The Multi-State Cooperative Societies Act, 1984

CHAPTER IV: DIRECTION AND MANAGEMENT OF MULTI-STATE COOPERATIVE SOCIETIES

29. General body, its constitution, powers and functions-

(1) The general body of a multi-State cooperative society shall consist of all the members of such society;

Provided that where the bye-laws of a multi-State cooperative society provide for the constitution of a smaller body consisting of delegates of members of the society elected or selected in accordance with such byelaws, that smaller body shall exercise such powers of the general body as may be prescribed or as may be specified in the bye-laws of the society.

(2) Subject to the provisions of this Act, the rules and the bye-laws, the ultimate authority of a multi-State cooperative society shall vest in the general body of its members:

Provided that nothing contained in this sub-section shall affect the exercise by the board or any officer of a multi-State cooperative society of any power conferred on such board or such officer by this Act or the rules or the bye-laws.

(3) Where in any meeting of the general body or the board of a multi-State cooperative society, a cooperative society or another multi-State cooperative society is to be represented, such cooperative society or other multi-State cooperative society shall be represented in such meeting only through the Chairman or the Chief Executive of such cooperative society or other multi-State cooperative society, as the case may be, and where there is no board or such cooperative society or other multi-State cooperative society, for whatever reasons, through the administrator, by whatever name called, of such cooperative society or other multi-State cooperative society.

30. Annual general meeting of the general body -

(1) Every multi-State cooperative society shall, within such period as may be prescribed, after the close of the year, call a general meeting of its members in the manner prescribed for the purpose of -

(a) consideration of the audit report and annual report;

(b) disposal of net profits;

(c) approval of the programme of activities for the ensuing year;

(d) amendment of bye-laws;

(e) election, if any, of the members of the board, other than nominated members, subject to the provisions of section 35;

Provided that the Central Registrar may by general and special order, extend the period for holding such meeting for a further period not exceeding three months.

Provided further that if in the opinion of the Central Registrar no such extension is necessary or such meeting is not called by the multi-State cooperative society within the extended period, if any, granted by him, the Central Registrar or any person authorised by him in this behalf may call such meeting in the manner prescribed, and that meeting shall be deemed to be a general meeting duly called by the society and the Central Registrar may order that expenditure incurred in calling such a meeting shall be paid out of the funds of the society or by such person or persons who, in the opinion of the Central Registrar, was or were responsible for the refusal or failure to convene the general meeting.

(2) At every annual general meeting of a multi-State cooperative society the board shall lay before the society a statement showing the details of the loans or goods on credit, if any, given to any of the members of the board or to the spouse or a son or daughter of a member of the board during the preceding year or outstanding against him or against such spouse or son or daughter of the member of the board.

31. Special general meeting of the general body -

(1) The Chief Executive may, at any time, on the direction of the board, call a special general meeting of the society and shall call such meeting within one month after the receipt of a requisition in writing from the Central Registrar or from such member or members or a proportion of the total number of members, as may be provided in the bye-laws.

(2) If a special general meeting of a multi-State cooperative society is not called in accordance with the requisition referred to in sub-section (1), the Central Registrar or any person authorised by him in this behalf shall have the power to call such meeting and that meeting shall be deemed to be a meeting called by the Chief Executive in accordance with the provisions of that sub-section and the Central Registrar may order that the expenditure incurred in calling such meeting shall be paid out of the funds of the society or by such person or persons who, in the opinion of the Central Registrar, was or were responsible for the refusal or failure to convene the special general meeting.

32. Board of directors -

Subject to the provisions of this Act and the rules, there shall be a board of directors for every multi-State cooperative society consisting of such number of members as may be provided for under the bye-laws.

33. Association of employees in the management decision making process

Every multi-State cooperative society shall devise such procedure, as may be specified in the bye-laws or in the administrative instructions, for association of the representatives of employees of such multi-State cooperative societies at such level or bodies as may be specified in the bye-laws or the instructions issued in this regard, in the management decision making process.

