Chapter IV MANAGEMENT OF CO-OPERATIVE

Persons who may be admitted or continued members. (1) Subject to the provisions of this Act, no person shall be admitted or continued as a member of a Co-operative,-

(a) unless he needs the services of the Co-operative and accepts the responsibility of membership and is competent to contract under the Contract Act, 1872 (Central Act IX of 1872);

(b) if he conducts any business, such business being in conflict or competition or if he is a member of another Co-operative having same objectives with the business of the Co-operative as specified in the bye-laws; and

(c) unless he fulfills such other conditions as may be specified in the bye-laws of the Co-operative:

(d) is in default regarding any payment to be made to the co-operative exceeding an amount and for a period specified in the bye-laws;

(e) has applied to be adjudicated an insolvent or is an un-discharged insolvent; or

(f) has been sentenced for any offence, involving moral turpitude, such sentence not having been reversed or the offence pardoned and a period of five years has not elapsed from the date of the sentence; or

(g) is a paid employee of the co-operative or of its financing bank or of its union or of its federal co-operative.

Provided that after the registration of a Co-operative, the members shall be admitted only by the elected board.

(2) XXX

(2A) No cooperative shall, without sufficient cause in writing, refuse admission to membership to any person under the provisions of this Act or the Rules and the bye-laws made there under The board of the cooperative shall send a written communication of its decision to such person within sixty days from the date of receipt of his application

(3) If a question arises as to the eligibility or otherwise of a person to become a member or to continue as a member, the board shall decide the question after giving such person an opportunity of being heard. The decision of the board shall be final. In section 20 of the principal Act,- (i) in sub-section (1), after the words “shall be admitted” the words “or continued” shall be inserted. (ii) after clause (c) the following shall be inserted, namely:- “(d) is in default regarding any payment to be made to the co-operative exceeding an amount and for a period specified in the bye-laws; (e) has applied to be adjudicated an insolvent or is an un-discharged insolvent; or (f) has been sentenced for any offence, involving moral turpitude, such sentence not having been reversed or the offence pardoned and a period of five years has not elapsed from the date of the sentence; or (g) is a paid employee of the co-operative or of its financing bank or of its union or of its federal co-operative.” (iii) sub section (2) shall be omitted. In the Principal Act, in section 54, in sub-section (2) after third proviso, the following shall be inserted, namely:- "(2-A) The provisions of section 24 related to the Maximum number of board members and reservation of seats in the Board shall mutatis-mutandis apply to the Federal Co-operative."

Acceptance or refusal of membership. Whenever any person seeking membership of a Co-operative applies for the membership with requisite fee and share amount as prescribed in the bye-law of that Co-operative, the board of that Co-operative shall either grant membership for that person or refuse with reasons within sixty days from the date of receipt of application for membership. If no communication of admission as a member is received by the applicant before the expiry of the said period, his application for admission shall be deemed to have been accepted by the cooperative on the last day of the said period. If the applicant is refused membership, he can appeal to the Registrar against such refusal within thirty days from the date of refusal. The Registrar shall decide on such appeal and issue orders which the Co-operative has to implement within fifteen days from the date of order.

(1) A Member shall be disqualified to vote for one year in the general meeting or in an election of the members of the board of a co-operative,-

(a) who is admitted as member not less than one year before the date of General meeting or election as the case may be;

(b) who is defaulter for any dues to co-operative;

(c) Who has not participated in the management,-

(i) by attending any two out of the last five annual general meetings;

(ii) by utilizing such minimum services or facilities offered by the co-operative as may be specified in the Bye-Laws for any two co-operative years out of the last five co-operative years:

(iii) Notwithstanding anything contained in this Act or Bye-laws made thereunder, in the Election of the Board of Secondary Co-operative or Federal Co-operative or Apex Co-operative to the reserved seats, irrespective of any class of voters of the said Cooperatives they shall be entitled to exercise their votes, in the manner as may be prescribed.

Provided that, the restriction in clause (a) shall not apply to member of a co-operative participating in the first general meeting or first election of newly register co-operative held immediately after its registration.

