Chapter IIISALIENT FEATURES OF TAMIL NADU COOPERATIVE SOCIETIES ACT 1983

- AN ASSESSMENT

IntroductionThe Tamil Nadu Cooperative Societies Act, 1961 had been in force with

effect from 2.10.1963. It had been amended several times extensively, among

others, giving scope for enlargement of the electorate of the Board of Directors of

certain categories of cooperative societies like apex societies, central banks and

other central societies. However this act had proved not conducive for proper

functioning of the cooperative societies, due to vast changes and progress in the

cooperative movement.

The Santhanam Committee on Cooperation (1969) and the Administrative

Reforms Commission (1974) constituted by the state government made various

recommendations to amend the Cooperative Societies Act. The guidelines issued

by the Government of India (1975) have made various recommendations to modify

the state cooperative laws.

Based on the aforesaid recommendations and with a view to have a single

piece of legislation for all the cooperatives in the state including Cooperative Land

Development Banks, the Tamil Nadu Cooperative Societies Bill was introduced in

the Assembly in the year 1979 and was referred to a select committee. In the

meantime consequent on the dissolution of the state Assembly, the Bill lapsed.

After the reconstitution of the Assembly the Bill was introduced again in the

Assembly in the year 1980 and was referred to the select committee. The select

committee made extensive tour within the state and also toured in Maharashtra

and Gujarat States and after elaborate discussions and deliberations, presented a

revised bill to the Assembly by the end of March 1982, both the houses of

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legislature considered the bill in March 1983 and passed the same with certain

official amendments.

The bill was passed by both the houses of state legislatures, got the assent

of the President of the Indian Republic on 15th July 1983 and it has been published

as the Tamil Nadu Cooperative Societies Act 1983 (30 of 83) in the Tamil Nadu

gazette extraordinary dated 1st November 1983.

The Tamil Nadu cooperative societies Act 1983, contains a separate

chapter on Cooperative Land Development Banks. The new Act contains 184

Sections. The Act (1983) repealed the Tamil Nadu cooperative societies Act 1961

and the Tamil Nadu Cooperative Land Development Banks’ Act 1934.

Salient Features

Certain salient features of the Tamil Nadu Cooperative Societies Act, 1983

(Tamil Nadu Act 30 of 1983) are briefed here. The salient features of the Act with

respect to - Organization & Registration, Management & Administration, Business

and Regulatory provisions of the Act pertaining the cooperative societies in Tamil

Nadu are compared with that of the Act of 1961 and improvements of the 1983 Act

over the previous Acts are discussed.

• Registrar: Any person including a non-official can be appointed as the

Registrar of cooperatives for the State or any part of it under Section 3 of the

repealed Tamilnadu Cooperative Societies Act 1961. Whereas Tamilnadu

Cooperative Societies Act 1983, provides for only an officer of the Government

be appointed as Registrar of Cooperative Societies. Further, all or any of the

powers of the Registrar under this Act can be conferred only on an officer of

the Government. (Sec 3)

Registration of societies and Registration of amendment of by laws

❖ Conditions of Registration: Under the 1961 Act, {section 6(1)} the minimum

membership for the registration of a society was 10. Provision has been made

in the 1983 Act raising the minimum membership to 25 independent persons

(sec 6) With a view to ensure that the benefits of the cooperative movement

reached as large a number of members as possible, and avoid a few by

enrolling the required minimum number from persons belonging to a few

families or close circle of friends.

❖ Time Limit for Registration of Societies: The 1961 Act did not prescribe any

time limit for disposal of application for registration of a society or application

for registration of amendment of bylaws of a society. Section 9 (1) of the 1983

Act specified time limit for registration of a society as one hundred and twenty

days from the date of receipt of application by the Registrar. Section 11 of the

1983 Act stipulated that the time limit for registration of amendment of bylaws

of a society will be prescribed in the rules. Rules 9 (3) of the Tamilnadu

Cooperative Societies Rules 1988 prescribes the time limit as 120 days. Such

a time limit has been specified in the Act with a view to ensure that the

registering authority takes prompt action in examining and disposing of such

applications.

