INDEX

• Meaning Of Co-Operative Society

• Characteristics of Co-operative Society
• Advantages of Co-operative Society
• Limitations of Co–operative Society
• Types of Co-operative Societies
• Formation of a Co-opeative Society
• Registration of Society
• Who can form a society
• Restrictions on society with limited liability
• Bye-laws
• Model Bye- laws
• Membership
• Termination Of Membership
• Rights and liabilities of members
• Secretary of the Co-operative Society
• Duties of the Secretary the Co-operative Society
• Meetings Held in a Co-operative society
• Co-operative Society Act 1904
• Maharashtra Co-operative Societies Act 1960
• Management of society
• Registered Society is body corporate
• Audit
• Inspection of affairs of society
Meaning Of Co-Operative Society:
A co-operative society is an association of persons who have
voluntarily joined together to achieve a common economic and social
end through the formation of a jointly-owned and democratically
controlled business organisation. Members make equitable
contributions to the capital required and accept a fair share of the risks
and benefits of the undertaking.

Co-operative societieswork on the principles of self-help and mutual

assistance to provide services for their members. These include credit,
consumer, medical, insurance, dental, transport, security, food,
housing, travel, childcare and welfare services.

Characteristics of Co-operative Society:

A co-operative society is a special type of business organisation
different from other forms of organsation you have learnt earlier. Let
us discuss its characteristics.

i. Open membership: The membership of a Co-operative

Society is open to all those who have a common interest. A
minimum of ten members are required to form a cooperative
society. The Co–operative societies Act does not specify the
maximum number of members for any co-operative society.
However, after the formation of the society, the member may
specify the maximum number of members.

ii. Voluntary Association: Members join the co-operative

society voluntarily, that is, by choice. A member can join the
society as and when he likes, continue for as long as he likes,
and leave the society at will.

iii. State control: To protect the interest of members, co-

operative societies are placed under state control through
registration. While getting registered, a society has to submit
details about the members and the business it is to
undertake. It has to maintain books of accounts, which are to
be audited by government auditors.

iv. Sources of Finance: In a co-operative society capital is

contributed by all the members. However, it can easily raise

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 loans and secure grants from government after its
registration.

v. Democratic Management: Co-operative societies are

managed on democratic lines. The society is managed by a
group known as “Board of Directors”. The members of the
board of directors are the elected representatives of the
society. Each member has a single vote, irrespective of the
number of shares held. For example, in a village credit society
the small farmer having one share has equal voting right as
that of a landlord having 20 shares.

vi. Service motive: Co-operatives are not formed to maximise

profit like other forms of business organisation. The main
purpose of a Co-operative Society is to provide service to its
members. For example, in a Consumer Co-operative Store,
goods are sold to its members at a reasonable price by
retaining a small margin of profit. It also provides better
quality goods to its members and the general public.

vii. Separate Legal Entity: A Co-operative Society is registered

under the Co-operative Societies Act. After registration a
society becomes a separate legal entity, with limited liability
of its members. Death, insolvency or lunacy of a member
does not affect the existence of a society. It can enter into
agreements with others and can purchase or sell properties in
its own name.

viii. Distribution of Surplus: Every co-operative society in

addition to providing services to its members, also generates
some profit while conducting business. Profits are not earned
at the cost of its members. Profit generated is distributed to
its members not on the basis of the shares held by the
members (like the company form of business), but on the
basis of members’ participation in the business of the society.
For example, in a consumer co-operative store only a small
part of the profit is distributed to members as dividend on
their shares; a major part of the profit is paid as purchase
bonus to members on the basis of goods purchased by each
member from the society.

ix. Self-help through mutual cooperation: Co-operative

Societies thrive on the principle of mutual help. They are the

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 organisations of financially weaker sections of society. Co-
operative Societies convert the weakness of members into
strength by adopting the principle of self-help through mutual
co-operation. It is only by working jointly on the principle of
“Each for all and all for each”, the members can fight
exploitation and secure a place in society.

Advantages of Co-operative Society:

A Co-operative form of business organisation has the following
advantages:

i. Easy Formation: Formation of a co-operative society is very

easy compared to a joint stock company. Any ten adults can
voluntarily form an association and get it registered with the
Registrar of Co-operative Societies.

ii. Open Membership: Persons having common interest can

form a co-operative society. Any competent person can
become a member at any time he/she likes and can leave the
society at will.

iii. Democratic Control: A co-operative society is controlled in a

democratic manner. The members cast their vote to elect
their representatives to form a committee that looks after the
day-to-day administration. This committee is accountable to
all the members of the society.
iv. Limited Liability: The liability of members of a co-operative
society is limited to the extent of capital contributed by them.
Unlike sole proprietors and partners the personal properties of
members of the co-operative societies are free from any kind
of risk because of business liabilities.

v. Elimination of Middlemen’s Profit: Through co-operatives

the members or consumers control their own supplies and
thus, middlemen’s profit is eliminated.

vi. State Assistance: Both Central and State governments

provide all kinds of help to the societies. Such help may be
provided in the form of capital contribution, loans at low rates
of interest, exemption in tax, subsidies in repayment of loans,
etc.

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 vii. Stable Life: A co-operative society has a fairly stable life and
it continues to exist for a long period of time. Its existence is
not affected by the death, insolvency, lunacy or resignation of
any of its members.

Limitations of Co–operative Society:

Besides the above advantages, the co-operative form of business
organisation also suffers from various limitations. Let us learn these
limitations.
i. Limited Capital: The amount of capital that a cooperative
society can raise from its member is very limited because the
membership is generally confined to a particular section of
the society. Again due to low rate of return the members do
not invest more capital. Government’s assistance is often
inadequate for most of the co-operative societies.

ii. Problems in Management: Generally it is seen that co-

operative societies do not function efficiently due to lack of
managerial talent. The members or their elected
representatives are not experienced enough to manage the
society. Again, because of limited capital they are not able to
get the benefits of professional management.

iii. Lack of Motivation: Every co-operative society is formed to

render service to its members rather than to earn profit. This
does not provide enough motivation to the members to put in
their best effort and manage the society efficiently.

iv. Lack of Co-operation: The co-operative societies are formed

with the idea of mutual co-operation. But it is often seen that
there is a lot of friction between the members because of
personality differences, ego clash, etc. The selfish attitude of
members may sometimes bring an end to the society.

v. Dependence on Government: The inadequacy of capital

and various other limitations make cooperative societies
dependant on the government for support and patronage in
terms of grants, loans subsidies, etc. Due to this, the
government sometimes directly interferes in the management
of the society and also audit their annual accounts.

