Amusing though, it’s a fact that Cooperative Society Bye-Laws are not laws. The SC has ruled in [Co-Operative Central Bank Ltd. & … vs Additional Industrial Tribunal, on 03.04.1969[AIR 245, 1970 SCR (1) 206] that “They merely govern the internal management, business or administration of a society and may be binding between the persons affected by them but are neither law nor do they have the force of law. http://indiankanoon.org/doc/924801/. So 99.99 percent members of housing societies in Mumbai get bemused hearing this. They always thought. “Bye laws are for lawyers, no point in getting involved in to it.”
Going forward, if a little knowledgeable person will say that, “Bye-Laws are contracts entered in to by and between all the members of the Society.[Para 21 of SUPREME COURT judgment in Zoroastrian Co-Operative Housing Society Limited RD-SC 253 (15.04.2005) http://indiankanoon.org/doc/713373/] a lay member will get a shock retorting, “when did I ever sign a contract” For a binding contract it must at least be signed by me. Little known fact unfortunately, is every member signs these contracts, unknowingly.
Someone with little more knowledge might ask ‘why on earth the Registrar forces housing societies to register Model Bye-Laws approved by him shelf? Does his approval not make it a law? Absolutely hard core common sense view; but believe it or not, it is so. Even SC has said so in Co-Operative Central Bank Ltd. & … vs Additional Industrial Tribunal (SUPRA) “if a statute gives power to a Government or other authority to make rules, the rules so framed have the force of statute and are to be deemed to be incorporated as a part of the statute.” http://indiankanoon.org/doc/924801/
Our Constitution and the Cooperative Society Law do allow / require every Society to frame its own Bye-Laws and register them with the Registrar, when the Society is registered. It’s a democratic institution and the State in its regulatory powers should not interfere by requiring the societies to register Bye-Laws written in the Registrar’s office. This is confirmed by SC in Thalappalam Services Cooperative Bank Ltd.& … vs State Of Kerala & Ors. NO. 9017 OF 2013 observed “Powers exercised by the Registrar of Cooperative Societies and others under the Cooperative Societies Act are only regulatory or supervisory in nature, which will not amount to dominating or interfering with the management or affairs of the society so as to be controlled”http://indiankanoon.org/doc/37517217/
Reverting to caption topic, why there is a outrageous distance between the two; the members and their society Bye-Laws? Why they prefer to be ignorant about their own society Bye-Laws? And all this, when the Indian Parliament want the States to encourage “co-operative societies based on the principles of voluntary formation, democratic member-control, member-economic participation and autonomous functioning” Article 243ZI.
The starting point of unfolding the mystery is the Model Bye-Laws. These are written by cooperative department of the State and approved by the Registrar. These are to be adopted in the general body meetings of the housing societies as the Bye-Laws voluntarily agreed upon by their members before submitting it for registration. For existing housing societies the concerned Bye-Law is No 166 of Model 1984 and No 167 of Model 2001, 2009 and 2013 (Draft). Cooperative society registered prior to approval of Model 2001 by undergoing the process called amending the Bye-Laws as prescribed in Bye-Law No 166/167 can adopt 2001 subsequent Model as their registered Bye-Laws. Relevant portion of Bye-Law No 166/167 is reproduced below.
‘No bye-law shall be made, altered or abrogated unless
i. Not Applicable to this paper
ii. —do—
iii. the making, alteration or abrogation is approved and registered by the Registering Authority.
Rule 9 (M.C.S. Rules 1961) reads: “First bye-laws of a society:- When a society has been registered the bye-laws of the society as approved and registered by the Registrar shall be the bye-laws of the society.” So existing housing societies have their Bye-Laws approved by the Registrar.
The core issue is Registrar’s approval to bye-laws
Mark carefully, the word ‘approved’ in Bye-Law No 166 and the Rule 9.
The hierarchy of Cooperative Society Law is
(i) M C S Act 1960,
(ii) M.C.S. Rules 1961,
(iii) Orders issued under section 79A of the M C S Act 1960 and
(iv) Registered Bye-Laws.
Statutory authority/powers flow from the statute, the enactment of State Legislature definitely not from the Rules. Source of function /power /authority of the Registrar must be the M C S Act 1960. The M.C.S. Rules 1961 framed by the Executive lays down the procedures to execute provisions of the Statute. The Society and the Registrar are obliged to stick to these procedures.
The M C S Act 1960 in Section 2 (24) defines; “Registrar” means a person appointed to be the Registrar of Co-operative Societies under this Act;
No specific Section in the M C S Act 1960 lists out the powers of the Registrar. Section 3 provides for appointment of Officers/Executives as subordinate to the Registrar to use the vast powers spread across the length and breadth of the M C S Act 1960 in accordance with the procedures prescribed under the M.C.S. Rules 1961.
The Registrar’s duty is to satisfy himself that the proposed Bye-Laws conform to provisions of the M C S Act 1960 as evidenced by these words in Section 9(1) namely “that its proposed by-laws are not contrary to this Act or to the rules” This means there must be an express provision in the M C S Act 1960 to the effect that amendment to Bye-Laws must get the approval of the Registrar before its registration. If such a provision does not exist then that Bye-Law which provides for approval of its amendment by the Registrar cannot be registered or at least it is inoperative even if registered.