❖ Review of Deemed Registered Societies: At the same time, there is

provision in section 9 (4) of and 11 (7) of the 1983 Act empowering the

registering authority-to review the case of deemed registration within the period

prescribed under the rules (which is ninety days) as per rule 7 (10) and 9 (9) of

the Tamilnadu Cooperative Societies Act Rules, 1988 after the date of such

deemed registration with a view to see that societies which do not satisfy the

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conditions of registration or non-genuine societies are not allowed to exist and

to annul the amendment of bylaws contrary to the provisions of the Act or the

rules or the cooperative principles or any other law applicable to the society

concerned.

Admission of Members

❖ Board empowered to either admit or refuse admission: According to

section 17 (2) of the 1961 Act, in the case of credit societies, distributive

societies and marketing societies and such other class of registered societies

as notified by the Government, every person eligible for membership of such

society under the provisions of the Act, rules and by laws was given deemed

admission as a member of the society concerned on the date of receipt of

application in the office of the society. In the case of other societies the

committee of a society can either admit or refuse admission to any person for

good and sufficient reasons and also should communicate to the applicant

within a period of two months from the date of the application. It was

considered that, in the case of individual members, the board of every society

should have power either to admit the applicant or to refuse admission, for

good and sufficient reasons within a reasonable period failing which the

applicant should be deemed to have been admitted as a member with a view to

allow the democratically elected board of directors to have their say in the

admission of members and at the same time not allowing the board to delay a

decision on the application. Whereas section 21 (2) (i) of the 1983 Act,

provides that if the decision of the board is not communicated to the individual

within a period of sixty days from the date of receipt of the application in the

society, the applicant shall be deemed to have been admitted as a member of

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the society on the sixtieth day after the date of receipt of his application in the

society. In the case of deemed admission, if it is considered or found that a

member so admitted is not eligible to be a member of such a society under the

provisions of the Act, rules or bylaws of the society, a provision has been made

in section 21 (2) (ii) of the new Act enabling the Registrar to remove such

member either suo-motto or on application. According to rule 28 of the

Tamilnadu Cooperative Societies Rules, 1988 every order under section 21 (2)

(ii) shall be passed by the Registrar within a period of ninety days from the date

of information about the ineligibility of a member or from the date of receipt by

him of the application as the case may be.

Re-Admission in to membership: As for admission of individuals who

resigned from the membership of the society there is no provision in the 1961

Act specifying the period upto which a person who resigns from membership

cannot be admitted back as a member of the society. The by-laws of

cooperative societies specify the period, which is generally 3 years. But clause

(1) of sub-section (1) of section 23 of the new Act specifies that no person shall

be eligible for admission as a member of a society, if he has resigned from the

membership and a period of one year has not elapsed from the date of such

resignation.

As for admission of individuals sentenced for an offence in to

membership, the 1961 Act prescribes that such individuals will be admitted

until a period of five years has been elapsed from the date of expiry of the

sentence. Under clause (b) of sub-section (1) of section 23 of the 1983 Act only

an individual sentenced for an offence involving moral turpitude punishable

under any law with imprisonment for one year and upwards will not be eligible

for admission as a member of a society and that too for a period of one year

from the date of expiry of the sentence.

❖ Convening of two general body meetings in a year: According to section

26(2) of the 1961 Act, a general meeting of a society was to be held once in a

year for the purpose of approval of budget, consideration of audit report,

disposal of net profits etc. It was considered that the general meetings shall be

held once in every six months so that the members are able to review the

performance of the society at periodic intervals. Section 32(2) of the 1983 Act

provides for holding one general meeting for the approval of budget etc., and

the other for the purpose of appraisal of the programme of the activities of the

society and for considering any other matter every year.