Let us now sum up–

ADVANTAGES DISADVANTAGES

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 • Easy formation
• Open membership
• Democratic Control
• Limited Liability
• Elimination of Middleman’s
• Profit
• State Assistance
• Stable Life
• Limited Capital
• Problems in Management
• Lack of Motivation
• Lack of Cooperation
• Dependence on Government

Types of Co-operative Societies:

There are two types of co-operative societies.

• A primary society is a registered co-operative all of whose

members are individual persons who, or institutions which, have
the qualifications for membership.

• A secondary society is a registered co-operative all of whose

registered members are co-operative societies, trade unions, or
co-operative societies and trade unions.

• Producer cooperative societies. These are formed to eliminate

the middlemen and capitalist groups from the industrial
production, its main purpose goods for the requirements of its
members. Surplus productions are also supplied to out sliders in
the open market at profit. All the necessary activities as
production, management and marketing are performed by the
members themselves. Its members get dividend on the basis of
the capital invested by them.
a) To purchases the raw materials and other factors at most
economical prices.
b) To produces the goods at the most economical level.
c) To supervises the production most efficiently and
effectively.
d) To disposes of the surplus production to non members at
maximum price.
e) To eliminates the middlemen and capitalists.
f) To remove the workers grievances in respect of working
conditions, wages etc.
g) To arrange for the democratic control of the industrial unit.

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 • Consumer cooperative societies. This society is the voluntary
association of ordinary people formed with the object of
obtaining daily requirements of the members. It directly
purchases the goods at large scale from the producer or
wholesalers at whole sale price. It thus eliminates capitalists,
retailers and other middlemen from the channel of distribution
and members are in a position to make their purchase at
cheaper rate. Any one can become member by purchasing one
share of the society. Sometimes goods are also supplied to non-
members but they do not share in the profit of the society. Profit
earned by the store is distributed among the members according
to the value of the purchases conducted by the manager who is
elected by the members. Generally is two types are popular in
the world.
a) Retail cooperative store.
b) Wholesale
cooperative store.

Formation of a Co-opeative Society:

Stage 1: A Pro-tem Committee

A Pro-tem Committee (at least 3 members):

• Undertakes a feasibility study to determine the economic and

financial viability of the proposed society. A viability statement
consisting of the business plan and the cash flow projections (at
least 5 years) is to be prepared.

• Considers the objects and the constitution of the society and

drafts the By-laws.

Stage 2: Seeking the Registrar's Comments

After completing the feasibility study, the Pro-tem Committee is to

submit the viability statement, their particulars (i.e. Name, NRIC No,
Date of Birth, Citizenship, Occupation, Address and the Office Tel No.)
and the draft By-laws which include matters spelt out in The Schedule
of the Co-operative Societies Act for the Registrar's comments.

Stage 3: Preliminary Meeting

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After obtaining the Registrar's comments, a Preliminary Meeting of at
least 10 persons qualified for membership is convened to:

• adopt the By-laws (which have incorporated the Registry's

comments); and

• pass the resolution to accept all the rights, duties and liabilities
prescribed by the By-laws.

Qualifications for membership:

a) 16 years (12 years for school co-ops)

b) registered society or trade union
c) citizen or resident in India
d) is not legally or mentally disabled
e) is not an undischarged bankrupt
f) meet residence, employment, profession requirements as
prescribed in by-laws
g) credit co-op individual membership restricted to those who
belong to pre-existing common bond of association or
community of interest
h) has not been convicted of an offence punishable with
imprisonment
i) is able to meet such other requirements prescribed by the
By-laws.

Stage 4: Application for registration

The following documents are required to be submitted:

SR. Type of Document Signatures Remarks

No. Re
qui
red
a) For credit society Form 1 At least 10 Provide:
persons Name
PIN No.
Nationality
Occupation
Address
b) For non-credit society At least 10 Provide:
Form 2 persons Name
PIN No.
Nationality
Occupation

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 Address
c) By-laws Not applicable Nil
d) Viability statement Not applicable Cash flow
(business plan and cash forecast of at
flow forecast) least 5 years. If
viability
statement is
unchanged from
earlier
submission, no
need to
resubmit.
e) Minutes of the Preliminary All those
Meeting present

Upon registration, the Pro-tem Committee shall continue to manage

the affairs of the co-operative society until the First Meeting of its
members which is held not later than 3 months after receipt of the
Notice of registration.

The business of the first meeting shall include the election of officers
who shall serve until the first annual general meeting.

No person shall be eligible for membership of the Committee

of Management of a co-operative society if:

a) he is under 21 years of age (except in the case of school co-

operatives);
b) he is not a Singapore citizen or resident in Singapore, subject to
the Registrar's approval;
c) he is an undischarged bankrupt;
d) he has been convicted of an offence involving fraud or
dishonesty
• 5-year disqualification period applicable for non-credit co-ops
• No time bar for credit co-ops;

e) he has been convicted of an offence under the Co-operative

Societies Act;
f) he has been dismissed as an employee of a co-operative society;
and
g) he has been found to have previously misused or mismanaged
the funds of a co-operative society.

Registration of Society:

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State Government will appoint Registrar of Cooperative Societies. State
Government can appoint persons to assist Registrar and confer on
such persons all or any of powers of Registrar. [section 3]. Function of
Registrar starts with registration of a society. He has powers of general
supervision over society. Returns of Society are to be filed with
Registrar. He can order inquiry or inspection against society. He can
order dissolution of society.

Societies which may be registered

A society, which has as its object the promotion of economic interests

of its members in accordance with cooperative principles, can be
registered as a Society. Similarly, a society established with the object
of facilitating operation of such a society can also be registered under
the Act. The society can be registered with limited or unlimited liability.
However, unless State Government otherwise directs, (1) Liability of a
society of which a member is a registered society shall be limited. (2)
Liability of a society of which object is to creation of funds to be lent to
members, and of which majority of members are agriculturists and of
which no member is a registered society shall be unlimited [section 4].
Thus, a registered society can be member of another society, but
liability of such other society must be limited, unless State Government
otherwise directs.

