By Legal Cell
The Cooperative Societies Act Embraces a wide range of economic activities through District Cooperative Banks and primary agricultural societies for agriculture credit, urban cooperative bank for nonagricultural credit, primary dairy cooperatives and the unions for dairy activities, housing societies, consumers cooperatives etc, . The public at large deals with the cooperatives and many a times they are associated with some cooperative societies as members. Therefore, it is important to know about the rights of the members in a cooperative society.
Rights to Become A Member
The first and fore most important question is to consider the right of a person to become a member in a cooperative society for which Sec. 22 and Sec. 24 are relevant and important under GCS Act. The right to become a member is not recognised as fundamental right under constitution, since the cooperative society is not the State within the definition of article 12, as per the reported judgment in AIR! 1988- Kerala-75. As per the judgment of Hon’ble High Court Division Bench reported in 25(2) GLR 1244 the fundamental right of the cooperative society under article 19(1)(c) is recognised for the society to decide whom to associate and whom not to associate. Therefore, the amendment of GCS Act of 1982 is
declared as violative of article 19(1) (c) 2nd struck down as ultra-vires to the constitution.
Right to Continue As Member The powers of admitting a member are vested with the managing committee under Rule 33(1) but similar powers are not vested in the managing committee for removal of a member or expulsion of a member. The powers of expulsion of members are vested with the Registrar under Sec, 36 subject to appeal under Sec.153 and revision u/s 155. However, annual general meeting is vested with the powers under section 36 to initiate the proceedings of expulsion with no power of conclusion. The member once admitted cannot be dismembered except by due process of law u/s 11, Sec. 23. Sec.36 only by the Registrar subject to appeal under Sec. 153 and revision application under section 155. Therefore, the rights of members continue are protected by the law by providing remedies for any arbitrary action by the society and the society is not vested with any final powers of removal or expulsion.
Voting Rights of Member
Voting right of a member is conferred u/s 28. Here in this case, as against the companies, the voting of member is restricted only one vote irrespective of his share holding. It is important to note the words “no member of any society shall have more than one vote in its affairs under Sec. 28(1).
Therefore, there is an indication not to have more than one vote for a member, at the same time, there is an indication to have less then one vote by enabling provisions under section 27 under which the right of members can be restricted by the rules or by the bye-laws. Restrictions on the voting right of the member in case of default, in a credit society or in case of primary milk cooperative societies to supply prescribed quantity of milk may be provided in the bye-laws For restriction of exercise of the membership rights such restriction by the bye-Laws are consisted with Section 27, and, as a result not inconsistent with Section 28. This has been held by Gujarat. State Cooperative Tribunal in appeal NO.1
10/73 and recently in revision application NO. 136/96 decided on 4-12-96.
Right to Contest Election of the Committee Members
The right to contest the election is not unfettered right of a member and the same is restricted by operation of Rule 32 when provides for qualifications and disqualifications. More particularly Rule 32 (1 ) (c) gives a scope further to provide qualifications are and disqualifications in the bye-laws: over and above, the other qualifications and disqualifications under Rule 32, since Rule 32 (1) (C) reads as under.
“If he is not otherwise disqualified for being, appointed as such members”.
Right to Participate in AGM
As per the Chapter VII management of a society in GCS Act.1961 Sec. 73. final authority of society shall vest in the general body of the members in general meeting. Therefore, members has right to participate the general meeting particularly annual general meeting u/s 77 and special general meeting u/s 78. The member exercises control over the management of the society by participating in the election process to elect ,committee. Members and thereafter reviewing their performance in AGM in which balance sheet, annual, report auditor’s report etc. are placed for discussion and approve. The procedure of participation of the member in AGM may be left to be prescribe under the bye-laws
consistent with Act and Rules. AGM is empowered to adopt the bye-laws after registration as per rule 5 and to amend the bye-laws under Sec. 13 read with rule 6
Right of Members to See Books as Per Section No. 33
Section 33 is very important and, therefore, the same is reproduced herein below:
Section 33(1). Every member of a society shall be entitled to inspect free of cost, at the society’s office during office hours or any time fixed for the purpose by the society, a copy of the Act. the rules and the bye-laws the last audited annual balance sheet. The profit and loss account a list of the members of the committee, a register of members, the minutes of general meetings, and those position of the books and records in which his transactions with the society have been recorded.
“(2) A society shall furnish to a member, on request in writing and on payment of such fees as may be prescribed therefore, a copy of any of the documents mentioned in sub-section (1).”
It is important to note that similar Sec. 40 also repeats certain items as public documents which is also reproduced herein below:
Section 40 “Every society shall keep, at the registered address of the society, a copy of this Act and the rules, and of its bye-laws and a list of members open to inspection to the public, free of charge, during office hours or any hours fixed by the society therefore.”
The most important item is the bye-laws which is made public document U/S 40 so that the publics while dealing with the society can appreciate the powers and limitation of the office bearers analogous to Memorandum of Association and Article of Association under the Company Law.
Right to File Suit Under Section 96
A separate forum is provided under the Act called Board of Nominees before whom the member can file the dispute-cum-suit. This is an important right of a member of the society not only to challenge the actions of the society which really touch him, but also broadly any dispute touching the constitution, management or business of a society. Therefore, the question of locus standi does not arise in case of a member- challenging any action of the society. This questions is much more important in election
dispute wherein the member can challenge the election as an ordinary member though he may not be contesting candidate. In some of tile election laws, the right to challenge the election is given only to a contesting candidate and not to an ordinary voter. The same concept applies to the election of a specified society as per Rule 75 of Gujarat Specified Cooperative Societies elections Rule 1982. Herein Rule 75 the words by any candidate or any voter are used which means voter is also enabled to file a petition. Ail the voters may not be member, but most of he members are voters and what is emphasized
is that the right is conferred to an ordinary voter in addition to contesting candidate. Therefore, the member can vote in election and participate in annual general meeting and can challenge any illegality committed by the society touching the constitution, business or management of the society. The democratic process of Rule of majority does illegally to continued without any remedy for minority of an ordinary member.
Right to Transfer Interest of The Member in A Society
Section 30 and 31 regulates the right of a member to transfer share held by him as member. The legal heir does not automatically become a member unless his application for membership is accepted by the society. However, in case of housing society, the application of the legal heir should ordinarily be accepted since the principle of open membership as per section 24, read with Rule 12(2) applies. Rule 12(2) is held intravires to the constitution and the principle of open membership is held good by the Hon’ble High Court a reported decision in 36-GLA-Page-19 in a case of jain Merchants Cooperative
The rights of the members in a cooperative society are more important to know for the members, but at the same time more default to get protected against the society since the member has to right has litigation at his own costs and the society can fight at the costs of public money i.e. the money of the society. The rights of members are coupled with duties and liabilities for which a separate article may be required to deal with and therefore the scope of this Article is restricted to the rights only without touching the other part.