Avowed object of the Constitution (97th Amendment) Act 2011 was succinctly described by the Apex Court in these few words ; “ The 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, [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]
1.The pioneering State Maharashtra has set up a benevolent office of the Commissioner and Registrar of Cooperative Societies which in the interest of Cooperative Movement suggests from time to time Model Bye Laws for all around 35 classes of cooperative societies. Cooperative housing society Bye Laws is one of them. This class is having majority of cooperative societies.
2. Any ten members of ten independent families are entitled to form a housing cooperative submitting application there for in a prescribed format and three copies of Bye Laws drafted by them to run their society in accordance therewith. The precondition for registration of Bye Laws is that the Registrar of cooperative societies should be satisfied that none of the proposed Bye Laws
a. is repugnant to the policy directives, if any, issued by the State Government under section 4 of the Act and
b. is contrary to the Act or the rules and every Bye Law
c. is in the interest of the society and co-operative movement
d. fulfils any of the conditions laid down in the M C S Act 1960 or the M.C.S. Rules 1961 and that the entire set covers Bye Laws on all matters specified by the Registrar under Rule 8 of the M.C.S. Rules 1961.
3. It is pertinent to note what Apex Court has said about Bye Laws of cooperative society on several occasions. Only three judgments are referred to herein.
a. “It has no doubt been held that, if a statute gives power to a Government or other authority to make rules, the rules so framed have the force of statute and are to be deemed to be incorporated as a part of the statute.”. [Co-Operative Central Bank Ltd. & … vs Additional Industrial Tribunal, … on 3 April, 1969 [1970 AIR 245, 1970 SCR (1) 206]
b. “The principle that rules framed under a statute have the force of statute does not apply to bye-laws of a cooperative society. They merely govern the internal management, business or administration of a society and may be binding between the persons affected by them but are neither law nor do they have the force of law.” [Co-Operative Central Bank Ltd. & … vs Additional Industrial Tribunal, … on 3 April, 1969 Equivalent citations: 1970 AIR 245, 1970 SCR (1) 206]
c. “Under the Indian Contract Act, a person sui juris has the freedom to enter into a contract. The bye-laws of a cooperative society setting out the terms of membership to it, is a contract entered into by a person when he seeks to become a member of that society. Even the formation of the society is based on a contract” Zoroastrian Co-operative’s case [Zoroastrian Co-Operative Housing Society Limited And Another V. District Registrar Co-Operative Societies (Urban) & Ors [2005]RD-SC 253 (15 April 2005)
4. With this background it is proposed to unveil how the Model Bye Laws approved by the Commissioner and Registrar of Cooperative Societies for voluntary adoption by housing societies registered in the State of Maharashtra, integrates the ratios of the above three landmark judgments.
5. As the Models 1984, 2001, 2009, so far approved and one under approval 2013 are not mandatory in nature, they are only suggestions. Nowhere in the registered by laws it is recognized that they are as per the approval of the Registrar. They are registered as proposed by the promoters in their meeting about which a large number of signatories were not briefed as to what they were signing for, forget participation.
6. In February last soon after the promulgation of the first ordinance by the Governor of the State amending the M C S Act 1960, the Commissioner and Registrar of Cooperative Societies posted on his official website the Model Bye Laws 2013 and asked the Joint Registrars whose jurisdiction extends to whole of Maharashtra collectively, to see that these Bye Laws were adopted and registered by each and every cooperative housing society by May 31, 2013. Even at these stage they were not the one supposed to come under the purview of the Apex Court judgment referred to in (3)a, but they were covered by judgment referred to in (3)b/c.
7. Taking the Model 2013 at par with judgment referred to in (3)b/c, i.e. “Rules governing internal management binding on those who agree with them” let us look at the Registrar’s role in these Bye Laws.
1. Bye-Law No 22 (B) 4 lf a question, of a member being Active or Non-Active arises, an appeal shall lie to the Registrar within a period of 60 days from the date of communication of such classification.
COMMENTS
Making appeal to the Registrar is not an internal matter. If a member has as a matter of fact did not attend a single the general body meeting in five years, he has rendered himself a Non-active member. Such matters of facts should not fall in to the Registrar’s jurisdiction.
2. Bye-Law No 34
“Note:- In case of acquiring membership on the basis of nomination, such member shall hold the flat/unit in ‘Trust’ till all the Heirs are brought on record and shall not have the right to ownership and shall not create the third party interest.”
COMMENTS
Section 30 of the M C S Act 1960 is quite clear on this matter and a Bye Law requiring all hers to be brought on record is a substantial legal requirement unwarranted nder law is being thrust upon honorary members of the managing committee of housing society.
3. 38 (d) “No Objection Certificate” of the Society is not required to transfer the shares and interest of the transferor to transferee.
COMMENTS
The admission of new persons in to membership is a prerogative of the Society and how a transferor or the Registrar can insist that Committee should not have any objection to transfer.
4. 38 (e) ix No additional amount towards donation or contribution to any other funds or under any other pretext shall be recovered from transferor or transferee.