Who can form a society:

A society can be formed with at least 10 members of age above 18
years. If object of society is creation of funds to be lent to its members,
all the members must be residing in same town, village or group of
villages or all members should be of same tribe, class, caste or
occupation, unless Registrar otherwise directs. - - The provision of
minimum 10 members or residing in same town/village etc. is not
applicable if a registered society is member of another society. - - The
last word in name of society should be ‘Limited’. If the Society is
registered with limited liability. [section 6]. Registrar is empowered to
decide whether a person is agriculturist or non-agriculturist or whether
he is resident of same town/village or whether the members belong to
same caste/tribe etc. and his decision will be final. [section 7].

Restrictions on society with limited

liability:
If a society has limited liability, any individual member of such society
cannot have share capital more than one-fifth of total capital. An

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individual member cannot have interest in shares exceeding Rs 1,000.
- - This restriction of 20% shares or Rs 1,000 shares value is not
applicable to a registered society which is member of another society.
[section 5]. - - Thus, if a registered society is member of another
society, it can hold shares exceeding 20% or exceeding Rs 1,000 in
value.

Bye-laws:
Any Amendment to bye-laws shall be registered with Registrar. If
Registrar is satisfied that the amendment is not contrary to Act or
rules, he will register the amendment. He will issue a certificate of
registration along with copy of amendment certified by him, which is
conclusive evidence that the amendment has been duly registered.
[section 11].

Model Bye- laws:

If your co-operative society is old it may continue to follow old

byelaws. But when a new co-operative society approaches the
registrar it would have to compulsorily adopt the new byelaws.

Under the Maharashtra Co-operative Societies Act 1960, a housing

society is free to adopt its own set of laws that governs its members.
These are called byelaws and are limited to the Maharashtra state.

Byelaws are the rules that govern a co-operative society and its
members and these undergo changes from time to time through
amendments whenever the government feels the need for changes.

For instance, the cash on hand limit under the old byelaws was Rs
300. Cash on hand is maintained by the society for day to expenses
such as plumber's payments for instance. Over the years it was felt
that the amount was not sufficient. And hence in the new byelaws the
same has been increased to Rs 4,500.

Such changes under various headings become imminent and that is

how the new model byelaws came into effect from July 2, 2001. Since
then, the government has made it mandatory for co-operative
societies in Maharashtra to adopt the new byelaws.

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Byelaws are district specific. In other words while these are more or
less the same there could be minor changes depending on which
district you fall in whether it is Mumbai, Pune or Thane.

Enumerated here are some of the differences between the old and the
new byelaws.

Transfer of flat: Under the old byelaws in case you were to transfer
your flat, a charge of 2.5% of the difference in the purchase value
minus sale value would be levied as transfer charges. But under the
new model byelaw number 45 all that has been scrapped and a
common charge is levied as per the general body resolution subject to
the condition that it is not above Rs 25,000.

Maintenance: Under the old byelaws the maintenance charged varied

among members. For instance, let us say the monthly maintenance
amount payable was Rs 500. Now if the flat was given on leave and
licence, the maintenance charge would be hiked to Rs 1,000.

But as per the new byelaws, maintenance is 10% of service charges.

Service charges include salary of the office staff, liftmen, watchman,
the property taxes, electricity charges, water charges, etc. in case the
society has an independent office.

That apart it also includes entrance fees for affiliation to the housing
federation and any other co-operative institution, audit fees for
internal, statutory and re-audit if any besides expenses incurred at
meetings of the general body, the committee and the sub-committee
retainer fees, legal charges, statutory enquiry fees among others.

Purchase of second flat: Under the old byelaws there were restrictions
on holding more than one flat. You needed to obtain the registrar's
permission to purchase a second flat in the same society or within the
limits of a certain district.

You were also needed to submit an affidavit saying that you do not
hold any other flat in the same district. For instance, if you were the
owner of a flat in Mumbai you could not own another flat in the same
city. But another flat in Pune or Thane was allowed.

In the new byelaws the same has been done away with. So you can
very well purchase a flat in the same society. Under Byelaw number
62 of the new model byelaws all you need to do is make an application
to the society saying that you intend to purchase another flat. It's the
society's consent that matters.

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Transfer among family members: Under the old byelaws there were
transfer charges applicable even if the transfer was between family
members.

But then under Section 6 read with byelaw number 3 of the model
byelaws, no transfer charge is to be levied in case of transfer of flat to
any one of the family members. Under byelaw number 3(25) family
members means the following group of persons: husband, wife, father,
mother, sister, brother, son, daughter, son in law, brother in law, sister
in law, daughter in law, grandson, granddaughter

Membership:
The members of an association are the subscribers and the persons
and eligible organizations admitted to membership in the association
according to its rules.

Membership share requirement

An association, in its rules, must designate a class of shares as the

membership shares and provide, as a condition of the admission of a
person or eligible organization as a member of the association, that the
person or eligible organization subscribe for a minimum number of
membership shares.

Members under 19 years of age

(1) An association may provide in its rules for the admission to

membership in the association of persons under 19 years of age
who are at least 16 years of age.

(2) Rules referred to in subsection (1) are subject to subsection (3).

(3) Despite the Infants Act, the Age of Majority Act or the common
law and subject to subsection (4) of this section, an individual
admitted to membership in an association who is under 19 years of
age and who is at least 16 years of age

(a) has the same obligations, rights and legal capacity as a

member of the association who has reached 19 years of age, and

(b) may be sued,but only in respect of membership in an

association and of any indebtedness or obligation to the
association.

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 (4) An individual under 18 years of age is not eligible to be a
director or officer of an association.

Termination Of Membership:
(1) This section applies only to an association other than a housing
cooperative.

(2) An association may provide in its rules for the termination of the
membership of a member.

(3) Rules referred to in subsection (2) are subject to this section and
sections 36 to 39.

