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Version 5 - 97th Amendment & Co-operative Housing Societies

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Krishnaraj Rao

on 16 May 2013

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Transcript of Version 5 - 97th Amendment & Co-operative Housing Societies

Co-operative
Housing
Societies: January
97th Amendment of Constitution Entire
Co-operative
Sector With 6 lakh cooperative societies having 25 crore members, India’s co-operative movement is numerically the world's largest. With working capital of Rs. 3.4 lakh crore, its presence is felt in every village of the country,
and all walks of rural life! Milk-Producers' Co-operatives Sugar Producing Co-operatives Fishermen's Co-operatives Horticulturist's Co-operatives ... and also many walks of urban life, e.g.
co-operative banks, credit societies, and
Co-operative Housing Societies. With 6 lakh cooperative societies having 25 crore members, India’s co-operative movement is numerically the world's largest. With working capital of Rs. 3.4 lakh crore, its presence is felt in every village of the country,
and all walks of rural life! Milk-Producers' Co-operatives Sugar Producing Co-operatives Fishermen's Co-operatives Horticulturist's Co-operatives ... and also urban life, e.g. co-operative banks, credit societies, and Co-operative Housing Societies. Nationwide
in 2012

& 2013 Big Changes in
Maximum no. of directors is 21

Social Justice & Affirmative Action
-- 5 Reserved Seats for SC-ST-OBC & women on Board

Fixed 5-year term for elected members & office bearers

Max. six months for suspension of Board of Directors

Independent audit

Empower Govt to obtain periodic reports & accounts 7. Other mandates… 6. New Directive Principle
To Ensure voluntary formation, autonomous functioning, democratic member control and professional management of Co-op. Societies
-- insertion of Article 43B & Article 243 ZI 5. Offences and Penalties
“The Legislature of a State may, by law, make provisions for the offences relating to the co-operative societies and penalties for such offences.” 4. Right to get information
“The Legislature of a State may, by law, provide for access to every member of a co-operative society to the books, information and accounts of the co-operative society kept in regular transaction of its business with such member.” 2. Insertion of Definitions of
Co-operative Societies
into Constitution

Part IX defines “The Panchayats”

Part IX A defines “The Municipalities”

And now, Part IX B defines “The Co-Operative Societies” 1. Article 19 amended
Protection of certain rights regarding freedom of speech, etc.— (1) All citizens shall have the right —
(a) to freedom of speech and expression;
(b) to assemble peaceably and without arms;
(c) to form associations or unions or co-operative societies;
(d) to move freely throughout the territory of India;
(e) to reside and settle in any part of the territory of India; and
* * * * *
(g) to practise any profession, or to carry on any occupation, trade or business. Passed in Jan 2012.
Process began in 2006.

It mandates big changes
in Co-operative Sector.

Each State has its own Cooperative Societies Act.
Co-op is a State Subject.

Deadline for Implementation
was Feb 16, 2013

Maharashtra Co-op Societies Act, 1960, was amended on 14th Feb, 2013, vide MCS (Amendment) Ordinance, 2013. 97th Constitutional Amendment Amendments in

Constitution

Maharashtra Co-operative Societies (MCS) Act 1960

Model Bye Laws for CHS Amendments in
Constitution 3. Electoral Reforms
“The superintendence, direction and control of the preparation of electoral rolls for, and conduct of, all elections to a co-operative society shall vest in such an authority or body, as may be provided by the Legislature of a State...” Constitution gives broad mandate at the Centre


States laws (like MCS Act, 1960) are amended
in specific ways to fulfill mandate…

Model Bye-laws for various kinds of
Co-operatives (e.g. CHS) are recommended by
State Co-op. Dept.

Each co-op. society must adopt new bye-laws before 30th April 2013 to ensure compliance in their day-to-day functioning. This Constitutional
Amendment
will change the Whole
Country
It is applicable to the ... and it is applicable to co-operative
societies in every State, & also
multi-state co-operatives. Maharashtra
Co-operative
Societies Act 1960
(MCS Act 1960)
was Amended on
14th Feb. 2013 Big Problem no. 2

Political Interference & corruption High-handedness

Denial of necessary documents to ordinary members

Bullying

Arbitrary behaviour

Poor administration

Bad reporting & accounting practices Old Problems of Co-op. Societies…

Big Problem no. 1

Democratic member control,
autonomous functioning
& professional management
are only in theory… not practiced! Because there is corruption & apathy in the system…
and we ourselves are part of the problem! Why are these changes necessary? Policy People To Prevent
Bad Administration
& Corruption…
Reform the System! 1) Committee to settle disputes of members & society within 3 months.

2) Three active members -- knowledgeable & senior, preferably experts whom general body considers impartial

3) Aggrieved to submit written application along with documents relied upon.

