The document outlines the regulatory framework governing co-operative societies in Maharashtra under the Maharashtra Co-operative Societies Act, 1960. It details the process of registration, membership rights, management structures, audit requirements, and penalties for non-compliance within co-operative societies. Additionally, it describes provisions for appeals, share transfers, nominations, and the legal implications of conducting business within the co-operative framework.

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NIYAMAN
Laws of the Co-operatives
Co-operation is an activity of the people. It is a self-generated, voluntary and self-sufficient
activity. Hence little governmental interference is desirable. However considering the
economic parameters of this movement and interests of several persons involved there is a
possibility of misuse of personal power by any of the group-members. The governments
therefore had to pass legislation to monitor the activities of the co-operatives mainly with the
purpose of safeguarding the interests of all the members.
Great Britain for example had passed a legislation as early as 1852. Similar intervention of
legislature can be seen in Germany and France (1867) and Italy (1883).
In Maharashtra the Co-operatives are governed by the Maharashtra Co-operative Societies
Act 1960 and supported by Maharashtra Co-operative Societies Rules, 1961. The legal
system in the co-operatives registered in Maharashtra State is elaborate. Moreover each co-
operative should have its own Bye-Laws which are the guiding principles of the co-operative.
These Bye-laws have to be approved through a resolution of the Society. These bye-laws can
be amended in the General body Meeting of the co-operative. The only condition on the bye-
laws is that they should not be contrary to the Maharashtra Co-operative Societies Act, and
have to be approved by the Registrar.
The legal framework essentially covers the following aspects :
Registration of Co-operative Societies
Rights of the members
Privileges of the Societies
Property and Funds of the Society
Management of the Society
Audit, Inquiry and Inspection
Disputes
Liquidation of Societies
Offences and Penalties
Appeals, Reviews and Revision

2. A co-operative society can be registered in Maharashtra State with the Registrar of
Co-operative Societies.
Any person competent to contract, as per the Indian contract Act, 1872 can join in
the formation of a co-operative.
A group of ten persons who reside in the area of operation of the proposed society
and are from different families, can join in application for registration of a society
A society with the objects of promoting the economic interests or the general welfare
of the members only can be registered.
No society which is contrary to the policy directives of the State can be registered.
Registration can be obtained from the registrar on filling up the application form with
the necessary fees and the bye-laws.
Division/Amalgamation/Transfer and conversion of a co-operative is allowed
A Co-operative Society can enter into collaboration with any Government
Undertaking or any other undertaking with the prior permission of the State
Government for business.
It can also enter into a partnership with other co-operatives.
The legislation provides for open membership.
Eligible person can appeal to the Registrar if his membership application is rejected
by the society.
A person can file membership application to the Registrar, if it is not accepted by the
society.
A member has voting rights in election of the Managing Committee and in general
meeting of the members. Every member has one vote, irrespective of the total
number of shares held by him .Proxy-voting is not allowed
A member can inspect the books of account of the society and obtain its copies.

3. There are three types of members in a society - Nominal, Associate and
Sympathiser. A Nominal or a Sympathiser member cannot possess shares of the
society and as such do not have the rights of an associated member.
A Society is a Body Corporate by the name with perpetual succession and common
Seal.
It can acquire, hold and dispose off property in its name.
It can enter in a contract.
Institute and defend suits and other legal proceedings.
It is exempted from compulsory registration of Instruments relating to shares and
debentures of Society under the Indian Registration Act 1908
The society has claim only next to the Government , on the property and interest of
the borrowing members.
The society has claim over the sale price of agricultural produce of the borrowing
member.
It is mandatory on the part of the employer to deduct from the salary of the
employee, dues of the Society, if agreed upon by the member.
The Society can receive deposits and loans from the members and other persons
within the area of operation of the Society and /or on conditions imposed by the
Registrar
Loans can be advanced to the members only. With the prior permission of the
Registrar, loans can be advanced to other Societies.
The Society has to keep and maintain updated records in prescribed format.
There are restrictions on the transactions with the non-members.
 The final authority of the Society vests in the General Body of the Society comprising
of all the members.

