By I C Naik
Importance of the Bye Laws in day to day management of a co-operative society cannot be underestimated although the Bye Laws stand nowhere near any law of the land.
The Bye Laws are not laws at all. The Hon. Supreme Court has in one judgment observed QUOTE: We are unable to accept the submission that the bye-laws of a co-operative society framed in pursuance of the provisions of the Act can be held to be law or to have the force of law.
The bye- laws that are contemplated by the Act can be merely those which govern the internal management, business or administration of a society. They may be binding between the persons affected by them, but they do not have the force of a statute UNQUOTE [ Co-Operative Central Bank Ltd. & vs Additional Industrial Tribunal, … on 3 April, 1969 [1970 AIR 245, 1970 SCR (1) 206]
The Constitution of India is the Supreme Legal Document of the land. Thus the Bye Laws of cooperative societies and the Constitution of India are poles apart as there lie between the two three drivers of of Cooperative Engine.
• the mandatory Notifications of the State Government
• the M.C.S. Rules 1961 and
• the M C S Act 1960.
The Bye Laws of a cooperative society are driven by all these three in one way or the other, and cannot afford a conflict with any of them. If there arose any conflict and if by chance matter goes before the authorities the Bye Laws have to succumb.
“Part IXB: The Cooperative Societies” as inserted by the Constitution (97th Amendment) Act 2011 (97CAA) has certain provisions which have brought the two of them quite close to each other eliminating all three above and that is the subject matter of this write-up.
Source of this miraculous event is the Article 243ZT in Part IXB reading as QUOTE: Notwithstanding anything in this Part, any provision of any law relating to co-operative societies in force in a State immediately before the commencement of the Constitution (Ninety-seventh Amendment) Act, 2011, which is inconsistent with the provisions of this Part, shall continue to be in force until amended or repealed by a competent Legislature or other competent authority or until the expiration of one year from such commencement, whichever is less.’ UNQUOTE
In order to make it easy to read between the lines, as to what it means going forward, it is paraphrased as under. Any provision of any law relating to co-operative societies in force in a State immediately before the commencement of the Constitution (Ninety-seventh Amendment) Act, 2011, which has become inconsistent with any provision of this Part, shall stand substituted mutatis mutandis by the concerned provision of this Part, unless it is suitably amended or repealed by a competent Legislature or other competent authority before the expiration of one year from such commencement. The Phrase “substituted mutatis mutandis” is implicit, in the absence of an affirmation that the inconsistent provision shall not only become inoperative, but a corresponding constitutional provision shall mutatis mutandis (with the necessary changes having been made) take place of such inconsistent provision simultaneously.
With effect from 14.02.2013 any provision of the M C S Act 1960 having been substituted as aforesaid, would results in any Bye Law corresponding to such substituted provisions of the M C S Act 1960 also getting mutatis mutandis substituted by relevant Articles of the Part “Part IXB: The Cooperative Societies” No need to wait for the removal of such inconsistency by appropriate enactment of the State Legislature since a time of 12 months was very thoughtfully built in to 97CAA to enable State legislature to pass such enactment and to suitably amend the Bye Laws. This brave interpretation could be attributed to the noble fundamental right of citizens to form a cooperative society and run it on principles of voluntary formation, democratic member-control, member-economic participation and autonomous functioning being the prime thrust of 97CAA.
There are volley of questions from cooperative housing societies as their committees are at a loss to satisfactorily interpret the internal management rules namely their Bye Laws. The wide spread confusion is rooted in to the conspicuous apathy of the State Administration towards several legitimate actions enjoined by virtue of provisions of new “Part IXB: The Cooperative Societies” during the twelve months ended on 13.02.2013.They did nothing, The Maharashtra State enacted the M C S Act 1960 carries violation of several provisions of “Part IXB: The Cooperative Societies”.
