In a very recent judgment the Supreme Court of India [in Thalappalam Ser. Coop.Bank Ltd.& … vs State of Kerala & Ors. on 7 October, 2013 Bench K.S. Radhakrishnan, A K Sikri JJ CIVIL APPEAL NO. 9017 OF 2013] succinctly noted that “Parliament, with a view to enhance public faith in the co-operative institutions and to insulate them to avoidable political or bureaucratic interference brought in Constitutional (97th Amendment) Act, 2011”
1)The Parliament has done a balancing act with a highly exceptional step through a Constitutional Mandate for all cooperative societies of the country an obligation as under;
Article 243ZP: Every co-operative society shall file returns, within six months of the close of every financial year, to the authority designated by the State Government including the following matters, namely:—
(a) annual report of its activities;
(b) its audited statement of accounts;
(c) plan for surplus disposal as approved by the general body of the co-operative society;
(d) list of amendments to the bye-laws of the co-operative society, if any;
(e) declaration regarding date of holding of its general body meeting and conduct of elections when due; and
(f) any other information required by the Registrar in pursuance of any of the provisions of the State Act.
Thus it is quite clear that in compliance of the constitutional obligation there was only one uncertainty left open by the Parliament namely, “the authority designated by the State Government” which was promptly removed by the State Legislature.
2)Hardly any society was aware that this obligation came in to force on 14. 02.2013 i.e. by 30th September 2013 all cooperative societies at least in Maharashtra were supposed to submit the return to the Registrar or to the person authorized by him pursuant to Sub-Section (1A) of Section 79 inserted by the Maharashtra Cooperative Societies (Amendment) Act 2013 in the M C S Act 1960 effective 14.02.2013. This Sub-Section reiterates word by word the lists of matters for which annual return has been constitutionally mandated as aforesaid.
3)Every amendment in any law is followed by a host of Rules authorized to be framed by the State Government to facilitate implementation of law. In the M C S Act 1960 wherever the two words appear namely “as prescribed”. Unless it is so prescribed by Rules, implementation of the concerned law provision is in limbo. So Rules enjoys nuisance value to substantive provision of law. At the same time the Rules are subordinate to Law under which they are framed so any Rule contrary to provision of law is null and void. But its nuisance values is unassailable, undoubtedly.
4)With Substantial amendment to the M C S Act 1960 the State Government issued a voluminous Draft of the Maharashtra Co-operative Societies (Amendment) Rules,2013 vide its Notification No.CSL.2013/C.R. No.697/15C, dated the 21November 2013, published in the Maharashtra Government Gazette, Extraordinary, Part IV-B, on 22 November 2013. This Notification has as many as 109 Rules to amend the Principal Rules namely the M.C.S. Rules 1961 (The Rule Amending Notification for short). It was supposed to be taken up for finalization soon after 31.12.2013 but must be hanging like appointment of Head of SCEA (State Cooperative Election Authority) in the wake political uncertainty of the next State Government taking the reins by December this year.
5)The M.C.S. Rules 1961 were made in 1961 vide G.N.C. No Cooperative Society Law 1161/46295-G. & R. D.D. dated 23rd December 1961 (M.G.G. Pt IV –B p.1201) and have been amended from time to time by Notifications, not less than 50 in number by now.
6)The M.C.S. Rules are made by the State Governments in exercise of powers conferred by sub-section (2) of section 165 of the Maharashtra Co-operative Societies Act, 1961. There are more than 90 Sub-Clauses specifyng the Rule making power. Two pre-conditions must be noted for a Rule to be a valid Rule. The Section in the M C S Act 1960 must have the magic words “as prescribed” plus a clause must exist specifying the scope of Rule making power. If the Rule made under any Sub-Clause of Section 165(2) fails to satisfy that the Sub-Clause empowers the State to make Rule it is void.
7)The Rule Amending Notification has vide Rule 60 proposed to substitut Rule 67 about returns to be filed by the Societies:
Rule 67: In addition to the periodical financial statements referred to in Rule 66, the society shall furnish to the Registrar any other returns in such forms as may be specified by him on such date or dates or at such interval or intervals as may be specified by him, in the order and the returns specified in Form “Y” to the Registrar an in electronic form as specified by the Registrar within six months of the close of the financial year. The salaried officers of the society shall be responsible for the submission of these returns on due dates, provided that, such returns are approved by Chairman or the managing committee. If there are no salaried officers of the society or if the executive functions are attended to by the Chairman or any other member of the committee in an honorary capacity, as provided in bye-laws, the return shall be submitted by the Chairman or such member of the committee.” ;
8)Rule 109 of the Rule Amending Notification has inter alia inserted nw form Y reproduced below;
FORM – Y
(See Section 79, Rule 67)
SUBMISSION OF RETURNS BY THE SOCIETY TO THE REGISTRAR
To,
The Registrar/ special/ AdL./DJR/ DDR/ Dy. R/ ARCs
As provided under Rule 67 of the M.C.S. Rules, 1961, following returns are enclosed herewith :—
(1) Annual Report of activities of the Society for the year-.
(2) Audited statements of accounts of the society for the year-.
(A) Balance Sheet;
(B) Profit and Loss Accounts; or
(C) Income and Expenditure Statement.
(3) A Statement of disposal of surplus assets as approved by General Body Meeting date ——————— for the year —————.
(4) A copy of the amendments to the bye-laws made by the society or proposed amendments to the bye-laws duly approved by the General Body Meeting.
(5) Declaration regarding date of conduct of election of the society, due in the year—————.
(6) Declaration regarding date of holding of General Body Meeting of the Society for the year……………………
(7) Statement regarding appointment of auditor, his consent, letter & remuneration fixed, for year —————.
(8) Statement of rectification of audit for the year-.
(9) Statement regarding co-operative education & training of the members, officers & employees of the society organized by the society during the year-.
(10) Contribution made to the co-operative education and training fund made by society for the year ———————.
(11) Statement regarding of Provisions made for contribution to be made to the election fund for the year —————.
(12) Statement showing status of preparation of list of Active and Non- active members of the society.
Place
Date
By order and in the name of the Governor of Maharashtra,
RAJGOPAL DEORA, Secretary to Government.
Points to ponder and conclusion
i.After reading the above 7 Paragraphs no Chairman or Secretary will be able to decide if they have to file the Annual Return before 30th September 2014 or not. The Source of dilemma is in the Proposed New Form Y in the Rule Amending Notification. At the outset let it be known that Section165 the Rule making power of the State has not been amended to empower the State to make any Rule to implement provisions of Section 79(1A). So to the extent Rule 67 provides any thing is repugnant to Sub-Section 1 of Section 79 of the M C S Act 1960.
ii.In the matter of filing the Return under Article 243ZP of the Constitution as aforesaid, it has built in just only one uncertainty namely the return has to be filed to the authority designated by the State Government. Once that has been done by State Assembly in Sub-Section (1A) of Section 79 the compliance has no hurdle. Every cooperative society must file Return as per Article 243ZP read with Sub-Section (1A) of Section 79 of the M C S Act 1960 and that is final.