Can a member who stood for elections to become a member of a managing committee in a cooperative society in Mumbai & whose nomination was rejected on the grounds that he was a father of three children be co-opted as a funtional director thereby giving him the opportunity to become an office bearer of the society ? Is there a loophole in the society law in the above matter?
I C Naik
Functional Director is a brain child of the Constitution (97th Amendment ) Act 2011. Let us see the provisions introducing this new entity in Cooperative Societies. One of the key attributes of Cooperative Society as per Constitution now is “Professional management” [Article 43B and Article 243ZI].
The “functional director” appears in the (3rd) the last proviso to last Sub-Article (3rd) of important Article 243ZJ concerning composition and strength of the management committee of Cooperative Societies.It reads as under:
Provided also that the functional directors of a co-operative society shall also be the members of the board and such members shall be excluded for the purpose of counting the total number of directors specified in the first proviso to clause (1).o
A careful examination of this proviso [which uses the word also twice] indicates that this Proviso is intended to be read with the entire Sub-Article (3) and not as a stand-alone provision. The functional director appears to be a last minute addition after writing down all rules concerning co-opted directors (chosen by committee outside the election process). Even the numbers are not specified. It indicates that all rules of co-opted expert directors apply to functional directors also. In effect this Proviso should have placed after the 1st Proviso to attain full clarity by a common man. Second proviso shifted to last position in Sub-Article 3 of Article 343ZJ makes the position clear. Look at this.
Provided further that such co-opted members shall not have the right to vote in any election of the co-operative society in their capacity as such member or to be eligible to be elected as office bearers of the board:
In the MCS Act 1960 the Proviso about functional directors reads almost same as it is in the Constitution (97th Amendment ) Act 2011 except that it has restricted the strength of functional directors to 2 in sub-section 2 of Section 73AAA.
If one looks at the definition of “functional director” in Clause 14-A in Section 2 it becomes clear that it refers to persons in employment.Have a look.
(14-A) “functional director” means a Managing Director or a Chief Executive Officer by whatever designation called, and includes any Head of the Department, workman or representative of the ecognized union of the concerned society, nominated by the Committee;
The Functional Director is in contract with the Society, namely the contrat of employment and he can not be an officer of the Society also on account of following bye-law which every registered bye laws of every housing society carry.
No Officer of the Society shall have any interest, directly or indirectly, otherwise than as such officer: ( a ) In any contract made with the Society.( b ) In any property sold or purchased by the Society. ( c ) In any other transaction of the Society, except as investment made in or loan taken from the Society for provision of residential accommodation by the Society to any paid employee of the Society.
To conclude for a lay man it looks like a loophole, but judicial interpretation will not differ from Court to Court. Vandana has rightly raised this question undoubtedly. Keep raising such intelligent questions going forward. Housing societies are advised not to get tempted by the misconceived loophole.