Members to be given opportunity to make their representations before

compulsory amalgamation, or winding up of a society

❖ Notice: Under the 1961 Act, before ordering compulsory amalgamation of

societies or winding up of a society, notice had to be given only to the society

and there was no specific provision for the society in turn to bring the same to

the notice of its members.

❖ Order to every member: Section 14(2) of the 1983 Act provides that the

proposed order of compulsory amalgamation of societies shall be

communicated to every member of the society. Similarly section 137(1) of the

1983 Act provides that the notice of winding up of a society will have to be

communicated to every member of the society.

❖ Opportunity to the members: These provisions have been made with a view

to enabling the members of a society or societies also to make their

representations, if any, against the proposed amalgamation or winding up.

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When notice of winding up is received it is likely that the board of management

which might be responsible for the bad state of affairs may not be willing or

interested to bring the contents of such notice to members of such society. It

was also considered that the members of the society being the share holders

should also be given an opportunity to make their representation, if any, before

issues of orders. Hence the 1983 Act provides for this.

❖ Approval of budget by the Registrar: Incase where the general meeting of a

society does not approve the budget before the commencement of the year

even after the budget is placed before it, section 32(2) (i) (a) provides that the

board shall refer to the Registrar who may approve the budget with or without

modifications taking into account the interests of the society. Such provisions

are absent in the 1961 Act.

Representation to Scheduled Castes and Scheduled Tribes, Economically

weaker sections and Women on the boards of Societies:

❖ Details of representation: The Tamilnadu Cooperative Societies Rules, 1988

provides representation on the board to weaker sections including Scheduled

Castes and Scheduled Tribes and women, only in certain classes of societies

and that too, by way of nomination only. Sub-section (1), (2) and (4) of section

33 of the 1983 Act provide that in the board of every agricultural producers

marketing society, credit society, milk producers society, oil seeds growers

society and such other class or category as may be prescribed and also in the

board of every cooperative sugar mill, cooperative spinning mill, cooperative

tea factory or such other prescribed society in which the Government have

taken not less than two thirds of the shares or given financial assistance to the

extent of less than two thirds of the loans, advances and deposits received by

the society, there shall be one representative for the Scheduled Castes and

Scheduled Tribes, one representative for the economically weaker sections

and one representative for women which shall be filled up by way of election.

❖ Alternative arrangement if there is no representation: The 1983 Act

provides that if no member of the Scheduled Castes and Scheduled Tribes or

the economically weaker sections or no woman is elected, the strength of the

board shall be increased by such number as is necessary to give

representation to the Scheduled Castes and Scheduled Tribes or the

economically weaker sections or women, as the case may be, and

representation to the concerned interest shall be given by way of nominating by

the prescribed authority from among the members of the society belonging to

the interest concerned.

❖ Right of every member to participate in the election to the board: In the

1961 Act, there was no statutory provision safeguarding the right of every

member of a society to participate in the election to the board of management,

because where a Representative General Body (RGB) was constituted or in a

society where branch advisory boards were constituted only the members of

the Representative General Body or branch advisory boards, as the case may

be, elect the members of the board from among themselves. It was considered

that every member of a society should have the right to participate in the

election to the board of management of the society. A provision therefore has

been made in section 32(1) (b) of the 1983 Act to the effect that the

Extraordinary General Body (EGB) of a society is not empowered to elect the

members of the board of the society and that the members of the board shall

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be elected by all the members of the society in such manner as may be

prescribed.

❖ Nominee of the Government to be a government servant: Under sub­

section (2) of section 27 of the 1961 Act, the Government or the financing bank

can nominate not more than three or one-third of the total number of members

of the committee, whichever is less. They at any time withdrew the person

nominated and filled up the vacancy by fresh nomination. Under this provision

the government also nominated government servant or non-official. But

according to sub-section (8) of section 33 of the 1983 Act the Government or

the financing bank can nominate not more than two in the case of apex

societies and not more than one in other cases and the nominee of the

Government shall be a government servant.