Part IXB has inserted certain mandatory uniform requirements which include the tenure, composition and election to the management of cooperative societies. Cooperative Society Laws empower a society to make Bye Laws covering the internal management rules including about the managing committee itself which they can also amend them from time to time. The cooperative housing societies for example have the registered Bye Laws which resemble to one or the other of the Models recommended by the Commissioner and Registrar of Cooperative Societies (CRoC) in the year 1984 or 2001 or 2009. These Bye Laws are subordinate to the M.C.S. Rules 1961 and the M C S Act 1960. For example Section 72 of the M C S Act 1960 provides
QUOTE: Subject to the provisions in this Act and the rules, the final authority of every society shall vest in the general body of members in general meeting, summoned in such a manner as may be specified in the by-laws. UNQUOTE
Section 73AAA(1) of the M C S Act 1960 reads QUOTE: (1) The Committee shall consist of such number of members as may be provided in the by-laws UNQUOTE.
Where any Bye Law is in conflict with any of the provisions of the Statute, at the time of registration the Registrar directs to change it in line with the statutory provision. If any statutory provision is amended the concerned Bye Law needs to be amended forthwith.
The amendment procedure being too lengthy, societies rarely go for it and the concerned Bye Law becomes invalid and the actions of the society must conform to the amended law. For example Section 73B as inserted by the Maharashtra Cooperative Societies (Amendment) Act 2013 (the Amending Act) in the M C S Act 1960, requires that every cooperative society shall reserve for Scheduled Caste, Scheduled Tribes or Other Backward Classes, De-notified, Tribes (VimuktaJatis) Nomadic Tribes,three seats of the managing committee to be filled in by election or nomination from members of these communities by those classes of societies as may be specified by the State.
This provision violates Proviso 2 to Article 243ZJ as one seat for the Scheduled Castes or the Scheduled Tribes is mandated to be reserved by every cooperative society without any State having power to chose any society for making reservations and that also of 3 seats in place of one seat. So far housing societies are not specified for these reservations under the M C S Act 1960 but this law is void as it is in conflict with Proviso 2 of Article 243ZJ. How can the Bye Laws provide for 3 seats when only 1 seat is to be reserved.
Normally the Constitution of India provides authority and framework for the Parliament and the State legislatures to enact laws on various subject matters as distributed in three list under Seventh Schedule to the Constitution of India.
Bypassing this normal practice, certain Constitutional Mandates are addressed directly to all the cooperative societies in any State or Union Territories of India under “Part IXB: The Cooperative Societies”. Articles 243ZJ, 243ZM and 243ZP provides for such direct mandates, without calling upon the States/Union Territories to make a law in that behalf. These provisions invalidates any contrary provision in any Statute passed by the Parliament, any State legislature, Rules and the Bye Laws of any cooperative society.
1. Sub-Article (2) of Article 243ZM:
QUOTE: The term of office of elected members of the board and its office bearers shall be five years from the date of election and the term of office bearers shall be coterminous with the term of the board:
Provided that the board may fill a casual vacancy on the board by nomination out of the same class of members in respect of which the casual vacancy has arisen, if the term of office of the board is less than half of its original term. UNQUOTE
Sub-Articles (3) & (4) of Article 243ZM:
QUOTE: Every co-operative society shall cause to be audited by an auditor or auditing firms referred to in clause (2) appointed by the general body of the co-operative society:
(4) The accounts of every co-operative society shall be audited within six months of the close of the financial year to which such accounts relate.
Article 243ZP
QUOTE: 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.
UNQUOTE
These requirements are to be complied with by every cooperative society and the managements of cooperative societies should not wait for the State Administration to register the Bye Laws as aligned to 97CAA.
There are of course practical hindrances managements should face for example Committees left with two members before its tenure crosses halfway mark. The members must behave responsibly and not quit in the first half of the 5 year tenure. After all members have voluntarily accepted to become member and cooperative principles expect them to assume responsibility of management of their society.