In exercise of the powers conferred by Sections 122 and 123 of the Multi State Co-operative Societies Act, 2002, the Central Government issued a show cause notice dated 15.06.2017 to the elected Directors on the Board of Kendriya Bhandar (a society registered under MSCS Act, 2002) as to why they may not be removed for being persistently negligent in performance of its duties imposed on it by the Byelaws of Kendriya Bhandar and also for failure in its responsibility imposed on it by the MSCS Act, 2002.
The then elected Directors of Kendriya Bhandar challenged the said notice and filed a Writ Petition (C) No. 6156/2017 titled Board of Directors Kendriya Bhandar versus Ministry of Personnel P.G. & Pensions, Government of India.
Kendriya Bhandar on behalf of the said elected directors paid huge amount of fees to the Advocate hired by the elected Directors of Kendriya Bhandar to contest their personal case in the Hon’ble High Court of Delhi.
In my opinion, the Writ Petition (C) No. 6156/2017 titled Board of Directors Kendriya Bhandar versus Ministry of Personnel P.G. & Pensions, Government of India was the personal case of the then elected directors of Kendriya Bhandar and as such they were personally liable to pay the fees of their advocate. But, the then elected directors by abusing their position, obtained pecuniary advantage and defrauded Kendriya Bhandar.
I wish to know as to whether any criminal complaint for misappropriating Kendriya Bhandar funds and for breaching trust of members of the society can be filed against the said Board of Directors.
Sir, please educate me in the matter.
I C Naik
RESPONSE
Text of relevant provisions:
“49. Powers and functions of board Multi State Cooperative Societies
(1) The board may exercise all such powers as may be necessary or expedient for the purpose of carrying out its functions under this Act. “
Observations
Board can exercise such powers as are necessary or expedient for the purpose of carrying out its functions under this Act
Section 20 of MSCS Act requires the proposed Society to register its bye-laws containing matters as prescribed under. These matters include
- the objects of the society;
- the services to be provided to its members;
In order to understand the function of the directors of the Society it is necessary to go through above two and identify if the money spent by directors from the Society Funds any matter listed in the bye-laws.
Section of MSCS Act 2002 under Section Provides as under:
“The registration of a multi-state cooperative society shall render it a body corporate by the name under which it is registered having perpetual succession and a common seal, and with power to acquire, hold and dispose of property, both movable and immovable, enter into contract, institute and defend suits and other legal proceedings and to do all things necessary for the purpose for which it is constituted, and shall, by the said name, sue or be sued.”
“Misappropriating Kendriya Bhandar funds” is not the function of the Society which the directors were engaged in. So the answer is clear.