❖ Period of the interim board not to exceed one year: According to first

proviso to sub-section (1) of section 27 of the 1961 Act, an interim committee

appointed by the promoters of a society to conduct the affairs of the society

can be allowed to be continued for an indefinite period so long as the Registrar

grants extension. It was considered that the interim board should not be

allowed to continue in office for a period of more than one year from the date of

registration of the society. Necessary provision has been made in the third

proviso under clause (a) of sub-section (1) of section 33 of the 1983 Act that

the period of interim board appointed by the promoters shall not exceed one

year in the aggregate from the date of registration of the society.

Period of nomination of the entire board not to exceed three or five years

❖ Period of office of nominated committee: According to second proviso to

sub-section (1) of section 27 of the 1961 Act, if the by laws so provide, a

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society can have a committee of management nominated by the Government

or the Registrar for such period as may be specified in the bylaws. In view of

this provision, nominated committees in certain societies have been

continuously in office ever since their formation. The period of nomination has

therefore been restricted. Such nominated committee cannot hold office for

more than three years from the date of nomination and in the case of societies

where the nominated board has held office for more than two and a half years

or more, they cannot hold office for more than six months from the date of such

commencement under clause (b) of sub-section (1) of section 33 of the 1983

Act.

❖ Nominated Board for Sugar Mill, Spinning Mill etc: However, in the case of

a sugar mill, spinning mill, tea factory and such other prescribed society in

which Government have taken not less than two-thirds of the shares or given

financial or other assistance to the extent of not less than two thirds of the

loans, advances and deposits received by the society as per sub-section (4) of

section 33 of the 1983 Act, the Government or the Registrar can nominate the

entire board for a period of five years from the date of commencement of

production or business for which the society is registered. In such cases where

the nominated board has already held office for a period of four and a half

years or more, such nominated board cannot be continued for more than six

months from the date of such commencement. But after five years period, the

Government or the Registrar can under item (ii) of clause (b) of sub-section (4)

of section 22, nominate not exceeding one-third of the total number of

members of the board of these societies.

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Composition of nominated board: Under second proviso to sub-section (1)

or under sub-section (2) of section 27 of the 1961 Act any person whether he is

a member or not, can be nominated to the board of a society. As per clause

(b) of the sub-section (1) of section 33 of the 1983 Act, where the nomination of

al! or any of the members of the board of a society is made under that clause,

the nominated members shall be the members of the society or government

servants or both.

Strength of the board: At present, in many cases, the board of a society is

either too small and does not give due representation to the different interests

or constituents, or too big and gives undue representations to certain interests

which was considered to be not conducive to the proper functioning of the

society. With a view to ensuring that due representation is given every interest

without making the board unwieldy the minimum and the maximum strength of

the board have been specified under sub-section (3) of section 33 of the 1983

Act which are as follows: Such a provision was absent in the Act of 1961.

S.No

Category of societies Strength of the Board (number)

Minimum Maximum1. All societies specified in part A* of the

Schedule to the Act 25 39

2. All societies specified in part B** of the

Schedule to the Act 21 31

3. Apex societies (other than apex societies in

the schedule) 25 39

4. Central societies (other than central

societies in the schedule) 21 31

5. Primary societies (other than primary

societies in the schedule) 11 21

* Societies specified in part A refers to Apex Societies ** Societies specified in part B refers to Central Societies

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Office bearers and delegates: The Tamilnadu Cooperative Societies Act,

1961 or the Tamilnadu Cooperative Societies Rules, 1963 did not specify about

the person to be the delegate of a society to the general body of another society in

which the society is a member and how the delegate is to be elected. Hitherto they

were governed by the provisions contained in the bylaws of the societies

concerned, whereas clause (b) of sub-section (11) of section 33 of the 1983 Act

specifies that the delegates of the registered society to the general body of other

registered society shall be elected by the members of the board from among

themselves by secret ballot in such manner as may be prescribed, further that a

person who is an office bearer or who stands for election as an office bearer shall

not be eligible to stand for election as a delegate and according to the second

proviso under that sub-section a person who is a delegate or who stands for

election as a delegate shall not be eligible to stand for election as an office bearer.