(4) Subject to any rules of an association for termination of

membership, and to subsections (5) and (6) of this section and
sections 36 to 39, an association may terminate the membership of
a member if

(a) the member has engaged in conduct detrimental to the

association,

(b) the member has not paid money due by the member to the
association within a reasonable time after receiving written
notice to do so from the association, or

(c) in the opinion of the directors, based on reasonable grounds,

the member
(i) has breached a material condition of an agreement with
the association, and
(ii) has not rectified the breach within a reasonable time
after receiving written notice to do so from the association.

(5) An association may exercise the powers under this section to

terminate the membership of a member only by a resolution of the
directors requiring a majority of at least 3/4 of all the directors and
passed at a meeting of the directors called to consider the
resolution.

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 (6) Sections 156 and 208 do not apply to termination of a
membership in an association on the grounds described in
subsection (4) (b) or (c).

Termination of membership in a housing cooperative:

(1) A housing cooperative may provide in its rules for the

termination of the membership of a member.

(2) Rules referred to in subsection (1) and the rules that a housing
cooperative may adopt under subsection (3) of this section are
subject to this section and sections 36 to 39.

(3) A housing cooperative by its rules may adopt either of the

following grounds as constituting grounds for termination of the
membership of a member who has a right to possession or
occupancy of residential premises that is dependent on the
member's membership:

(a) the member has not paid rent, occupancy charges or other
money due by the member to the housing cooperative in respect
of the residential premises and has not rectified the nonpayment
within a reasonable time after receiving written notice to do so
from the housing cooperative;

(b) the member

(i) has not paid rent, occupancy charges or other money
due by the member to the housing cooperative in respect
of the residential premises, or
(ii) in the opinion of the directors, based on reasonable
grounds, has breached a material condition of an
agreement between the member and the housing
cooperative relating to the member's
(A) possession or occupancy of the residential
premises, or
(B) use of the property of which those premises form
part,

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 and has not rectified the nonpayment or breach
within a reasonable time after receiving written
notice to do so from the housing cooperative.

(4) Subject to any rules of a housing cooperative for termination of

membership, and to subsections (5) and (6), a housing cooperative
may terminate the membership of a member if the member has
engaged in conduct detrimental to the housing cooperative.

(5) A housing cooperative may exercise the powers under this

section to terminate the membership of a member only by a
resolution of the directors requiring a majority of at least 3/4 of all
the directors and passed at a meeting of the directors called to
consider the resolution.

(6) Sections 156 and 208 do not apply to termination under this
section of a membership in a housing cooperative.

Notices respecting the termination of members:

(1) A member of an association whose membership is proposed to

be terminated by a resolution of the directors

(a) is entitled to at least 7 days' notice of the meeting at which

the resolution is to be considered, together with a statement of
the grounds on which the member's membership is proposed to
be terminated, and

(b) may appear, either personally or by or with an agent or

counsel, to make submissions at the meeting.

(2) Within 7 days after the date on which a proposed resolution to

terminate a membership referred to in subsection (1)

(a) is withdrawn,

(b) is defeated because it does not receive the required majority,

or

(c) is passed by the required majority,

the directors must deliver written notice of the outcome to the

member.

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Appeal from termination of membership:

(1) A person whose membership in an association is terminated

under section 34 or 35 may appeal the decision of the directors at
the next meeting of the association, by delivering a notice of appeal
to the association within 7 days after delivery of written notice
under section 36 (2).

(2) A person whose membership in an association is terminated and

who, under and within the time limited by subsection (1), appeals
the termination of the membership, continues, despite the
resolution of the directors terminating the membership, to be a
member of the association unless the members at the general
meeting to which the appeal is brought confirm the termination of
the membership

(a) in the case of a membership in an association other than a

housing cooperative,
(i) if the membership is terminated for any of the reasons
referred to in section 34 (4) (b) or (c), by a resolution
requiring a simple majority or, if provided by the
association's rules, a greater majority, or
(ii) if the membership is terminated for the reason referred
to in section 34 (4) (a), by a special resolution, or

(b) in the case of a membership in a housing cooperative,

(i) if the membership is terminated for any of the reasons
referred to in section 35 (3), by a resolution requiring a
simple majority or, if provided by the housing cooperative's
rules, a greater majority, or
(ii) if the membership is terminated for the reason referred
to in section 35 (4), by a special resolution.

(2.1) If the members of a housing cooperative confirm the

termination of a person's membership under subsection (2) (b), the
housing cooperative must

(a) promptly serve the person with

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 (i) a notice that the resolution or special resolution
confirming the termination was passed by the members,
and
(ii) a notice in the prescribed form of the person's right to
appeal the termination under subsection (3), and

(b) comply with other prescribed conditions.

(3) A person who has been served with a notice under subsection
(2.1) (a) (i) may appeal the termination to the court before the
expiry of the 30 day period beginning on the day after the person is
served with the notice on any of the following grounds:

(a) the housing cooperative failed to observe the principles of

natural justice in terminating the membership;

(b) the decision of the housing cooperative is not reasonably

supported by the facts;

(c) the decision of the housing cooperative is not authorized by

section 35.

(3.1) Despite section 171, a person who has commenced an appeal

in accordance with subsection (4) of this section continues to be a
member of the association for the purposes of an application under
section 172.1, and may include with the appeal an application under
section 172.1 for an order of possession.

(4) An appeal to the court under subsection (3) must be

commenced in accordance with Rule 49 of the Rules of Court by
notice of appeal in Form 59

(a) filed in a registry of the court before expiry of the 30 day

period referred to in subsection (3), and

(b) served on the housing cooperative before expiry of the 14

day period beginning on the day after the notice of appeal is filed
in the registry of the court.

(4.1) If a person commences an appeal under subsection (3) from a

decision of a housing cooperative to terminate that person's
membership, the housing cooperative may file an application under

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section 172 (1) with its appearance under Rule 49 (6) of the Rules of
Court.

(4.2) If an appeal is commenced under this section,

(a) any application by the housing cooperative for an order under

section 172 (1) must be filed with the appearance, and

(b) any application by the member under section 172.1 must be

filed with the notice of appeal so that the court may determine at
the same time all the issues between the parties relating to the
termination.