Restriction on collection of deposits from non-members. In the Principal Act, in section 58,- (i) in sub-section (1),the words “and the office of the office bearers” shall be omitted; and (ii) after sub-section (4), the following shall be inserted, namely:- "(5) The Chief Executive shall, within fifteen days from the date of constitution or deemed constitution of the Board after a general election and immediately before the expiry of the term of office of the President or Chairperson, Vice-President or Vice-Chairperson, convene a meeting in the prescribed manner of all the members of the committee for the purpose of electing President or Chairperson, Vice-President or Vice-chairperson and such others as are required to be elected under the bye-laws of the federal co-operative. One of the members who is not a candidate for the election of President or Chairperson, Vice-president or Vice-Chairperson, shall be chosen to preside over such meeting: Provided that, the Members of the first Board elected in the first general meeting held after the registration of a co-operative shall elect the President or Chairperson, Vice-President or Vice-Chairperson and others in such manner as may be prescribed. (6) The Chief Executive shall, as and when there is a casual vacancy in the office of the President or Chairperson, Vice-President or Vice-Chairperson or others, convene a meeting of the members of the Board for the purpose of filling up the casual vacancy and the provisions of sub-section (5) shall mutatis mutandis apply. (7) The Chief Executive shall within three days from the date of the meeting, forward to the Registrar and Co-operative Election Authority a copy of the notice convening the meeting and also a copy of the proceedings of the meeting. (8) If the Chief Executive fails to convene the meeting in accordance with sub-sections (5) and (6), the Co-operative Election Authority or any officer authorized by it to do so, shall convene a meeting for the purposes specified in the said sub-sections."

(1) Subject to the provisions of this Act, rules and the bye-laws, the final authority of a Co-operative shall vest in its general body. (2) Where a Co-operative so desires, its bye-laws may provide for a representative general body drawn from the members, to be constituted in such manner and with such functions as specified in the bye-laws. Any reference in this Act to the general body shall apply to the representative general body also. (3) Subject to the other provisions of this Act, rules and the bye-laws, the following matters shall be dealt with by the general body namely:-(a) consideration of the annual report of the preceding cooperative year submitted by the board; (b) appointment and removal of the auditor and internal auditor for the audit of accounts of the current year; (c) consideration of the audit report and audited financial statements for the preceding cooperative year; (d) consideration and decision on the compliance report submitted by the board regarding the rectification of defects and remedying the irregularities pointed out in the audit report of the preceding cooperative year; (e) disposal of the surplus or net profits of the preceding cooperative year; (b) [XXX]; (c) [XXX]; (d) [XXX]; (e) [XXX]; (f) review of operational deficit, if any; (g) approval of the long term perspective plan and the annual operational plan; (h) approval of the annual budget for the next cooperative year; (i) creation of specific reserves and other funds as specified in the bye-laws; (j) review of actual utilisation of reserve and other funds; (k) review of the use of the services of the cooperative by the directors of the board; (k-1) consideration of the loans and advances made to the directors and their relatives, the defaults, if any, and the action taken for recovery thereof; (k-2) amalgamation, division, merger, transfer of assets and liabilities; (k-3) decision on bad debts considered as irrecoverable; (k-4) Review of the list of board of directors who have borrowed loans from the cooperative and other top twenty defaulting borrowers; [XXX]; (l) removal of directors of the board [XXX]; (m) report on action taken on inquiry report under section 37, if any; (n) report on membership of the Co-operative in other Co-operatives; (o) review of annual report and accounts of any organisation created under sections 14, 15 or 16, if any; (p) consideration of an appeal of a person whose application for membership has been rejected [XXX] by the board, if any; (q) consideration of the list of employees recruited who are relatives of directors or of the Chief Executive; (r) amendment of bye-laws; (s) formation of code of conduct for the directors and office bearers; (t) brief note of admission and removal of members during the Preceding cooperative year; (u) winding up of the Co-operative; and (v) such other functions as are specified in the bye-laws. In the Principal Act, in section 59, the proviso shall be omitted.