COMMENTS
The Premium is fixed and notified in exercise Of powers of the State under Section 79A of the M C S Act 1960. The Registrar does not have the power to say tat no donations shall be accepted.
5. Bye-Law No 44 (2) “No permission of the society is required to sub-let the flat / shops, however the intimation needs to be given to the society 8 days before such sub-letting.”
COMMENTS
This is only provision proposed in new Bye Laws.
It is the first item in Bye Law No 5 listing objects of the housing society namely “To promote peaceful co-habitation amongst the members” They do not have unconditional privilege to let anybody occupy the flat, which may endanger “peaceful co-habitation amongst the members” by totally disconnecting itself from scrutinizing the persons who are going to come and stay with them. There are certain conditions in the registered Bye-Laws which enable committee to pre-screen the potential residents who are not proposed to be waived under any change in law having been arisen under recent changes in Cooperative Society Law. Why should the Committee surrender the small income by way of NOC payment which has been upheld by the Courts also as legitimate.
6. Bye-Law No 120 In a general election of a committee of a society, on the election of two-hirds or more number of members, the returning officer or any other officer or authority conducting such election shall within seven days after the declaration of results of election of such number of members have been elected but the committee has, for whatever reason, not been so far constituted, forward their names together with their permanent address to the Registrar, who shall, within 15 days from the receipt thereof by him, publish or cause to be published such names and addresses by affixing on a Notice Board of the Society or at any prominent place in his office, and upon such publication, the committee of the society shall be deemed to be duly constituted. In determining two thirds of the number of members, a fraction shall be ignored.
COMMENTS
Bye Laws are internal regulations. How can it lay down obligations for the Registrar to discharge some responsibilities of announcing members of the Committee. Now the Registrar has no jurisdiction over election matters and these are all transferred to SCEA.
7. Bye-Law No 121 (2) If a member of the Committee attracts any of the disqualifications under the bye-law No. 120 (1), the Committee shall record the fact in the minutes of its +meeting and the Secretary of the Society shall inform the member and Registrar accordingly. Such member shall cease to be the member of Managing Committee on the order of the Registrar.
COMMENTS
If on facts the member has ceased to be the member of the Committee how can Bye Laws (internal matters and not a law) expects a statutory authority to intervene to take an executive decision. If Cooperative Society Law wants the Registrar to intervene let it be said in the statute, members have no right to make Bye Laws binding other than themselves. With what authority the managing committee can request the Registrar to declare a seat of a member vacant? It is the members of the Society who want the members of the Committee to observe certain discipline. The law wants state to give democratic control but the Commissioner and Registrar of Cooperative Societies has some other agenda, it seems.
8. Bye-Law No 148(4).” If the Society fails to intimate and file the returns as provided by section 75(2A) and section 79(1B), the Registrar may cause Societies accounts to be audited by appointing an Auditor from the panel of Auditors.”
COMMENTS
Once again how can a document which has no force of law can empower the statutory authority to issue orders in case of its failures. It is the work of law. Why members are being confused with law and Bye Laws. The genesis of this confusion is fusion of three binding opinions of the Apex Court as stated in Para 3 hereof,
9. Bye-Law No 152 (iii) requires the Society to obtain approval of the Registering Authority to write off bad debts.
COMMENTS
In order to write off the dues of the housing society which have become bad and not recoverable, how Bye Laws can confer a right of approval to be granted to the Society to write them off. If the law wants that the Registrar sould be involved in such matters let it empower under suitable provision. Seeking approval of the Registrar is not inconsonance with any provision of the M C S Act 1960 or the M.C.S. Rules 1961.
10. Bye-Law No 153 (a) same Statutory Auditor shall not be appointed for more then two consecutive years.
COMMENTS
Proviso to new Sub-Section 2A of Section 75 reads as under:
“Provided that, the same auditor shall not be appointed for more than three consecutive years by the annual general body meeting of the same society”;
Why should society be restricted to appoint same auditors for two years only?
11. Bye-Law No 153 © The Remuneration of Auditors so appointed shall be decided by the General Body Meeting of the Society.
COMMENTS
Section 81(1) of provides that “The remuneration of the auditor or auditing firm of a society shall be borne by the society and shall be at such rate as may be prescribed.”
12. Bye-Law No 167 the making, alteration or abrogation is approved and registered by the Registering Authority
COMMENTS
Sub-Section (1B) of Section 13 clearly provides that “No amendment of the bye-laws of a society shall be registered by the Registrar under this section or in the case of the bye-laws which are deemed to have been registered shall have effect, if the amendment is repugnant to the policy directives, if any, issued by the State Government under section 4.]”
Why should the Bye Law an internal document having no legal force should empower the the Registrar to approve the amendments. When the Bye Laws are agreed contracts by and between the members why should they surrender their right to the Registrar.
This analysis reflects that the mindset in bureaucracy has not changed at all despite such unequivocal assurance in the Parliament to the nation that days are gone of political or bureaucratic interference in the management of cooperative societies.