(5) An appeal to the court under subsection (3) may be a new

hearing and the court may hear all the evidence the court considers
relevant including, but not limited to, the evidence of the housing
cooperative and the person, and the court

(a) must either

(i) despite section 39, restore the membership in the
housing cooperative of the person whose membership was
terminated by the resolution or special resolution, with the
restoration to be effective on and after a date specified by
the court, and if an application has been made under section
172.1, the court must make an order of possession in favour
of the member, or
(ii) confirm the resolution or special resolution by which the
members of the housing cooperative confirmed the
termination of the person's membership, and if an
application has been made under section 172, the court
must make an order of possession in favour of the housing
cooperative, and

(b) may make any other order that the court considers
appropriate.

(6) An appeal from a decision of the court under subsection (5) lies
to the Court of Appeal with leave of a justice of the Court of Appeal.

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Requirement to redeem shares on membership withdrawal or
termination:

(1) A person who withdraws from membership in an association is

entitled, subject to section 66 (2), to require the association to
redeem

(a) the person's membership shares, and

(b) any of the person's investment shares in classes restricted for

distribution to members only within a period and on conditions
the association may establish under its rules, or immediately and
unconditionally, if the association's rules do not establish any
period or conditions.

(2) A person whose membership in an association is terminated

under this Division is entitled, subject to section 66 (2), to require
the association to redeem

(a) the person's membership shares, and

(b) any of the person's investment shares in classes restricted for

distribution to members only.

(3) The entitlement, described in subsections (1) and (2), of a

person who withdraws from membership in a housing cooperative
or whose membership in a housing cooperative is terminated, is
postponed until the person has given up the actual possession and
occupancy of any residential premises in which the person had a
right to possession or occupancy dependent on the person's
membership.

(4) In the case of

(a) a community service cooperative, or

(b) an association to which section 173 or 196 (2) applies, the

refund on account of membership shares must not exceed the
amount paid up on the member's membership shares.

Rights and liabilities of members:

20
If liability of members is not limited by shares, each member shall have
one vote irrespective of amount of his interest in the capital. [section
13(1)]. If liability of members of a registered society is limited by
shares, each member will have as many votes as may be prescribed in
bye-laws. [section 13(2)]. If a registered society has invested in shares
of other registered society, it can vote by appointing a proxy. [section
13(3)]. - - A member of registered society shall not exercise his rights
as member, unless he has made payment to society in respect of
membership or has acquired interest in society, as may be prescribed
by rules or bye-laws. [section 12]. Thus, if there is any default in
payment to society, the member cannot exercise his rights.

Secretary of the Co-operative Society:

(1) The committee shall appoint a secretary and, unless the person so
appointed is a member of the committee, shall have power to fix the
remuneration for his services.

(2) The secretary, if a member of the committee, shall be unpaid.

(3) No appointment made under paragraph (1) of this rule shall be

valid and effective, and no remuneration fixed thereunder shall be
payable or recoverable, unless approved by the Registrar. Every such
approval shall be communicated in writing by the Registrar to the
committee.

(4) In the event of failure on the part of the committee to appoint a

secretary, the Registrar shall appoint a secretary and, unless the
person so appointed is a member of the committee, the Registrar shall
fix his remuneration. Every appointment made by the Registrar under
this paragraph shall be valid and effective, and every remuneration
fixed by the Registrar shall be payable and recoverable, as if made or
fixed by the committee.

(5) The secretary shall occupy his office until his services are
determined by one month's notice in writing given by the committee:

21
Provided that no determination as aforesaid shall be valid and effective
until the approval of the Registrar in writing has been obtained
therefor.

(6) The secretary may resign his office by giving one month's notice to
the committee in writing.

(7) On the occurrence of a vacancy in the office of the secretary, the

provisions of this rule shall apply mutatis mutandis to the filling of such
vacancy.

Duties of the Secretary the Co-operative

Society:
(a) to attend all meetings of the registered society and of the
committee and to carry out all the instructions of the committee;
(b) to be present at the office during the hours of business as fixed
from time to time by the committee;
(c) to record the whole of the transactions of the registered society in
the books provided for that purpose; to conduct correspondence on
behalf of the registered society; to prepare the annual statement of
accounts and balance sheet; and to have charge of the documents,
books and vouchers for payments and receipts on behalf of the
registered society;
(d) to receive all applications for loans and bring the same before the
committee; to prepare receipts and other documents in the form
prescribed for signature by borrowers prior to their taking the loans
sanctioned; and with the authority of the committee to supply
information about the registered society which may be applied for by
members;
(e) to receive all moneys due or payable to the registered society and
issue receipts to the payer for same from a counterfoil receipt book
supplied to the registered society for the purpose by the Registrar,
obtaining at the same time the signature of the person making the
payment on the counterfoil;
(f) to deposit with the treasurer from moneys collected by him on
behalf of the registered society all sums in excess of an amount to be

22
fixed from time to time by the committee and to obtain from him a
receipt on a form to be taken from the prescribed counterfoil book;
(g) to keep separate all moneys belonging to the registered society
and on no account to mix them with any other moneys; and to produce
at all times when called upon to the committee, or the Registrar or any
person authorized by him, all moneys in his hands belonging to the
registered society;
(h) to make payments as authorized by the committee, obtaining the
payee's signature on the payment book prescribed by the Registrar:
Provided that if the payment is made outside the registered society's
office the secretary shall, in every instance, obtain from the payee a
manuscript receipt and attach it to a separate page of the payment
book;
(i) to issue a receipt on a form to be taken from the prescribed
counterfoil book when receiving money from the treasurer; and
(j) to summon meetings as provided in the rules.

Meetings Held in a Co-operative society:

General meeting
The supreme authority of a society shall be vested in the general
meeting of its members, at which every member has a right to attend
and to vote.

Meeting of delegates

(1) Notwithstanding section 50, if a primary society has more than

3,000 members, the general meeting of members may be replaced by
a meeting of delegates, each delegate representing a certain number
of individual members. All provisions of this Act referring to general
meetings of members shall include a reference to meetings of
delegates.
(2) Every individual person who is a member of a society may be
eligible for election as a delegate.
(3) The meeting of delegates shall consist of not less than 20
delegates, elected from among the members. The delegates may not
vote by proxy.
(4) The society shall make by-laws specifying the method by which the
delegates are elected and the number of individual members
represented by each delegate and the term of office of the delegates.
(5) The Registrar may, on application by a primary society with less
than 3,000 members, allow the society to replace the general meeting

23
of members by a meeting of delegates, if for any special reason he
thinks fit to do so.