4) Assist the parties in an impartial manner to reach amicable settlement within the framework of the Acts, Rules and Bye-laws

5) Sign Grievance Settlement Agreement Grievances & Disputes Redressal Committee 1) Only active member can vote in
affairs of the society including elections.

2) Non-active member cannot contest election.

3) Member who does not attend at least one general body meeting and pay maintenance for at least one out of five years to be classified as “non-active member”

4) Non-active member liable for expulsion & eviction from flat after 10 years Active Member In a society not having any government grant or loan, no Administrators will be appointed.

In a Society having government aid, Administrator can be appointed maximum for six months.
After 6 months, elections must be held No Administrator 147. Punishments… e.g.
Every society, officer or past officer, member or past member, employee or past employee of a society… who commits an offence under section 146 shall, on conviction, be punished-
(a) If it is an offence under clause (a) … imprisonment for … six months, or with fine … five thousand rupees;
(b) if it is an offence under clause (b) … imprisonment which may extend to three years, or fine fifteen thousand rupees; 81. (5B) The auditor shall submit an audit memorandum report within a period of one month from its completion and in any case before issuance of notice of the annual general body meeting, …
The Auditor concerned shall after obtaining written permission of the Registrar, file a First information Report… Failure to file First information Report… would make Auditor liable for disqualification and removal of his name from Panel of Auditors or any other action as Registrar may think fit. CHAPTER VIII
Audit, Inquiry, Inspection & Supervision
81. Audit.--
1 (e) The auditor’s report shall have:
All particulars of irregularities observed in audit… the auditor/auditing firm shall investigate and report the modus operandi… fix the responsibility for such misappropriation or embezzlement of funds or fraud, on the members of the board or the employees of the society… with all necessary evidence. New MCS Act - Tough on Crime! 6) Stop washing dirty linen in co-op. court. Resolve internal differences through “Grievance Redressal Committee”.

7) Co-op. court to encourage Win-Win compromise,
Not Win-Lose “Justice” in private dispute resolution.

8) Get professional help for management. Adopt modern methods of management, record keeping etc.

9) Strengthen Audit function. Stop Crime!
Auditors, Registrar etc. to pinpoint
responsibility for fraud and Register FIR.

10) Realistic penalties for offences.
Fine amounts have increased. 1) Empower active members.
Non-serious participants cannot
participate in decision-making.

2) Expel dormant members
or force them to become active.

3) No Administrators. Active members will be
“authorized officer” or “interim committee”.

4) Regular training to groom fresh leaders
through Apex Co-operatives. Allocate funds for that.

5) Managing Committee must attend training
at least once in five years. Major Changes: 73-E. State Co-operative
Election Authority:
Superintendence, direction and control
of the preparation of the electoral rolls…
and conduct of… every election of the members of the board and of the office bearers Elections to be monitored closely 146. Offences… e.g.
(a) any member of a society transfers any property or interest in property in contravention of sub-section (2) of section 47 …
(d) any person, collecting share money for a society in formation, does not within a reasonable period deposit the same in the State Co-operative Bank…
(g) … officer or member willfully makes a false return or fails to furnish a return under section 75 or 79 of the Act, or furnishes false information to person holding an inquiry under section 83, officer authorized under section 88 1) Accounts to be audited at least once in
each financial year… before AGM notice

2) Auditor or auditing firm from a panel
approved by State Govt

3) Auditor shall lay audit report before AGM

4) Every society shall file audited annual returns within six months of the close of every financial year to the Registrar or to the person authorized. Strict Audit & Reporting February
Amendment in
Maharashtra Co-operative Societies (MCS) Act, 1960 March
Amended Model Bye-laws for Co-operative Housing Societies
issued by Maharashtra Co-operation Department End-April
Deadline for all Co-op. Housing Societies of Maharashtra
to call a Special General Meeting and adopt the
Amended Model Bye-laws Constitution gives broad mandate at the Centre


States laws (like MCS Act, 1960) are amended
in specific ways to fulfill mandate…


Model Bye-laws for various kinds of
Co-operatives (e.g. CHS) are recommended by
State Co-op. Dept.


Each co-op. society must adopt new bye-laws before 30th April 2013 to ensure compliance in their day-to-day functioning. 116. (a) Election of all the members of the Committee shall be held once in 5 years, before expiry of its term, in accordance with the provisions of Sec 73- CB of the Act and the Rules / procedure framed there under.
It shall be the duty of the committee to intimate to the State Election Authority for holding of its election before expiry of its term. On failure, the committee members shall cease to hold office after expiry of its term and attract action by the Registrar under section 77 A.

(b) The Committee of the society may co-opt Two "expert directors" relating to the objects and activities under taken by the society. The number of such co-opted members shall not exceed two in addition to the strength of the committee as provided in bye-laws No. 115., Such co-opted members shall not have the right to vote in any election of the society in their capacity as such member or to be eligible to be elected as office bearers of the committee.

