Act 2011 wanted to do almost that but in actual practice the States do not seem to be kind to the hopes of the Indian Parliament.

Top-Down Hierarchy of Maharashtra C S Law (Illustration)

i.Constitutional Provisions in “Part IXB: The Cooperative Societies” after enactment of The Constitution (97th Amendment ) Act 2011 (97CAA) where any State Law is inconsistent therewith.

iiThe Maharashtra Co-operative Societies Act 1960. [ Sections 1-168] [President’s assent on 4-05-1961: Published in the gazette of the Maharashtra Government, Part IV, on 09-05-1961; Amended nearly every year the last being the Maharashtra Cooperative Societies (Amendment) Act 2013 enacted as Mah. Act No. XVI of 2013 assented to by the Governor on 13-8-2013 became effective replacing Ordinance having in force on and from 14 2 2013]

iii. The Maharashtra Co-operative Societies Rules 1961 [Rules110/Forms 38][G.N., C & R.D.D.,No.CSL.,1161/46295-G DATED 23rd December 1961 [M.G. Pt. IV- B p1201] also amended more than 50 times by now.

iv.The Maharashtra Co-operative Societies (1st Amendment) Rules, 2014. Published in NOTIFICATION Maharashtra Co-operative Societies Act, 1960. No. CSL-2014/697/C.R.04/13C dated the 30th August 2014.

v.The Maharashtra Cooperative Tribunal Regulations 1962 [Rules 37/Forms 16]

vi.The Maharashtra Co-operative Societies Election to Committee Rules,2014 Published the Government Notification, Co-operation, Marketing and Textiles Department, No. CSL. 2013/C.R. No.639/13-C dated 11th September 2014.

vii.All orders issued under Section 79A of the M C S Act 1960 which are binding on every society as specified therein

viii.Circulars issued by the Commissioner and Registrar of Cooperative Societies.

ix.Registered Bye-Laws of the concerned society.

Lost opportunity to free cooperatives from the strong shackle of Politicians and Bureaucracy:

Although Bye-Laws are internal regulations of Co-operative Societies answering all day to day management questions, they are subject to above (i) to (viii) components of (Say Housing) Society Law. So a member how so ever well versed in the Bye-laws of the housing society of which he is a member, he comes across hurdles in the form of one or the other provisions of any one more of these 8 components.

1.In 1991 BRAHM PERKASH COMMITTEE presented a Model cooperative societies Act with the hope that Indian federal constituents will welcome it whole heartedly and give much needed legislative impetus to almost bewildered Cooperative Movement. But Indian States proved him hopelessly wrong- may be because Bye-laws RAHM PERKASH was too bold a person of that time and even as of too day in terms of Indian Political and bureaucratic stance.

2.The approach of the model law is to give a genuine character to cooperatives, to facilitate building of an integrated cooperative structure so as to evolve a cooperative system, make the federal organizations at various levels more responsive and responsible towards their members, minimize government control and interference to enable cooperators and cooperatives to develop self-reliance and self-confidence with power of decision making and to eliminate politicization.  The draft law, thus, removes the colonial approach and character of existing laws and truly meets the norms of governance of a democratic autonomous enterprise in the country so deeply committed to democratic values.

3.The Model Act gave no power to the Registrar or the Government to issue orders for any of the following in a cooperative:

a)   Supersession of the Board of Director.

b)  Compulsory amalgamation or division of societies.

c)   Compulsory amendment of bye-laws

d)  Veto/rescind/annul the resolutions of cooperative societies

e)   Issue directives/ Notifications/G R Circulars etc

4.Most redeeming feature of the Model Act was that it gave no rule making power to the government.  The law itself lays down the broad parameters necessarily to be observed by cooperatives and leaves all other matters relating to constitution, management and business of the society to be conducted in accordance with its bye-laws.

Irrationality of Bye-Laws

The cooperative society and its Bye-laws cannot come in to existence, unless the Registrar of cooperative societies is satisfied that a proposed society has complied with the provisions of this Act and the rules, or any other law for the time being in force, or policy directives issued by the State Government under section 4 and that its proposed by-laws are not contrary to this Act or to the rules.