34. Disqualification for a member of a board -

No member of any multi-state cooperative society or nominee of a member-society on a national cooperative society shall be eligible for being chosen as, or for being, a member of the board of such multi-State cooperative society or national cooperative society or of any other cooperative society to which the multi-State cooperative society is affiliated. if such member -

(a) has been adjudged by a competent court to be insolvent or of unsound mind;

(b) is concerned or participates in the profits of any contract with the society;

(c) has been convicted for an offence involving moral turpitude;

(d) holds any office or place of profit under the society;

Provided that the Chief Executive or such full-time employee of the society as may be notified by the Central Government from time to time or a person elected by the employees of such society to represent them on the Board of such society shall be eligible for being chosen as, or for being, a member of such board;

(e) has been a member of the society for less than twelve months immediately preceding the date of such election or appointment;

(f) has interest in any business of the kind carried on by the society of which he is a member;

(g) has taken loan or goods on credit from the society of which he is a member, or is otherwise indebted to such society and after the receipt of a notice of default issued to him by such society, has defaulted -

(i) in repayment of such loan or debt or in payment of the price of the good taken on credit, as the case may be, within the date fixed for such repayment or payment or where such date is extended, which in no case shall exceed six months, within the date so extended, or

(ii) when such loan or debt or the price of goods taken on credit is to be paid in instalments, in payment of any instalment, and the amount in default or any part there of has remained unpaid on the expiry of six months from the date of such default;

Provided that a member of the board who had ceased to hold office as such under this clause shall not be eligible, for a period of one year, from the date on which he ceased to hold office, for reelection as a member of the board of the multi-State cooperative society of which he was a member or for election to the board of any other multi-State cooperative society;

(h) is a person against whom any amount due under a degree, decision or order is pending recovery under this Act;

(i) is retained or employed as a legal practitioner on behalf of or against the multi-State cooperative society, or on behalf of or against any other multi-State cooperative society which is a member of the former society.

Explanation -

For the purposes of this clause "legal practitioner" has the same meaning as in clause (i) of sub-section (1) of Section 2 of the Advocates Act, 1961;

(j) has been convicted for any offence under this Act.

35. Election of members of board -

(1) The superintendence, direction and control of the preparation of the electoral rolls for, and the conduct of, elections of the members of the board of such multi-State cooperative societies or class of multi-State cooperative societies as the Central Government may, by general or special order, notify, shall be vested in such returning officers as may be appointed by the Central Registrar in this behalf.

(2) The vote at such elections shall be by secret ballot.

(3) The term of office of the elected members of the board shall be such, not exceeding three years from the date of election, as may be specified in the bye-laws of a multi-State cooperative society:

Provided that the elected members shall continue to hold office till their successors are elected or nominated under the provisions of this Act or the rules or the bye-laws and assume the charge of their office.

(4) No person shall be eligible to be elected as a member of the board of a multi-State cooperative society unless he is a member of the general body of that society.

(5) The Central Government may make rules generally to provide for or to regulate matters in respect of elections of members of the board.

36. Holding of office in cooperative society -

Notwithstanding any thing contained in this Act, no person shall be eligible to hold, at the same time, office of a president or chairman or vice-president or vice-chairman on the board of more than one multi-State cooperative society:

Provided that any person holding, at the commencement of this Act, the office of a president or chairman or vice-president or vice-chairman in more than one multi-State cooperative society shall, within three months from such commencement by notice in writing signed by him, intimate the name of the multi-State cooperative society in which he wishes to serve and thereupon his office in the other multi-State cooperative society in which he does not wish to serve shall become vacant:

Provided further that in default of such intimation within the period referred to in the preceding proviso, his offices in all the multi-State cooperative societies shall, at the expiration of the period aforesaid, become vacant.

37. Restrictions on holding of office -

No person shall be eligible to hold the office of a president or chairman or vice-president or vice-chairman on the board of a multi-State cooperative society, after he has held the office as aforesaid during two consecutive terms, whether full or part:

Provided that a person who has ceased to hold the office of a president or chairman continuously, for one full term of three years shall again be eligible for election to the offices aforesaid.

Explanation -

Where any person holding the office of the president or vice-president or chairman or vice-chairman at the commencement of this Act is again elected to that office after such commencement, he shall for the purpose of this section, be deemed to have held office for one term before such election.

38. Payment of honorarium -

Honorarium may be paid to the elected chairman or president of the board out of the profits of the multi-State cooperative society in respect of specific services rendered by him, subject to such restrictions and conditions as may be prescribed.

39. Removal of elected members by general body -

An elected member of a board who has acted adversely to the interests of multi-State cooperative society may, on the basis of a report from the Central Registrar or otherwise, be removed from the board upon a resolution of the general body passed at its meeting by a majority of not less than two thirds of the members present and voting at the meeting.

Provided that the member concerned shall not be removed unless he has been given a reasonable opportunity of making representation in the matter.