First meeting

(1) Every society shall within 3 months after receipt of the notice of
registration, unless the time is extended by the Registrar, hold a first
meeting of its members.
(2) The business of the first meeting shall include the election of
officers who shall serve until the first annual general meeting and shall
be eligible for re-election.

Annual general meeting

(1) Every society shall provide in its by-laws for an annual general
meeting to be convened by the committee of management and to be
held as soon as practicable, but not later than 6 months after the end
of the financial year, unless the approval of the Registrar has, within
that period of 6 months, been obtained to extend that period, and may
also provide for other general meetings.
(2) Unless the by-laws otherwise provide, a notice of every general
meeting shall be sent to each member or delegate entitled to attend
the meeting at least 15 clear days prior to the date of the meeting. The
notice shall state the matters for discussion and the resolutions to be
proposed and no other subject shall be discussed without the consent
of the majority of the members present and voting at the general
meeting.

Functions of annual general meeting

The functions of the annual general meeting of a society are —

(a) to consider and confirm the minutes of the last annual general
meeting and of any other intervening general meeting;
(b) to consider the auditor’s report, the reports of the committee of
management and any report made by the Registrar or his
representative;
(c) to approve the financial statements;
(d) to consider and resolve the manner in which any available net
surplus shall be distributed or invested subject to the provisions of this
Act and the by-laws;
(e) to consider and adopt any amendments to the by-laws;
(f) to elect or remove members of the committee of management;
(g) to appoint, where necessary, the auditors of the society;
(h) to consider and determine the maximum amount the society may
borrow; and

24
(i) to transact any other general business of the society of which due
notice has been given to members.

Extraordinary general meeting

(1) An extraordinary general meeting of a society may be convened at

any time by the committee of management of the society, except that
at least 7 clear days", and in the case of a proposed amendment to by-
laws at least 15 clear days", written notice of the meeting and of the
subjects on the agenda for discussion have been sent to each member
or delegate, as the case may be, or given as provided in the by-laws.
(2) An extraordinary general meeting of a society shall be convened by
the committee of management on receipt of a requisition for such a
meeting signed by at least 20% or 60 of the members or delegates of
the society, whichever is the less, stating the objects of the meeting.
(3) If the committee of management fails to convene a meeting in
accordance with subsection (2) within one month of receiving the
requisition for the meeting, the members making the requisition shall
have power to convene the meeting themselves by notice to all
members of the society stating the objects of the meeting and the fact
that the committee of management has failed to convene the meeting.
(4) The Registrar or his representative may at any time convene a
special general meeting of a society and may also direct what matters
shall be discussed at the meeting.

Co-operative Society Act 1904:

In India, cooperative societies are regarded as instruments to mobilize
and aggregate community effort to eliminate layers of middlemen in
any product or service supply chain hence resulting in greater benefit
sharing for the grassroot farmer,worker or artisans. The Cooperative
Credit Societies Act, 1904 enabled formation of cooperatives for
supplying to farmers cheap credit and protect them from exploitation
in the hands of the moneylenders. The cooperative act 1912 expanded
the sphere of cooperation and provided for supervision by central
organization.

Co-operative Society Act 1904:

In India, cooperative societies are regarded as instruments to mobilize
and aggregate community effort to eliminate layers of middlemen in
any product or service supply chain hence resulting in greater benefit
sharing for the grassroot farmer,worker or artisans. The Cooperative
Credit Societies Act, 1904 enabled formation of cooperatives for

25
supplying to farmers cheap credit and protect them from exploitation
in the hands of the moneylenders. The cooperative act 1912 expanded
the sphere of cooperation and provided for supervision by central
organization.

Maharashtra Co-operative Societies Act

1960:
An Act further to amend the Maharashtra Co-operative Societies Act,
1960.
WHEREAS it is expedient further to amend the Maharashtra Co-
operative Societies Act 1960, for the purpose hereinafter appearing; It
is hereby enacted in the Forty-seventh Year of the Republic of India as
follows :-

1. This Act may be called the Maharashtra Co-operative Societies

(Amendment) Short title Act, 1996.

2. In section 9 of the Maharashtra Co-operative Societies Act, 1960

(hereinafter referred to as “the principal Act”). in such-section (2),
after the words “deemed to have been registered” the words” and
thereafter the Registrar shall issue a certificate of registration under
his seal and signature within a period of fifteen days “ shall be added.
Our Comments :-Section 9, had been amended to clarify the provision
as regards Registration of Co-operative Society more explicit.

3. In section 22 of the principal Act, in sub-section (2), after the words

“deemed to have been admitted as a member of the society”. the
words “If any question arises whether a person has become a deemed
member or otherwise, the same shall be decided by the Registrar after
giving a reasonable opportunity of being heard to all the concerned
parties.” shall be added.

4. In section 23 of the principal Act, in sub-section (IA), after the words

‘become a member of such society”, the words, “If any question arises
whether a person has become a deemed member otherwise, the same
shall be decided by the Registrar after giving a reasonable opportunity
of being heard to all the concerned parties”, shall be added.
Our Comments : – Section 22(2) and 23 (1A) has been amended to
clarify that as regards membership the power shall be exercised by the
registrar.

5. In section 27 of the principal Act, for sub-section (9), the following

sub-section shall be substituted, namely : –

26
“(9) No nominee of the Governmetn or any financing bank on the
committee of any society shall be entitled to vote at any election of
officers of such committee such as, the President, Vice President,
Chairman, Vice Chairman, Secretary, Treasurer or any other officers by
whatsoever designation called, who holds the office by virtue of his
election to that office.
Our Comments : – Section 27 has been amended so that the powers as
regards Governmetn nominees as regards election of office bearers
have been 0curtailed.