Having made sure that Bye-Laws are as per Cooperative Societies Laws why it should be necessary to keep threatening the members (the most reluctant reader of Bye-Laws ) that what you read in Bye-Laws is “subject to provisions of the Act and the Rules”  Each and every of 170 and odd bye laws are farmed in accordance with and “subject to provisions of the Act and the Rules” For example relevant portion of Bye-law No 140 of the Model 2001 and 2009 reads QUOTE: The Chairman of the society shall have power of overall superintendence, control, control and guidance in respect of management of the affairs of the society, within the frame-work of the MCS Act 1960, the MCS Rules 1961and the bye-laws of the society. In case of any emergency, the Chairman of the society shall be competent to exercise any of the powers, of the Committee UNQUOTE

If the phrase  “The frame-work of the MCS Act 1960, the MCS Rules 1961” is  replaced by the provisions of these Bye-Laws it would serve the purpose and not alienate the members/Chairman.

Few more illustrations:

1.Bye-Law No 39(b) QUOTE: A meeting of the Committee or the general body, as the case may be, shall not refuse any application for admission to membership or transfer of shares and interest in the Capital/Property of the society except on ground of noncompliance of the provisions of the Act, the Rules and the bye-laws of the society or any other law or order issued by the Government in exercise of the statutory powers vested in it. UNQUOTE

A phrase “the provisions of the Act, the Rules ” confuses the management as it is irksome  to go through the Act and the Rules when elaborate conditions are incorporated in the Bye-Laws. Compliance of Bye-laws should adequate.

2.Bye-Law No 111. QUOTE:  Subject to the provisions of the MCS Act, the MCS Rules and the Bye-laws-laws of the Society, the final authority of the society shall vest in its general body meeting, summoned in such manner as is specified in these bye-laws. UNQUOTE

3.Bye-Law No 112. QUOTE: The Management of the affairs of the society shall vest in the Committee duly constituted in accordance with the provisions of the MCS Act, the Rules1961  and the bye-laws of the Society UNQUOTE

4.Bye-laws 39 (B) If the phrase  “the provisions of the MCS Act, the Rules1961” are deleted it’s not going to make any difference as it goes without saying in view of the fact that Rules are superior to Bye-Laws and Provisions of the Act are superior to Rules.

As we know passing an Act is a legislative prerogative, making Rules is a delegated legislation by Legislature and bye laws are contractual terms agreed by and between members. Housing society management is in the hands of voluntary service providers and if they are subjected to the torture of phrases like “subject to applicable provisions of the Act and the Rules and Bye-Laws” irritate them a lot and hence make mistakes and behave with members in an unpleasant manner.

SPECIFIC MENTION OF APPLICABLE PROVISION OF THE ACT PROVIDES COMFORT TO READERS.

ILLUSTRATIONS OF THIS FACILITY:

1.Bye-Law No 12 (i) The reserve Fund of the society shall comprise of :-

(a)The amounts carried to the said fund, from year to year, out of the net profit of that year, subject to the provisions of sections 66(1) and (2) of the Act;

2.Bye-Law No 15 . The Funds of the society, when not employed in its business, may be invested or deposited as required under section 70 of the Act.

3.Bye-Law No 23 A member shall have the right to inspect free of cost books, registers, documents, etc. as provided in section 32(1) of the Act and get copies of the documents as provided under Section 32(2) of the Act, on payment of  the fees prescribed under the bye-law No. 172 171.

4.Bye-Law No 25 .No associate member shall have any rights or privileges of a member except as provided under Section 27(2) of the Act.

5.Bye-Law No 34 “Subject to the provisions of the Section 30 of MCS Act 1960  bye-law No. 17A or 19, on the death of a member, the society shall transfer the shares and interest of the deceased member in the Capital/Property of the society to the Nominee/Nominees”

6.Bye-Law No 38© In the event of ineligibility (in view of the provisions of Section 29(2)(a) of the Act.) of the member to transfer his shares and interest in the Capital/Property of the society.

HOPING AGAINST HOPES may be but we must try.

The suggestion to abolish the Rule making Power and of issuing directions Notifications etc should complel the legislative provisions to be sharply focused and Bye-Laws can be made fully self contained by strictly adhering to the provisions of the Legislative enactment. Management of housing societies have one book to fall back. This shuld leave nearly zero pace for Political and bureaucratic interference in Cooperative Movement. Hope this happens!!!