(1) The Board of Souharda Co-operative Society shall consists of not less than thirteen members excluding the Chief Executive, but not exceeding the number of members as may be prescribed; Provided that, one seat shall be reserved in favour of members belonging to the scheduled castes and one seat for the members belonging to the scheduled tribes, two seats shall be reserved in favour of women members and two seats shall be reserved in favour of members belonging to backward classes as may be notified by the State Government, on the board of every primary, secondary or union and apex co-operative society. Provided further that, respective Co-operative shall make provisions in the bye-laws with previous approval of the Registrar to increase the number of seats in the Board of secondary or union and apex co-operative society if their number of board of directors exceeds the limit as specified in sub-section (1). Provided also that, every co-operative shall co-opt persons having experience in the field of banking, management, finance or specialization in any other field relating to the objects and activities undertaken by the co-operative, as members of the board of such co-operative and such co-opted members shall not have the right to vote in any election of the co-operative in their capacity as such member or to be eligible to be elected as office bearers of the board. Provided also that, the number of such co-opted members shall not exceed two in addition to maximum number of directors specified in sub-section (1). Provided also that, not more than three functional directors if necessary of a cooperative shall also be the members of the board and such members shall be excluded for the purpose of counting the total number of directors specified in the sub-section (1). (2) Save as otherwise in the Act, the term of the directors will be five years from the date of election. Provided that the term of the director of the Federal Co-operative shall end if he ceases to be the director of the representative Co-operative. (3) The chief executive shall be an ex-officio member of the board and shall not have a right to vote in the election of the office bearers. In the Principal Act, in section 60, in sub-section (3A) for the words “twenty percent of the members”, the words “ten percent of the members or one thousand whichever is less, those members” shall be substituted.

(1) A person shall be disqualified for being elected or continued as director of the Co-operative for a maximum period of five years from the date of incurring disqualification if such person,- (a) has at any time lost the right to vote as a member or to continue as such; or (b) has incurred any other disqualifications as specified in the bye-laws; or (c) absents himself from three consecutive board meetings without leave of absence; or (1) (d) is convicted for an offence involving moral turpitude under any law for the time being in force, or for an offence under this Act; or (e) is in default to that cooperative or any other cooperative or cooperative society in respect of any dues from him as borrower or has been a surety for a borrower who has defaulted in repaying his loan continuously for three installments. (f) incurs any disqualification as specified in sub-section (2). (g) If he/she fails to declare and submit his/her family assets and liabilities statement by end of every cooperative year. Explanation- For the purpose of this clause “family” means “Director and his/her spouse, unmarried daughter and undivided son. (2) Such directors who are responsible shall incur disqualification for being elected as director in a cooperative or cooperative society for a maximum period of five years from the date of incurring such disqualification and shall also be disqualified to continue as director of that cooperative or any other cooperative or cooperative society, if during the term of office as director of a cooperative or cooperative society they, (a) have not rendered necessary assistance to the cooperative election authority for conducting election to the board before the expiry of its term within the stipulated time; or (a-1) have not submitted returns and information to the Registrar and the federal cooperative as per section 34 within a period of six months from the close of the cooperative year; or (a-2) have committed serious financial irregularities or frauds which have been detected; or (b) have not conducted the annual general meeting within the twenty fifth day of September every year or requisitioned meeting of the general body within the time stipulated in section 30; or (c) have not placed the audited accounts for the preceding cooperative year along with the report of the auditor before the annual general meeting. (d) have violated the order or direction of the Federal Cooperative or violated any order of quasi-judicial authority or court; (e) have opened branches without prior approval of the Federal Cooperative (3) A director or an employee who is guilty of misappropriation, breach of trust or any other omission or commission resulting in loss to the Co-operative, shall be personally liable to make good that loss without prejudice to such criminal action to which he is liable under any other law for the time being in force. (4) Any question as to whether a member of the board is or has become subject to any disqualification specified in this section shall be decided by the Federal Co-operative after giving the person concerned a reasonable opportunity of being heard. (5) Any person aggrieved member may prefer an appeal against the order made under sub-section (4) to the Registrar within thirty days from the date of order.

(1) A motion of no-confidence against an office bearer may be moved only after two years of his assumption of office. In case, the motion of no-confidence is once defeated, a fresh motion shall not be introduced within one year thereafter. No motion of no-confidence shall be moved unless there is a request from not less than one-third of the elected members of the Board of a co-operative concerned. (2) An office bearer of a co-operative shall be deemed to have vacated his office forthwith, if a resolution expressing want of confidence in him is passed by a majority of two third of the total number of elected directors of a co-operative at a meeting specially convened for the purpose. (3) The procedure for no-confidence motion shall be such as may be prescribed.