40. Removal of member by Central Registrar -

If in spite of cessation of office under circumstances mentioned in Section 34, Section 36, Section 37 or Section 39 a member of the board refuses to vacate his office, the Central Registrar shall, by order in writing, remove him from such office.

41. Nominee of Central Government or State Government on the board -

(1) Where the Central Government or a State Government has subscribed to the share capital of a multi - state cooperative society or has guaranteed the repayment of principal and payment of interest on debentures issued by a multi-State cooperative society or has guaranteed the repayment of principal and payment of interest on loans and advances to a multi-State cooperative society, the Central Government or the State Government in this behalf, as the case may be, or any person authorised by the Central Government or the State Government, shall have the right to nominate on the board such number of persons as may be prescribed;

(2) The bye-laws of a multi-State cooperative society may provide for the nomination of persons in excess of the limits prescribed under sub-section(1).

(3) A person nominated under this section shall hold office during the pleasure of the Government by which he has been so nominated.

42. Powers and functions of the board--

(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.

(2) Without prejudice to the generality of the foregoing power, such power shall include the power --

(a) to admit members;

(b) to interpret the organisational objectives and set up specific goals to be achieved towards these objectives;

(c) to make periodic appraisal of operations;

(d) to appoint a Chief Executive and such other employees of the society (out of the list of persons referred to in section 50) as are not required to be appointed by the Chief Executive;

(e) to make provisions for regulating the appointment of employees of the multi-State cooperative society and the scales of pay, allowances and other conditions of service of, including disciplinary action against, such employees;

(f) to approve annual and supplementary budget;

(g) to acquire or dispose of immovable property;

(h) to raise funds;

(i) to sanction loans to the members; and

(j) to take such other measures or to do such other acts as may be prescribed or required under this Act.

43. Meetings of the board--

(1) The Chief Executive shall convene the meetings of the board at the instance of the chairman or president of the multi-State cooperative society.

(2) The total number of meetings of the board in a year and the venue of meetings may be such as may be prescribed:

Provided that the board shall meet at least once in every quarter.

44. Chief Executive--

(1) There shall be Chief Executive, by whatever designation called, of every multi-State cooperative society, to be appointed by the board and he shall be a full-time employee of such multi-State cooperative society.

(2) The Chief Executive shall be member of the board and of the Executive Committee and such other committees or sub-committees as may be constituted under sub-section (1) of section 46.

(3) The functional directors in national cooperative societies shall also be members of the board.

(4) Where the Central Government has subscribed to the extent of more than one-half of the share capital of a national co-operative society, it shall be obligatory on such a society to seek prior approval of the Central Government to the appointment of Chief Executive and the functional directors.

45. Powers and functions of Chief Executive--

The Chief Executive shall exercise the powers and discharge the functions, specified below, namely:-

(a) day to day management of the business of the multi-State Cooperative society;

(b) operating the accounts of the multi-State cooperative society and be responsible for making arrangements for safe custody of cash;

(c) signing of the documents for and on behalf of the multi-State cooperative society;

(d) making arrangements for the proper maintenance of various books and records of the multi-State cooperative society and for the correct preparation, timely submission of periodical statements and returns in accordance with the provisions of this Act, the rules and the bye-laws;

(e) convening meetings of the general body of the multi-State cooperative society, the board and the Executive Committee and other committees or sub-committees constituted under sub-section (1) of Section 46 and maintaining proper records for such meetings;

(f) making appointments to posts in the multi-State cooperative society in accordance with the rules made under clause (e) of Sub-section (2) of section 42 except the posts in relation to which the power of appointment vests in the board under Clause (d) of that sub-section;

(g) assisting the board in the formulation of policies and objectives and planning;

(h) furnishing to the board periodical information necessary for appraising the operations and functions of the multi-State cooperative society;

(i) performing such other duties, and exercising such other powers, as may be prescribed or as may be specified in the bye-laws of the multi-State cooperative society.

46. Committees of the board -

(1) The board may, subject to such conditions as may be prescribed, constitute an Executive Committee and other committees or sub-committees, as may be considered necessary.

(2) The Executive Committee or other committee or sub-committee referred to in sub-section (1) shall perform such functions as are assigned to it in accordance with the bye-laws of the multi-State cooperative society.

47. Central Government's power to give directions in public interest -

If the Central Government is satisfied that in the public interest or for the purposes of securing proper implementation of cooperative production and other developmental programmes approved or undertaken by the Central Government or to secure proper management of business of the multi-State cooperative societies generally or for preventing the affairs of the multi-State cooperative societies being conducted in a manner detrimental to the interests of the members, any depositors or creditors thereof, it is necessary to issue directions to any class of multi-State cooperative societies generally or to any multi-State cooperative society or societies in particular, the Central Government may issue directions to them or to it, from time to time and all such multi-State cooperative societies or the society concerned, as the case may be, shall be bound to comply with such directions.