(Sub sec 11) of Sec 33 of 1983 Act.

Disqualification for membership of board

❖ Default: The disqualifications for membership of board have been made more

stringent than those in section 28 of 1961 Act. Under the 1983 Act besides

default in respect of any loan, default in respect of any advances and dues

under credit purchase have also been included for the purpose of

disqualification under section 34 (1) (b) (i).

❖ Illiteracy: With a view to averting the illiteracy of office-bearers and directors

being exploited by the paid employees leading to supersession in certain cases

or involvement of innocent directors along with real culprits in criminal cases,

clause (i) of sub-section (1) of section 34 of the 1983 Act specifies that a

person to be elected as a member of the board should know to read and write

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Tamil or English or such other language as may be notified by the Government

for any particular area.

Government Service: The 1983 Act also prohibits government servant

engaged in administration or audit of cooperative societies or employees of

cooperative societies from being elected or nominated as a member of a board

of any society for a period of two years from the date of their ceasing to be

such government servant or employee. This provision has been made to

prevent government servants or employees of societies from becoming

directors or office bearers of societies immediately after retirement or

resignation. (Sub clause 2 of clause e of sub section 1 of section 34 of the

1983 Act).

Moral turpitude and default: Clause (f) of sub-section (1) of section 34 of the

1983 Act stipulates that no person is eligible for being elected or nominated as

a member of the board of any society for a period of three years if he has been

sentenced for any offence under the Act other than an offence under section

162 and for a period of five years, if he has been sentenced for an offence

involving moral turpitude punishable under any law, with imprisonment for one

year and upwards from the date of expiry of such sentence.

Sentenced for corrupt practices: As per clause (g) and (h) of sub-section (1)

of section 34 of the 1983 Act a person who has been sentenced for corrupt

practice under Section 162 or has been disqualified or removed from the office

of the member of the board under section 36 of the 1983 Act is disqualified

permanently from holding office in any society.

Disqualification for 3 years from clearance of default: Under the 1961 Act,

a committee member who committed default for a period exceeding three

months was not eligible for contesting election for a period of one year from the

date of his disqualification. But a person against whom a decree, decision or

award has been obtained can contest for election immediately after discharging

the amount involved in the decree, decision or award. This disparity has been

removed under the 1983 Act. As per sub-section (2) of section 34 of the 1983

Act, a member of the board who has ceased to hold office as such for having

incurred the disqualification on account of default or decree is not eligible from

being elected or nominated to the board of any society for a period of three

years from the date on which the default has been fully cleared or decree has

been fully discharged.

❖ Disqualification as applicable to individuals and society representatives:

Under the 1961 Act there was no distinction between an individual member or

a society regarding the period of default for incurring disqualification. Under

sub-section (ii) of clause (b) of sub-section (c) of section 34 of the 1983 Act

while the period of default continues to be three months in respect of individual

members, the period of default in respect of society members has been

specified as one year. Further it is also specified that in the case of a society,

default should exceed 30 per cent of the sum due by that society.

❖ Disqualification on account of absence: Rule 31 (A) of 1963 rules provided

for disqualification of directors absenting from four consecutive meetings of the

board. Clause (d) of sub-section (2) of Section 34 of the new Act provides that

a member of the board who absents himself from four consecutive meetings for

the board or from all meetings of the board for a continuous period of three

months, whichever is longer, shall cease to hold office as such in the board.

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However provision has been made for restoration to the office by condonation

for absence.