(1) The election to a board shall be conducted immediately before the expiry of the term of the outgoing board so as to ensure that the newly elected members of the board assume office immediately on the expiry of the term of office of the members of the outgoing board. (1A) Every candidate contesting for the Election of the Board shall, at the time of filing his nomination, file a declaration of his/her and his/her family‟s assets and liabilities in the manner as may be prescribed. (1B) Every elected director of the Board shall submit a declaration of assets and liabilities of his/her and his/her family for each financial year of his tenure in the manner as may be prescribed. Explanation- For the purpose of this sub-section “Family” means Candidate and his/her Spouse, Unmarried Daughter and Undivided Son. (2) Subject to provisions of this Act, the procedure and guidelines for conducting elections to Souharda Co-operative Societies by the Co-operative Election Authority as may be prescribed. (3) The newly elected directors of the board shall assume office immediately on the expiry of the term of the outgoing board. (4) XXX

Subject to the provisions of this Act, rules and bye-laws, the board shall have powers,- (a) to admit and remove members; (b) to elect and remove the office bearers; (c) to appoint and remove the Chief Executive; (d) to fix staff strength; (e) to frame policies concerning the organisation and services to members; (f) to frame regulations regarding,- (i) custody and investment of funds; (ii) maintenance of accounts; (iii) mobilisation, utilisation and investment of various funds; (iv) appropriate management information systems including filing of statutory returns; (v) such other matters as may be necessary for the effective performance of the Co-operative; (g) to place the annual report, annual financial statements, annual plan and budget for the approval of the general body; (h) to consider audit and compliance reports and place them before the general body; (h-1) to consider the inquiry report, if any, take action for rectification of the irregularities pointed out, if any, in the inquiry, cause compliance report and place the report before the general body; (h-2) to cause the completion of the audit of accounts for the preceding cooperative year within the first day of September every year and obtain the audit report thereon. (h-3) to convene annual general meeting within twenty fifth day of September every year. (h-4) to convene special general meeting as and when necessary or on requisition. (h-5) to file returns and information to the Registrar and federal cooperative before thirtieth day of September every year. (i) to review membership in other Co-operatives; (j) to perform such other functions as may be delegated by the general body or as specified in the bye-laws. (k) Every elected director of the Board shall submit a declaration of assets and liabilities of his/her and his/her family for each financial year of his/her tenure as in the manner as may be prescribed. (l) to collect and review the assets and liabilities of Chief Executive of the souharda co-operative society. (m) if the Chief Executive fails to submit the assets and liabilities to the Board, the Board shall take disciplinary action on Chief Executive such manner as may be prescribed. Explanation: For the purpose of this clause “family” means Candidate/Chief Executive Officer/Director and his/her Spouse, Unmarried Daughter and Undivided Son.

(1) The Chief Executive shall within fifteen days from the date of constitution or deemed constitution of the Board after a general election and immediately before the expiry of the term of office of the President or Chairperson, Vice-President or Vice-Chairperson and any other office-bearers, convene a meeting in the manner as may be prescribed of all members of the committee for the purpose of electing President or Chairperson, Vice-President or Vice-chairperson and such any other office bearers as are required to be elected under the bye-laws of the souharda co-operative society. One of the members who is not a candidate for the election of President or Chairperson, Vice-president or Vice-Chairperson or any office bearer shall be chosen to preside over such meeting: Provided that, the Members of the first Board elected in the first general election held after the registration of a co-operative, shall elect the President or Chairperson, Vice-President or Vice-Chairperson and other office bearers in such manner as may be prescribed. (2) The Chief Executive shall, as and when there is a casual vacancy in the office of the President or Chairperson, Vice-President or Vice- Chairperson or other office bearers convene a meeting of the members of the Board for the purpose of filling up the casual vacancy and the provisions of sub-section (1) shall mutatis mutandis apply. (3) The Chief Executive shall, within three days from the date of the meeting, forward to the Registrar and Co-operative election authority a copy of the notice convening the meeting and also a copy of the proceedings of the meeting. (4) If the Chief Executive fails to convene the meeting in accordance with sub-sections (1) and (2), the Co-operative election authority or any officer authorized by it to do so shall convene a meeting for the purposes specified in the said sub-sections. (5) The President or Chairperson or in his absence, the Vice President or Vice-Chairperson shall,- (a) preside over meetings of the Board and the general body; (b) have only a casting vote in the event of equality of votes on any matters being decided upon by the Board except election to the office bearers: Provided that in the event of equality of votes in the election of office bearers, the election shall be by drawing lot; and (c) exercise such other powers as are specified in the bye-laws or as may be delegated by the Board. (6) The term of office of the President or chair person, vice president or vice chair person and any other office-bearers shall be five years from the date of election and shall be co-terminus with the term of the board. Explanation.- If the election to the office of the President or Chairperson, Vice-President or Vice-Chairperson is held in the middle of the term the remaining part of the term shall deemed to be a full term. Provided that the term of the office bearer of the Federal Cooperative shall end if he ceases to be the director of the representative Co-operative.