4.  Every Society shall call Annual General Meeting within a period of three months after
the date fixed for completing or drawing up of its accounts for the year.
 At every Annual General meeting, the Managing Committee shall lay a statement of
loans given to the members of the Managing Committee and their family members,
Income and Expenditure Account, Balance Sheet, a Report by the Managing
Committee regarding the Society’s affairs.
Failure to do so may attract the disqualification of the members of the Managing
Committee and other penalties.
 A Special General Meeting can be called by the Chairman of the Co-operative or by
majority of the members of the Managing Committee. Members too can requisition
for such a meeting if 1/5 th of the total members of the Society endorse this
requisition.. The Registrar also has the powers to call for a Special General meeting.
So can the committee of the Federal Society do so.
Failure to call for this meeting may attract penalty for the Managing Committee.
 It is the duty of every Managing Committee to arrange for holding of elections of its
members before the expiry of its term.
Election to a Specified Society shall be conducted by the Collector and that of a
Notified Society by the Registrar.
 Management of the Society vests in a duly constituted Managing Committee.
 Reservation for the weaker section, women and scheduled castes/tribes has been
provided in the Managing Committee.
 No committee is duly constituted unless the Registrar publishes the names of the
members of the Managing Committee alongwith their addresses.
 If a Managing Committee of a Society is not duly constituted, an Administrator may
be appointed by the Registrar.
 An Administrator can also be appointed ( for a period of six months ) by the Registrar
if the Managing Committee is removed for negligent performance as per the
provisions of Co-operative Law.
A member of the Managing committee can also be removed by the Registrar for
negligent performance.
 The Managing committee can appeal against its removal / dismissal.
 Office bearers of a Society can be removed by the way of No confidence motion.
Such a no confidence motion has to be supported by at least one-third of the
members of the managing Committee. Removal from office is effected only after the
resolution is passed by a simple majority in the Managing Committee.

5.  No funds shall be divided among its members, other than the net profits earned by
the Society.
 The society’s funds cannot be utilised to defend any proceedings filed by or against
any office bearer of the Society, in his personal capacity under sections 78, 96 or
144-T of the Maharashtra Co-operative Societies Act,1960.
 Remuneration can be paid to the Managing Committee members for services
provided by them to the Society.
 Net Profit earned by the Society can be appropriated by the members with the
approval of the Annual General Meeting.
 Reserve fund shall be maintained by the Society
 Investments of Funds shall be made as per the guidelines prescribed in the
Maharashtra Co-operative societies Act, 1960
Audit ,Inquiry Inspection and Supervision of Societies
o The Registrar of Co-operative Societies makes it compulsory for every
Government -aided Co-operative Society to audit its accounts at least once in
a co-operative year (i.e. April - March).
o All the other Societies also have to get their accounts audited by a Certified
Auditor once in every co-operative year.
o A Registrar has powers to order the Society to be re-audited . This is however
done by him suo-moto or in the case where 1/3rd members of the Society
apply to him for re-audit.
o The Registrar can inspect the working of the Society on his own or on
application of its creditors.
o The Registrar can commission an inquiry into the affairs of the Society on the
basis of the audit report or an inspection report. He can appoint an Inquiry
Officer and conduct an inquiry through him.
Similarly he can also conduct inspection of a Society just to ascertain that all
the Books of Accounts are being maintained properly and that the affairs of
the Society are being conducted reasonably by the Managing Committee.
o The Registrar can order for compensation, if it is found That any person has
misapplied or retained any property, or money of the Society, or has caused
breach of trust.
Performance or Cost Audit
Test Audit
Social Audit can also be conducted on the affairs of the Society.