(c) The Committee of the society may co-opt Two "functional directors", such members shall be excluded for the purposes of counting the total numbers of the committee and shall have no right to vote. Election… 96. The annual general body meeting of the Society shall transact the following business :


(x) To receive from committee the Audit Rectification Report and Action taken thereon.

(xi) To appoint the Grievance settlement and Redressal Committee as provided in Bye-law No. 173. Annual General Meeting… Inspection of Books and Records Getting Copy of the Bye-laws.
(a) A member shall have right to inspect free of cost books, registers documents etc. as provided in Section 32 (1) of the Act and get copies of the documents … on payment of the fees prescribed under the bye-law No. 172.
172.
1. Certified copy of the approved Bye-laws of the Society Rs. 5/- per page.
2. Amendment of the bye-laws of the society Rs. 5/- per page.
3. Last audited Balance Sheet of the Society Rs. 10/- per page.
4. Application for membership of the Society Rs.25/-
5. Second and Subsequent Nomination by the member of the Society Rs.50/-
6. Share Certificate of the Society (Dup|icate) Rs. 100/-
7. List of members of the Society Rs. 10/- per page.
8. Correspondence (related to member) Rs. 10/- per page.
9. Minutes of the general body meetings and committee Meetings Rs. 10/- per page.
10. Indemnity Bond Rs. 20/-
11. Copy of Audit Report, Annual Returns and Periodicals -- Rs 10/- per page.
12. List of Non-Active members -- Rs 5/- per page.
13. Any other document as per section 32 of the Act -- Rs. 5/- per page. Access to Documents… 22 (B) A member who is not an 'Active Member' shall be the 'non-Active Member'.

Society shall classify the members as 'Active' or Non-Active' member at the close of every financial year.

Society shall communicate to every Non-Active member about his classification, within a period of 30 days from 31st March of every year as prescribed under these By-laws as per Appendix - -

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.

The ' Non-Active' member can be reclassified as 'Active member' if he satisfies the conditions laid down under Byelaw no. 22(B)(1). Non-Active Member… 22. (B) (1) A member shall be called as 'Active Member' if:-

a. He has purchased and owns the Flat I Unit in the Society.

b. He has attended at least One General Body Meeting within a consecutive period of Five years.

c. He has at least paid the amount equivalent to one year of society Maintenance and Service charges, within a consecutive period of Five years. Active Member… 7. The funds of the society may be raised in one or more Modes of raising of the following ways: the funds of the society…
(i) by and for Election Fund.

(E) Creation of Other Funds
(d) To create Education and Training Fund from the Members as contribution of Rs 10 per month / per unit or as decided by the General Body. Creation of Funds… 5 (a) To promote peaceful co-habitation amongst the members on the Co-operative Principles and ensure Voluntary formation, Democratic Member Control, Member - Economic Participation and Autonomous Functioning.

(b) To provide co-operative education and training to develop co-operative skills to its members, committee members, officers and employees of the society.

(c) To initiate Redevelopment of the building as per the norms of the authority.

(e) To provide co-operative education and training to develop co-operative skills to its members, committee members, officers and employees of the society. Objects of Society… 3 (xxix) ‘Authorized person’ means a person duly authorized to take action under the provisions of this Act.

(xxx) ‘State Co-operative Election Authority’ means an authority constituted or nominated by the State Government for the purposes of superintendence, direction, and control of the preparation of the electoral roll for and conduct of the elections of committee of a society or such class of societies as may be notated.

(xxxi) ‘Expert director’ means and includes a person having experience in the field of Housing and the field relating to the objects and activities undertaken by the society.

(xxxii) ‘Functional director’ means and includes a Chief Executive Officer or Manager or by whatever designation called, nominated by a committee and who is available for whole time to look after the working of the society and discharge the duties and functions as may be assigned to him by the committee.

(xxxiii) ‘Officer’ means a person elected or appointed by a society to any office of such society and includes any office bearer such as a chairman, vice-chairman, chairperson, secretary, treasurer, manager, member of the committee and any other person elected or appointed to give directions in regard to the business of such society. Professional Management… 3. (ii) Bye-laws' means by-laws consistent with Act and registered under this Act for the time being in force and includes registered amendments of such bye-laws.

(xiii) "Promoter Builder" means a person and includes a partnership firm or a body or association of person, [whether registered or not] who constructs or causes to be constructed a block or building of flats [or apartments] for the purpose of selling some or all of them to other persons, or to a company, Co-operative Society or other association of persons, and includes his assignees; and where the person who builds and the person who sells are different persons, the term includes both Bye-laws & Promoter… Highlights of Amended Model
Bye-Laws But there are also pitfalls & hidden dangers in these legislative changes. Read about them here: http://blogs.halabol.com/2013/04/06/seeds-caste-divide-sown-new-housing-society-bye-laws
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