Filling up of casual vacancies. The board shall fill up a casual vacancy on the board by nomination out of the same class of members in respect of which the casual vacancy has arisen,

(1) The board may convene as many board meetings and general meetings in a co-operative year according to its needs and shall convene at least one board meeting every two months and one annual general meeting within the twenty fifth September of every year for transaction of business stated in sub-section (3) of section 23. (2) The Board shall convene a special general meeting within thirty days of receipt of a requisition from not less than one-tenth of members of the Co-operative or as provided in the bye-laws. Such requisition shall contain the reasons for convening the meeting. In the event of failure by the Board, the Federal Co-operative shall convene such general meeting within thirty days of receipt of requisition signed by not less than one-tenth of members of the Co-operative. (3) If the Co-operative and the Federal Co-operative, fail to convene the special general meeting within the time specified under sub-section (2), the Registrar shall convene the special general meeting within forty five days after the receipt of requisition signed by not less than one-tenth of the members of the Co-operative. (4) The quorum for a general meeting shall be as specified in the bye-laws, but shall not be less than ten percent or one thousand members eligible to vote whichever is less of the members eligible to vote at the meeting and the quorum for a representative general meeting shall not be less than sixty percent of the representatives eligible to vote at the meeting. If there is no quorum at the time of transaction of any business in any general meeting, such business shall not be transacted. (5) The quorum for a meeting of the board shall be as specified in the bye-laws but shall not be less than the number next to fifty per cent of the strength of the board. If there is no quorum at the time of transacting any business in any meeting of the board, such business shall not be transacted.

(1) Subject to the approval of the general body, the Board shall determine the cadre strength of the establishment and the scales of pay of the employees of the Co-operative: Provided that the Co-operative may borrow the services of the employees of other Co-operatives, Co-operative societies, Federal Co-operative, State or Central Government or their Organisations, Public Sector Undertakings and such other professional experts on such terms and conditions as may be approved by the general body. (1A) No employee of the co-operative shall be promoted to the next higher post unless he successfully completes such courses prescribed for promotion from his cadre out of the courses conducted under sub-section (7) of section 53. (2) The Chief Executive shall be the Chief Administrative Officer of the Co-operative and shall, subject to the general control and superintendence of the Board,- (a) be in-charge of the overall control and supervision of the day-today affairs of the Co-operative; (b) sign documents, enter into agreements and contracts and institute and defend suits and other legal proceedings on behalf of the Co-operative; (c) have powers to endorse, sign, negotiate cheques and other negotiable instruments and operate the bank accounts of the Co-operative; (d) be responsible to assist the board in matters relating to recruitment, performance and discipline of the employees; (e) arrange to maintain proper records and accounts of the Co-operative; (f) present the draft annual report and financial statements for the approval of the board within thirty days from the close of the cooperative year (g) assist to convene the board meetings, general meetings and the special general meeting in accordance with the bye-laws; (h) assist the board in the formulation of policies and programmes; (i) furnish to the board information necessary for monitoring the performance of the Co-operative; and (i-1) furnish the financial statements, schedules and other statements with the approval of the board and the related books of accounts, records and other documents necessary for the annual audit of accounts of the cooperative to the auditor within the thirty days from the close of the cooperative year. (i-2) place before the board the action to be taken for rectification of defects pointed in the audit report, obtain approval of the board and take action accordingly. (i-3) place before the board the action to be taken for rectification of defects pointed in the inquiry report, if any, obtain approval of the board and take action accordingly. (i-4) render necessary information and assistance to the cooperative election authority for conduct of elections before the term of expiry of the board. (i-5) furnish to the Registrar and Federal cooperative within the thirtieth day of September every year, the returns and information to be submitted as per section 34 to the Registrar and the Federal cooperative. (i-6) report any information on any vacancy in the board to the cooperative election authority. (i-7) If he/she fails to submit every financial year the declaration of assets and liabilities of his/her and his/her family. Explanation:- For the purpose of this clause “family” means “Chief Executive Officer and his/her Spouse, Unmarried Daughter and Undivided Son.