Restriction to hold office in more number of societies: With a view to

providing more opportunity for a wider section of people to participate in the

movement than at present, subsection (4) of section 34 of the 1983 Act

imposes restriction on a person from being a member of the boards of more

than three registered societies at the same time subject to the further restriction

that he should not also, at the same time, be in the boards of more than one

apex society or more than one central society.

Restriction of Board Membership in more number of societies: According

to clause (d) of sub-section (4) of section 34 of the 1983 Act, if a person is a

member of the boards of more than three registered societies on the date on

which the new Act comes into force, he has to resign his membership of the

boards of all but three societies within a period of 90 days from that date failing

which he will cease to be a member of the boards of all such societies.

Similarly a person who is a member of the boards more than one apex society

or more than one central society at the commencement of the Act should

resign his membership from the board of all but one apex or one central society

within the said period of 90 days failing which he will cease to be a member of

the boards of all the apex or central societies.

Restriction on period of years in office: It was considered that a person who

has been elected as a president of a society for two successive terms of three

years, should not be allowed to contest for election as the president of the

society unless a gap of two terms of three years had elapsed and that a person

should not be the president of more than one society. Necessary provisions in

this regard have been made in sub-section (7) of section 34 of the 1983 Act.

Decision on disqualification: Under the 1961 Act, Registrar alone was

competent to decide the question as to whether a member of the board was or

has become subject to any of the disqualifications specified in the Act. But

according to sub-section (3) of section 34 of the 1983 Act, the authority

competent to decide any question as to whether a member of the board was or

has become subject to any of the disqualifications mentioned in section 34 of

the Act is the board of the society concerned. If the board fails to give a

decision under said sub-section (3) within one month from the date of incurring

the disqualification, the Registrar, under sub-section (6) of section 34 of the

1983 Act, may decide it and direct the removal of such member from the

membership of the board, if he is found disqualified. It may be noted that under

the new Act, the disqualification is not automatic and so long the decision is not

given under sub-section (3) or removal is not ordered under sub-section (6) of

section 34, the member concerned is entitled to continue as such as if he is

qualified or is not disqualified.

Disqualification on account of member of a superseded board: Under the

1961 Act a member of the superseded board was disqualified from being

elected or appointed to the board of the concerned society only for a period of

three years from the date of expiry of the period of supersession. With a view

to ensuring that the people responsible for mismanagement of a cooperative

society are not got re-elected to the board of any society, provision has been

made in sub-section (5) of section 34 of the 1983 Act, that such disqualification

is applicable not only to the society the board of which has been superseded

but also to other societies. Further, this disqualification is made applicable even

to a person who was a member of such superseded board on the date of issue

of notice of supersession though such member might not be a director on the

date on which the order of supersession is issued. Further according to clause

(b) of sub-section (5) of section 34 of the 1983 Act a member of a board in

respect of which proceedings for supersession or surcharge are pending is not

eligible for election or appointment to the board till the termination of the

proceedings.

❖ Convening of board meeting every month: There was no statutory provision

either in the 1961 Act or in the 1963 rules to ensure that the board of

management of every society meets periodically and transacts business. Only

the bylaws of the cooperative society specify the periodicity of holding board

meeting of a society. Now a provision has been made in section 33 (13) of the

1983 Act to the effect that ordinary meeting of a board shall be held at least

once in every month for which a notice of not less than three clear days shall

be given. It has also been provided that the managing director or where there

is no managing director the president of the society shall convene the board

meeting.

❖ Decision in case of equality of votes: Under the 1961 Act where there was

an equality of votes, it would be deemed that the matter was not decided

except in case of election. But according to clause (b) of sub-section (1) of

section 26 of the 1983 Act where there is an equality of votes, the president

shall have a casting vote.

❖ Restriction for nominees from contesting and voting: According to sub­

section (4) of section 21 of the 1961 Act, the nominees of the Government or of

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the financing bank were not entitled to vote at election. However, they were not

specifically prevented from contesting for election as office-bearers. With a

view to preserving the democratically elected character of the board, Section

26 (4) and 33 (16) of the 1983 Act prohibit the nominee of the Government or

of the Registrar or of the prescribed authority if he is a Government servant or

the nominee of the financing bank or of the other society or of other interests or

the ex-officio member of the board from either contesting or voting at elections

of office bearers and delegates.