6.  Disputes can be raised by any member regarding Election of a Managing Committee,
or the Officers. Disputes can also be raised about the conduct of the conduct of the
General Meeting and the management or business of the Society.
Such disputes can be settled in special courts which deal with only the Co-operative
matters. These courts are called as Co-operative Courts.
 In the case of disputes which arise due to recover of sums disbursed by the co-
operative society. The Co-operative Court can attach the property of a member,if it is
likely to be disposed off
 A certificate then issued by the official assignee or by an authorised person or by the
Co-operative Court itself shall be executed as a decree of a Civil Court and also
executed as arrears of land revenue. Any private transfer of the property thereafter,
shall be null and void against the claimSociety.
 A Society can be wound up, after inquiry and audit, or on application or by the
Registrar on his own, if found that the Society has not commenced and/or has
ceased to function.
 Appeal against the order of liquidation can be made by the members.
 The Society registration can be cancelled on receipt of the final report from the
liquidator and the last General Meeting.
 The Society can also be cancelled if its affairs are wound up, or if it is de-registered
or its assets and liabilities are transferred.
Following are the offences which are punishable under the Maharashtra co-operative
Societies Act
 Transfer of property on which there is a charge of the Society
 Failure to deduct dues of the Society from the Salary of an employee
 Failure to invest funds of the Society
 Failure to deposit the share money of the Society with the Bank
 Conduct private business in the name of the Society
 Collecting share money by misrepresentation
 Issuing of false share certificates knowingly
 Failure to call. General Body Meeting
 Failure to give necessary assistance to authorised persons under the Co-operative
Law

7.  Failure to hand over the custody of records and property to the administrator or the
liquidator
 Failure to observe directives of the Registrar
 Wilful neglect of furnishing any information required by the Registrar and the Auditor
 Making of false returns
 Failure to comply with any decision, award or order
 Fraudulent disposal of any property on which society has prior claim.
 Destruction, mutilation, tampering , altering, falsifying records of the Society.
Punishments can comprise of penalty upto Rs.5000/- and/or imprisonment upto
three years.
The remedy of appeal is provided against refusal of Registration or amendment of bye-
laws,division,amalgamation,conversion,cancellation,de-registration,transfer of shares, refusal
and expulsion of membership, removal of managing committee, directives to Society, cost of
Inquiry and Inspection ordered by the Registrar, fixing liability on delinquent promoters,
winding up or rejection of nomination in election of committee.
Review and Revision of orders passed by the Registrar can be made against any other order
to higher authorities
The Maharashtra State Co-operative Appellate Court is constituted for appeal against or seek
revision /review of, the orders of the Co-operative Court.
An appeal against the order of Assistant Registrar/ Deputy Registrar lies with the Joint
Registrar (Appeals). If the order is passed by the Joint Registrar/Additional Registrar or the
Registrar then the aggrieved party can appeal to the State government.
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==============harashtra Co-operative Societies Act, 1960 and the Model Bye Laws
The object of the Maharashtra Co-operative Societies Act, 1960
The object clause of the Maharashtra Co-operative Societies Act, 1960 states that the Act was
promulgated to consolidate and amend the law relating to Co-operative societies in the state of
Maharashtra. The Act further states that it was necessary to amend law in a manner so that there
was an orderly development of the co-operative movement in the State of Maharashtra in