6. In section 73-1 D of the principal Act. –

a) in such-section (I), –
i) for the words “two-third majority” the words simple majority” shall
be substituted;
ii) for the words “for the time being entitled to sit and vote at any
meeting of the committee ”the word as” entitled to vote at the election
of such President, Vice President, Chairman , Vice Chairman, Secretary,
Treasurer or any other officer” shall be substituted.
(b) in sub section (2) for the time being entitled to site and vote at any
meeting of the committee” the words entitled to elect the President,
Vice President, Chairman, Vice Chairman, Secretary, Treasurer or any
other officer, as the case may be, of the committee” shall be
substituted;
(c) in sub-section (7) for the words “six months” the word as “one
year” shall be substituted.
Our comments :- section 73 (1D) have been amended so that no
confidence motion can be passed with simple majority instead of 2/3
majority. Subsection 7 of this section has been amended so that the
requisition for a Fresh Motion of no confidence can be brought only
after a period of one year. Instead of the previous period of six months.
The term of the administrator is now extended upto one year from the
previous period of six months.

7. In section 73BB of the principal Act, in sub-section (I) –

(a) for the words “union then the selection shall be made by the union
with the largest membership, and where there is no union at all, then
by an election by such employees from amongst themselves in the
prescribed manner” the words “recognised union or unions and where
there is no union at all or where there is a dispute in relation to such
issues including whether a union is recognised or not, then the seats so
reserved shall be filled by an election by such employees from
amongst themselves in the prescribed manner” shall be substituted.
(b) the following Explanation shall be added at the end, namely :-
“Explanation – For the purpose of this section the members of the
committee shall mean and include the representatives of the
employees”.

27
8. In section 73BB of the principal Act, –
(a) to sub-section (I), the following Explanation shall be added, at the
end, namely :-
‘Explanation – For the purpose of determining the number of
committee members under this sub-section, committee members who
are elected, co-opted nominate, appointed or otherwise occupying the
position on the committee under 73B, 73BB and under this sub-section
shall not be included”,
(b) in sub-section (2), for the existing proviso, the following proviso
shall be substituted, namely :-
‘Provided that, where the bye-law of a society already provide for
reservation of seats for women on the committee thereof, the total
number of seats to be reserved for women shall be equal to the
number of seats specified in sub-section (I)”.

9. In section 73H (2), of the principal Act, in sub-section (2), for the
words, “where there is a willful failure on the part of the committee to
hold election to the committee before the expiration of its term, the
committee before the expiration of its term, the committee before the
expiration of its term, the committee” the words “ The committee”
shall be substituted. Our Committee, to conduct the elections before
the expiry of the tenure of the committee. The above said amendment
appears to have been made to bring consistency with the provisions of
subsection (2B) of subsection 73-G.

10. In section 77A of the principal Act, in sub-section (3), the following
proviso shall be added, namely :-
“Provided hat, if a new committee is not, or cannot be constituted at
the expiry or termination of the term of office of the committee or
Administrator, for any reason beyond the control of the committee or
Administrator, the term of office of the committee or Administrator, as
the case may be, shall be deemed to be extended, until the new
committee is duly constituted.”
Our Comments :- Section 77 (A) has been amended so that the tenure
of office of the Managing Committee or Administrator would be
deemed to have been extended if for any reason whatsoever a new
committee cannot be constituted before the expiry of the term office.

11. In section 78 of the principal Act, in sub-section (3) the following

proviso shall be added, namely:-
“Provided that, the member who has been so removed, shall not be
eligible to be re-elected, re-appointed, re-nominated, or re-co-opted, as
a member of any committee from the date on which he has been so
removed or till such lesser period as may be laid down under the
provisions of section 73FFF or 144E, as the case may be”.
Our Comments :- if a member of the committee has been removed

28
under this section than he cannot be re-elected, reappointed,
renominated or recopted as a member of the Managing Committee for
one full term from the date he has been removed or for such period as
laid down in provisions of sections 73FFF or 144E of the M.C.S. Act
1960.
Our comments : – Subsection of 104 has been substituted to specify in
which cases the appeal should lie with the registrar and in which
places the appeal should lie with the State Government.

12. In section 104 of the principal Act, for sub-section (I), the following
sub-section shall be substituted, namely :-
“(1) The committee or any member of the society ordered to be wound
up may prefer an appeal against the final order of winding-up within
two months form the date of the issue of the order made under section
102.-
(a) if made by the Registrar, or the special or Additional or Joint
Registrar on whom the powers of the Registrar are conferred, to the
State Government ;
(b) If made by any person other than the Registrar, or the Special or
Additional or Joint Registrar on whom the powers of the Registrar are
conferred, to the Registrar.
Provided that, no appeal shall lie against order, issued under sub-
clause (i), (ii) or (iii) of clause (c) of sub-section (I) of section 102”.

13. In section 112B of the principal Act, in sub section (I) in clause (b),
in sub-clause (iv), for the words” such employees”, the following shall
be substituted namely :-
“such employees. Where there is no recognised union or unions or
where there is no union at all, the employees shall elect
representatives from amongst themselves. The election shall be held
by the Collector in the manner laid down in Chapter XI-A of this Act”.

14. In section 148 of the principal Act, for sub-section (3), the following
sub-section shall be substituted, namely :-
(3) No prosecution under this Act shall be lodged, except with the
previous sanction of the Registrar.

Management of society:
Each society will be managed by Committee. - - Committee means the
governing body of a registered society to whom the management of its
affairs is entrusted. [section 2(b)]. Officer of society includes a
Chairman, Secretary, treasurer, member of Committee or other person

29
empowered under rules or bye-laws to give directions in regard to
business of society. [section 2(e)].

Registered Society is body corporate:

A registered cooperative society is a body corporate with perpetual
succession and common sea. (just like a company). It can hold
property, enter into contracts, institute and defend suit and other legal
proceedings and to do all things necessary for the purposes of its
constitution. [section 18].

Audit:
(1)The Registrar shall audit or cause to be audited by some person
authorised by him by general or special order in writing in this behalf
the accounts of every registered society once at least in every year.
(2) The audit under sub-section (1) shall include an examination of
overdue debts, if any, and a valuation of the assets and liabilities of
the society.
(3) The Registrar, the Collector or any person authorised by general or
special order in writing in this behalf by the Registrar shall at all times
have access to all the books, accounts, papers and securities of a
society, and every officer of the society shall furnish such information
in regard to the transactions and working of the society as the person
making such inspection may require.