48. Supersession of board -

(1) If in the opinion of the Central Registrar the board of any multi-State cooperative society is persistently making default or is negligent in the performance of the duties imposed on it by this Act or the rules or the bye-laws or has committed any act which is prejudicial to the interests of the society or its members or has omitted or failed to comply with any directions given to its under section 47 or that there is a stalemate in the constitution or functions of the board, the Central Registrar may after giving the board an opportunity to state its objections, if any, and considering the objections, if received, by order in writing, remove the board and appoint one or more administrators, who need not be members of the society to manage the affairs of the society for such period not exceeding one year; as may be specified in the order, which period may, at the discretion of the Central Registrar, be extended from time to time; so, however, that the aggregate period does not exceed two years.

(2) The Central Registrar may fix such remuneration for the administrators as he may think fit and the remuneration shall be paid out of the funds of the multi-State cooperative society.

(3) The administrator shall subject to the control of the Central Registrar and to such instructions as he may from time to time give, have power to exercise all or any of the functions of the board or of any officer of the multi-State cooperative society and take all such actions as may be required in the interests of the society.

(4) Save as otherwise provided in sub-section (5), the administrator shall, before the expiry of his term of office, arrange for the constitution of a new board, in accordance with the bye-laws of the multi-State cooperative society.

(5) If at any time during the period of administrator is in office the Central Registrar considers it necessary or expedient so to do, he may, by order in writing giving reasons therefor, direct the administrator to arrange for the constitution of a new board for such multi-State cooperative society in accordance with the bye-laws of such society and immediately on the constitution of such board, the administrators shall hand over the management of such society to such newly constituted board and cease to function.

(6) Where a multi-State cooperative society is indebted to any financial institution the Central Registrar shall, before taking any action, under sub-section (1) in respect of that society, consult the financial institution.

(7) Notwithstanding anything contained in this Act, the Central Registrar shall, in the case of a cooperative bank, if so required in writing by the Reserve Bank in the public interests or for preventing the affairs of the cooperative bank being conducted in a manner detrimental to the interests of the depositors or for securing the proper management of a cooperative bank, pass an order for the supersession of the board of that cooperative bank and for the appointment of an administrator therefor for such periods not exceeding five years in the aggregate as may from time to time be specified by the Reserve Bank.

49. Securing possession of records, etc. -

(1) If -

(a) the records (including registers and books of accounts) of a multi-State cooperative society are likely to be tampered with or destroyed or the funds or other property of such society are likely to be misappropriated or misapplied; or

(b) the board of a multi-State cooperative society is reconstituted at a general meeting of the society; or

(c) the board of a multi-State cooperative society is removed by the Central Registrar under sub-section (1) of section 48; or

(d) a multi - State cooperative society is ordered to be wound up under section 77 and the outgoing members of the board refuse to hand over charge of the records and property of the society to those having, or entitled to receive such charge, the Central Registrar may apply to the magistrate within whose jurisdiction the multi-State cooperative society functions for securing the records and property of the society.

(2) On receipt of an application under sub-section (1), the magistrate may, by a warrant authorise any police officer not below the rank of a sub-inspector to enter and search any place where such records and property are kept or are believed to be kept and to seize such records and property; and the records and property so seized shall be handed over to the new board or administrator of the multi-State cooperative society or the liquidator, as the case may be.

(3) Every such search and seizure shall be made in accordance with the provisions of the Code of Criminal Procedure, 1973.

50. Constitution of body of persons for preparation of list, etc.-

The Central Government shall -

(a) constitute a body of persons in the manner prescribed for the preparation of a list of persons eligible for appointment to the posts of Chief Executive and other managerial posts in national cooperative societies, the maximum pay-scale of which exceeds such amount as may be prescribed;

(b) make rules for regulating the recruitment, remuneration, allowances and other conditions of service of officers and other employees of national cooperative societies.

51. Acts of multi-State cooperative societies not to be invalidated by certain defects -

No act of a multi-State cooperative society or of any board or of any committee or of any officers of the society shall be deemed to be invalid by reason only of the existence of any defect in the procedure or in the constitution of the society or of the board of the committee thereof or in the appointment or election of an officer or on the ground that such officer was disqualified to hold office.