8. accordance with the relevant directive principles of the state policy as laid down in the Constitution
of India.
Eligibility criteria for becoming a member of a co-operative society
As per Section 22(1) of the Maharashtra Co-operative Societies Act, 1960, the following persons are
eligible to become member of a Co- operative Society.
a. An individual who is competent to contract under the Indian Contract Act, 1872.
b. A firm, company or any other body corporate constituted under any law for the
time being in force, or a society registered under the Societies Registration Act,
1860.
c. A society registered, or deemed to be registered under the Act.
d. The State Government or Central Government.
e. A local authority.
f. A public trust registered under any law for the time being in force for the
registration of such trusts.
Refusal by Co-operative Society for membership to any person
As per Section 23(1) of the Maharashtra Co-operative Societies Act, 1960, no society shall without
sufficient cause, shall refuse membership to any person if he is otherwise duly qualified for
membership under the provisions of this Act and the Approved Bye-Laws of the Co- operative
Society Limited.
Time limit for refusal of membership of the society
Section 22(2) of the Maharashtra Co-operative Societies Act, 1960 lays down that where a person's
application for membership to a society has been rejected, he should be intimated about the same
with reasons, within fifteen days of the date of the decision or within 3 months from the date of
receipt of the application for admission, whichever is earlier. If the society fails to communicate the
decision to the applicant, within three months from the date of the receipt of such application, he
shall be deemed to have been admitted as a member of the society.
Fees payable for adding an extra name in a share certificate issued by a society
When any person, who is eligible to be an associate member, wishes that his name is added in a
share certificate, as a member, he has to pay an entrance fee of Rs. 10/- towards addition of his
name as an additional member. This entrance fee is chargeable towards every additional name
included in a share certificate to the society. This has been laid down in Model Bye-law No. 21 of
the Model Bye-laws framed for a Co-operative Housing Society Ltd.
Procedure for transfer of shares in a Co-operative Housing Society
The procedure for transfer of shares in a Co-operative Housing Society is laid down in the "Model
Bye-law No. 40 of Bye-Laws Of The Co-operative Housing Society Limited". As per Model Bye-Law
No. 40(a), a member of a co-operative housing society desiring to transfer his shares and interest in
the property of a society has to give 15 days' notice to the Secretary of the society in the prescribed
form (Appendix 19) intimating that he intends to transfer his shares, right and interest in the
property of the society, indicating the name of the intended transferee and the amount of
consideration. The consent of the proposed transferee in the prescribed form (Appendix 20)
accompanies the notice of member. The notice of the member will be considered by the Managing
Committee of the society to decide whether the member is eligible to transfer his shares/interest. A
member is not eligible to transfer his shares/interest in society if he has held such shares or interest

9. for less than one year (Sec 29(2)(a) of the Act). As per Model Bye-law No. 40(c) the decision of the
ineligibility for transfer shall be communicated to the member within 3 days of the decision of the
Managing Committee. If the member is found eligible to transfer his shares in the property of the
society he is called upon to submit his application for transfer of shares in the prescribed form
[Appendix 21(1) for individuals and 21(2) for corporate bodies] with the share certificate along with
an application for membership by the transferee in the prescribed form
(Appendix 22 for individual and Appendix 23 for corporate bodies.) The Member has also to pay
the transfer fee and give an undertaking to discharge all the liabilities which may become due on
transfer of shares. For a detailed list of documents required for a transfer of a flat, please refer to
Annexure No XVIII on page 99 of this book.
As per Model Bye-Law No. 41(c), the Committee will then communicate the decision on the
application for transfer of shares/interest in the property to the proposed transferee within three
months of its receipt. If the decision on applications is not communicated within three months of its
receipt, the transfer application will be deemed to have been accepted and the transferee shall be
deemed to have become a member of the society.
Nomination
Nomination means transferring the shares and/or interest by a member in the capital/ property of
a co-operative society to another person who is referred to as the nominee, in the event of the death
of the member. Such a nomination is done by a member making an application in a prescribed form
to the co-operative society. A nomination comes into force only after the death of the person who
has made the nomination.
Nomination does not amount to transfer of rights of the member in the society to the nominee.
By nomination, the nominee is actually appointed as a trustee and the society merely transfers the
share certificate in the name of the nominee on the death of the person who had made the
nomination.
Separate share certificate for a garage in a co-operative society
A separate share certificate can be issued by a society for the garage in a co-operative society.
The maximum amount of transfer fee on the transfer of share certificate in a society
Under Model Bye-law No.40(d) (vii) of The Co-operative Housing Society Limited, the amount of
transfer fees is to be fixed by the general body meeting. The amount should not exceed 2.5% of the
difference between the book value of the flat and the price realised by the transferor on the transfer
of his flat, or of Rs.25,000/- whichever is less. Further this bye-law also states that no additional
amount by way of donation etc. will be taken unless it is paid voluntarily by the member.
Non-occupancy charges
Non-occupancy charges are the charges which a member is required to pay to the society in respect
of the flat, which is let/ sub-let/ leased out by him.
Determination of amount of non-occupancy charges fixed
Model Bye-law No.45(2)(c) of the Co-operative Housing Society Limited lays down that the non-
occupancy charges are to be decided at the General Body Meeting of the Co-operative Society. The
Bombay Rents, Hotel and Lodging House Rates (Control) Act,1947