The lone express provision about registration of amendment to the Bye-Laws is in Sub-Section (1B) of Section 13 namely that “No amendment of the bye-laws of a society shall be registered by the Registrar under this section or in the case of the bye-laws which are deemed to have been registered shall have effect, if the amendment is repugnant to the policy directives, if any, issued by the State Government under section 4.]. Sub-Section 2 of Section 12 further says that “ When the Registrar registers an amendment of the bye-laws of a society or where an amendment of the bye-laws is deemed to have been registered he shall issue to the society a copy of the amendment certified by him, which shall be conclusive evidence that the same is duly registered.” It does not use the phrase “approved and registered”
Nowhere the M C S Act 1960 empowers the Registrar to approve the amendment to the Bye-Laws.
Can a Rule require the Registrar to approve the amendment to Bye-Laws and if it does, is that Rule not an in-valid Rule going beyond the Act? Can the statutory provision conferring power to the State to make Rules require the “Registrar’s approval” as a precondition to registration? If it does, the question is when Statute does not confer such an important power how can the Rule making go that far. Applicable Rule is No 12(5); ” On receipt of a copy of the resolution and other particulars referred to in sub-rule (4), the Registrar shall examine the amendment proposed by the society and if he is satisfied that the amendment is not contrary to the Act or the rules and is in the interest of the society and co-operative movement, he may register the amendment and issue to the society a copy of the amendment certified by him under sub-section (2) of Section 13.
As against this elaborate satisfaction, under Section 13(1B) (supra) the Registrar can refuse registration of an amendment only if the amendment is repugnant to the policy directives, if any, issued by the State Government under section 4” Does this not mean that the Rule 12(5) requiring the Registrar to examine if “ the amendment was not contrary to the Act or the rules and was in the interest of the society and co-operative movement,” is not his duty or a power conferred on him under the M C S Act 1960.
There is another Rule 9 which is also contextual. It reads; “First bye-laws of a society:- When a society has been registered the bye-laws of the society as approved and registered by the Registrar shall be the bye-laws of the society.”
Mark the word approved. We did not come across in the M C S Act 1960 a power of approval to proposed Bye-Laws having been conferred on the Registrar. Is this Rule not a “misleading” to the extent it conveys some power which has not been vested in the Registrar under the M C S Act 1960. Does the “approval” not tantamount to making Rules; a situation SC has ruled in Co-Operative Central Bank (SUPRA) “if a statute gives power to a Government or other authority to make rules, the rules so framed have the force of statute and are to be deemed to be incorporated as a part of the statute.”
The Rule making power in this connection is vested in the State vide Section 165(2)iii reading as under:
(iii) prescribe the matter in respect of which a society may make, or the [Cooperative court] may direct a society to make, by-laws and the conditions to be followed in making, altering and abrogating by-laws and the conditions to be satisfied prior to such making, alteration or abrogation;
Can this be interpreted to mean that “the Rule making power extends to authorizing the Registrar to approve the proposed Bye-Laws or amendment there to” before it is registered. Does not seem to be so on the plain reading thereof. The word condition is tempting on the part of drafters of the Rules to stretch it to mean a condition of “approval by the Registrar” But that is precisely a quasi judicial power coupled with touchstones and cannot be termed as one of the “conditions” to be satisfied prior to such making, alteration or abrogation. And the function of “making, alteration or abrogation” is that of the Society and not of the Registrar.
PRESENT SCENARIO:
Housing societies must be in the process of amending their Bye-Laws to align them to The Constitution (97th Amendment ) Act 2011 and the Maharashtra Cooperative Societies (Amendment) Act 2013. More so because after initial enthusiasm the finalization pf Mode,2013 is in limgo. I would recommend amending the Bye-Law 166 / 167 as under:
166. No bye-law shall be made, altered or abrogated unless
(i) a proposal to do so has been communicated to all members, 14 days before the meeting of the general body of the society, at which it is proposed to be considered
(ii) the resolution is passed by not less than 2/3rds majority of the members present and voting at the meeting of the general body of the society and
(iii) the making, alteration or abrogation is free from any doubt that it is contrary to the Act or the rules and the policy directives, if any, issued by the State Government under section 4 of the M C S Act 1960, but it is found to be in the interest of co-operative movement, and
(iv) is registered by the Registering Authority.
It is thought that interest of the housing societies is better known to the Registrar and that view is consistently held no matter the Hon. Supreme Court holding the opposite view [in State Of Maharashtra And Ors. Vs Karvanagar Sahakari Griha … on 3 May, 2000] namely “In our view, what is in the interest of the society is primarily for the society alone to decide and it is not for an outside agency to say” http://indiankanoon.org/doc/925036/
The fate accompli:
How to satisfy the Registrar that
1. amendment passed by the general body meeting is not contrary to
a. the Act or
b. the rules,
c. or the policy directives, if any, issued by the State Government under section 4 of the M C S Act 1960, and
2. it is found to be in the interest of
a. the society and (although he society knows the best)
b. the co-operative movement, as the Registrar decides
How many housing societies have the members having an expertise to draft amendment to Bye-Laws which will satisfy the Registrar in above matters? Where will they find the required material in support thereof?
So housing societies are obliged to accept voluntarily the model Bye-Laws as their Bye-LawS . No alternative. And in that the members do not try to understand the Bye-Laws
Education, Education and Education!!!