Inspection of affairs of society:

Registrar can hold an enquiry or direct some person authorised by him
to hold enquiry in following circumstances – (a) Of his own motion (b)
Request of Collector (c) Application by majority of committee members
of society or (d) At least one-third of members of society. [section
35(1)]. All officers and members of society shall furnish necessary
information to registrar or person authorised by him. [section 35(2)].

1) The Registrar may of his own motion, and shall on the request of the
Collector, or on the application of a majority of the committee, or of
not less than one- third of the members, hold an inquiry or direct some
person authorised by him by order in writing in this behalf to hold an
inquiry into the constitution, working and financial condition of a
registered society. (2) All officers and members of the society shall
furnish such information in regard to the affairs of the society as the
Registrar or the person authorised by the Registrar may require.

30
The Birth of Amul and development of
India’s Dairy Cooperative Movement:
The birth of Amul at Anand provided the impetus to the cooperative
dairy movement in the country. The Kaira District Cooperative Milk
Producers’ Union Limited was registered on December 14, 1946 as a
response to exploitation of marginal milk producers by traders or
agents of existing dairies in the small town named Anand (in Kaira
District of Gujarat). Milk Producers had to travel long distances to
deliver milk to the only dairy, the Polson Dairy in Anand. Often milk
went sour as producers had to physically carry the milk in individual
containers, especially in the summer season. These agents arbitrarily
decided the prices depending on the production and the season. Milk is
a commodity that has to be collected twice a day from each
cow/buffalo. In winter, the producer was either left with surplus /
unsold milk or had to sell it at very low prices. Moreover, the
government at that time had given monopoly rights to Polson Dairy
(around that time Polson was the most well known butter brand in the
country) to collect milk from Anand and supply it to Bombay city in
turn. India ranked nowhere amongst milk producing countries in the
world in 1946.

Angered by the unfair and manipulative trade practices, the farmers of

Kaira District approached Sardar Vallabhbhai Patel (who later became
the first Deputy Prime Minister and Home Minister of free India) under
the leadership of the local farmer leader Tribhuvandas Patel. Sardar
Patel advised the farmers to form a Cooperative and supply milk
directly to the Bombay Milk Scheme instead of selling it to Polson (who
did the same but gave low prices to the producers). He sent Morarji
Desai (who later became Prime Minister of India) to organize the
farmers. In 1946, the farmers of the area went on a milk strike refusing
to be further oppressed. Thus the Kaira District Cooperative was
established to collect and process milk in the District of Kaira in 1946.
Milk collection was also decentralized, as most producers were
marginal farmers who were in a position to deliver 1-2 litres of milk per
day. Village level cooperatives were established to organize the
marginal milk producers in each of these villages.

31
The Cooperative was further developed & managed by Dr. V Kurien
along with Shri H M Dalaya. The first modern dairy of the Kaira Union
was established at Anand (which popularly came to be known as AMUL
dairy after its brand name). Indigenous R&D and technology
development at the Cooperative had led to the successful production
of skimmed milk powder from buffalo milk – the first time on a
commercial scale anywhere in the world. The foundations of a modern
dairy industry in India were thus laid since India had one of the largest
buffalo populations in the world.

The success of the dairy co-operative movement spread rapidly in

Gujarat. Within a short span five other district unions – Mehsana,
Banaskantha, Baroda, Sabarkantha and Surat were organized. In order
to combine forces and expand the market while saving on advertising
and avoid a situation where milk cooperatives would compete against
each other it was decided to set up an apex marketing body of dairy
cooperative unions in Gujarat. Thus, in 1973, the Gujarat Co-operative
Milk Marketing Federation was established. The Kaira District Co-
operative Milk Producers’ Union Ltd. which had established the brand
name AMUL in 1955 decided to hand over the brand name to GCMMF
(AMUL). With the creation of GCMMF (AMUL), we managed to eliminate
competition between Gujarat’s cooperatives while competing with the
private sector as a combined stronger force. GCMMF (AMUL) has
ensured remunerative returns to the farmers while providing
consumers with products under the brand name AMUL.

This was possible due to the leadership of the founder Chairman of

AMUL, Tribhuvandas Patel and the vision of the father of the White
Revolution, Dr. Verghese Kurien who worked as a professional
manager at AMUL. Numerous people contributed to this movement
which would otherwise not have been possible.

Dr. Verghese Kurien, the World Food Prize and the Magsaysay Award
winner, is the architect of India’s White Revolution, which helped India
emerge as the largest milk producer in the world.

Impressed with the development of dairy cooperatives in Kaira District

& its success, Shri Lal Bahadur Shastri, the then Prime Minister of India
during his visit to Anand in 1964, asked Dr. V Kurien to replicate the
Anand type dairy cooperatives all over India. Thus, the National Dairy
Developed Board was formed and Operation Flood Programme was
launched for replication of the Amul Model all over India.

Operation Flood, the world’s largest dairy development programme, is

based on the experience gained from the ‘Amul Model’ dairy
cooperatives. The facilities at all levels are entirely farmer-owned. The

32
cooperatives are able to build markets, supply inputs and create value-
added processing. Thus, Amul Model cooperatives seem to be the most
appropriate organizational force for promoting agricultural
development using modern technologies and professional
management and thereby generating employment for the rural masses
and eradicating poverty in these undeveloped areas. India has already
demonstrated the superiority of this approach.

Webliography:

• http://www.accommodationtimes.com/legal/society/ma
harashtra-co-operative-society-act/

• http://www.bclaws.ca/Recon/document/freeside/--%20C
%20--/Cooperative%20Association%20Act%20%20SBC
%201999%20%20c.%2028/00_99028_01.xml

• http://docs.google.com/viewer?
a=v&q=cache:uRy7sMwHKlMJ:www.nios.ac.in/Secbusco
ur/cc09.pdf+cooperative+society&hl=en&gl=in&pid=bl
&srcid=ADGEESjV8RrwKlzIug6gA1_Lt1vpdIPIK65g3MCO
LgPgcAQDviC3bquX5N-
Y8LgwoABoVyIbEqsPUHwwFBoHbSlRRr1hYb5qMM9wXK
VlfKcq92JMzLWr-zYlq27ogc2-
tlPOkKqzUlNA&sig=AHIEtbTGp2lpHWcxyz5xQib5YlJasXo
Dmg

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• http://en.wikipedia.org/wiki/Cooperative

34