S.B.Kunchur
In a reply to a query on 11 Aug.2013 regarding Associate Member in CHS you have mentioned that:-
Associate members have been getting a raw deal all along the inception of the M. C. S. Act 1960.
“Associate member ” means a member who holds jointly a share of a society with others, but whose name does not stand first in the share certificate (Section 2(19)(b) of the M. C. S. Act 1960 and Bye Law No 3 (xxiv)(a))
An individual competent to enter in to contract under the Indian Contract Act, 1872 can be admitted as an Associate Member of the CHS in either of the two ways.
Person whose name appears as a joint owner in the agreement executed under section 4 of the Ownership Flats Act, and by making a joint application along with the original member in the prescribed form and paying entrance fee of Rs 100.[Bye Law No 19A and Appendix No 8]
Person whose name does not appear in the agreement referred to above, by making the application in a form prescribed for such a person to be admitted as Associate member and to make him a joint holder of shares. This application has to accompany a written recommendation of the first member, entrance fee of Rs 100 and the share certificate… [Bye Law No 19 (B) Form in Appendix 7]
Thus as per above explanation the Associate Membership can be obtained in both ways with equal or same rights.
The definition under Bye-law No.19 (b) also mentions that—-
–‘ who/which is eligible to be an associate member’—-
Here my question is regarding the word ‘eligibility’ . Does this only imply the meaning to the extent as to competency to enter into contract as per Indian Contract Act 1872, mentioned above or does this also mean that a person should necessarily have share in the property and capital of the CHS jointly with other member. Conversely, can a person without share in the property and share capital become Associate member as per second option mentioned above ?
Please clarify in the matter for which I thank you in anticipation.
I C Naik
RESPONSE
S.B.Kunchur, Pune raised on 29 07 2015 a few doubts about Associate membership in CHS which are briefly restated as under:
“Does the word ‘eligibility’ used in Bye-Law No 19(b) imply “competency to enter into contract” does this also mean that a person should necessarily have share in the property and capital of the CHS jointly with other member and whether a person without share in the property and share capital become Associate member?”
ANALYSIS
At the outset the eligibility criterion for a member of cooperative society is specified u/s 22 in the MCS Act namely that he is competent to enter in to contract” The rationale for this criterion is that the Bye laws are contracts between members of the Society. [Supreme Court in Zoroastrian Co-Operative Housing Society [2005]Rd-Sc 253 (15 April 2005)]. The MCS Act 1960 has laid down a specific but simple additional eligibility criterion for Associate membership u/s 2(19)(b) namely “associate member” means a member who holds jointly a share of a society with others, but whose name does not stand first in the share certificate;
The Bye-Laws Model 2014 has under Bye-Law No 17 reiterated the competency criterion but fixed a different eligibility criterion against that u/s 2(19)(b). It’s Bye-Law 3(xxiv)(b) reads: “Associate Member” means a Member who holds the right, title and interest in the property individually or jointly with others, but whose name does not stand first in the share certificate”.
For the third doubt, please read full length story “Hon. SCEA, Please guide CHS, do not confuse” posted in Cooperative Coffee Shop on July 27, 2015 by Mr. I C Naik”
TOI report on 2-2-2015 created so much confusion that SCEA had to issue a written statement to TOI on 16 2 2015 that anybody claiming Associate membership in cooperative societies cannot be accepted as such unless his name appears on the share certificate issued by such cooperative society in accordance with its the registered bye-laws. Why on earth any person should claim Associate membership of cooperative society just because he is competent to enter in to contract, and that even without entering in to contract he can claim Associate membership?
A large number of cooperators may not be aware that Rule 19 of Maharashtra Cooperative Societies Rules 1961 specifies that
“No person shall be admitted as a member of a society unless,—
(i) he has applied in writing in the form laid down by the society or in the form specified by the Registrar, if any, for membership;
(ii) his application is approved by the committee of the society in pursuance of the powers conferred on it in that behalf
Also note the conflict within the Model 2014 as regards added eligibility criterion:
Bye-Law No 19(b)
An Individual, a Firm, a Company or a Body Corporate, registered under any Law for the time being in force, who/ which is eligible to be an Associate Member and who/which shall apply through Member in the prescribed form for such Membership, along with the entrance fee of Rs. 100/-, may be admitted as Associate Member by the Committee.
The Form prescribed for above Bye-Law No 19(b) is given at Appendix 5 to Model Bye-Laws 2014 providing for two optional declarations for the applicant to choose either:
1.I state that I have purchased / own property jointly with the First Member, being flat no………in the Society, vide registered deed / title documents no…..dt……
OR
2.I state that I do not jointly own or have joint title to the property with the above mentioned First Member
Going by the letter of the Bye-Law 3(xxiv)(b) person striking out Option1 is in-eligible to be admitted to Associate Membership.
The Bye-Law No 3(xxiv)(b) of the Model 2014 is in conflict with Section 2(19)(b) of the MCS Act 1960 so it stands superseded and eligibility criterion as per the MCS Act 1960 holds good.
IN NUTSHELL
The entire analysis can be summed clarifying all the doubts as under:
“Any individual competent to enter in to contract having applied in writing in the form laid down by the society for membership and the said application having been approved by the committee of the society, his name appears on the share certificate issued by the society in accordance with the society’s registered bye-laws but that name is not the first name on that certificate, such applicant is an Associate member of the society and it matters very little whether he jointly owns the flat with the first member or not.”