Provisions for payment of honorarium to members of the board

❖ Provision for honorarium: Sub-section (2) of section 61 of the 1961 Act,

expressly prohibited payment from the funds of a society to the president or to

any officer of the society by way of honorarium towards any service rendered

by him to the society. Though the services of board of directors of the society

expected to be gratuitous, it was considered that efficient management could

be encouraged by giving incentive. A provision is therefore made in the new

Act for payment of honorarium to the members of the board including the

president and vice-president of a society when it works on profit to encourage

them to render service with devotion and sincerity.

❖ Fixing of honorarium: Further, third proviso under section 69 of the 1983 Act

provides for payment of honorarium even in the case of societies with

accumulated losses but working on current profit to the office bearers and

directors up to five per cent of the current profit. This provision is intended to

give incentive to the office bearers and other directors for their efficient

management, even though the society may continue to work on loss due to the

accumulated losses of previous years. This is a unique concept introduced for

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the first time by Tamilnadu in the new Act. Rule 82 of the Tamilnadu

Cooperative Societies Rules 1988 deals with payment of honorarium from

general funds by a society with accumulated loss but working on current profit.

Provision for giving reasonable dividend to the members of a society on

their paid up share capital: The maximum rate of dividend payable on

shares to members is now provided in the 1983 Act itself. Section 72 (2) of the

1983 Act provides for payment of dividend on shares to members up to 14 per

cent per annum on the paid up value of each share. Whereas, payment of

dividend to members was specified in the rules of the 1961 Act.

Appointment of an administrator: Under certain special circumstances,

where the bylaws of a society so provide, a single person being the employee

of the financing bank, or a government servant, is appointed as manager of the

society in the place of a committee with all the powers of the committee.

However there was no enabling provision in the 1961 Act or in the 1963 rules

in this regard. Whereas sub-section (12) of the section 33 of the 1983 Act

provides for appointing a single person as administrator by the general body to

exercise all or any of the functions of the board or of any officer of the society.

Registrar’s power to enforce performance of duties: If a society has failed

to perform any duty imposed by an order under the Act or has not complied

with a lawful order of the Registrar, there was no provision in the 1961 Act, to

enforce performance of such duty or lawful order of the Registrar. Specific

provisions have been made in section 166 of the 1983 Act, empowering the

Registrar to issue an order directing the performance of any duty imposed by

or under the Act or the compliance of a lawful order of the Registrar within a

period fixed by him and to take such action as may be necessary. If such duty

is not performed or the order of the Registrar is not complied with within the

period so fixed, the Registrar may get the duty performed order complied with

at the cost of the society or person responsible for non-compliance.

Service conditions of employees: Section 73 of the 1983 Act provides for

prescription of qualifications, pay scales and service conditions of employees

of cooperatives in the rules; Rule 149 of the Tamilnadu Cooperative Societies

Rules, 1988 deals with them.

Constitution of Recruitment Bureaus: This is a new provision incorporated

in the Act 1983. In Section 74 of the 1983 Act, there is an enabling provision

for the constitution of recruitment bureaus at the state and district levels for

recruitment of such categories of paid officers and servants for employment by

such class or classes or category or categories of registered societies as may

be prescribed in the rules. Rules 150 and 151 of the Tamilnadu Cooperative

Societies Rules, 1988 deal with them.

Common Cadre of Service: Section 75 of the 1983 Act contains an enabling

provision for the constitution of common cadre of service in respect of certain

posts in scheduled cooperative societies or primary cooperative societies

affiliated to such scheduled cooperative societies, cooperative sugar mills,

cooperative spinning mills, cooperative tea factories and such other societies

as may be notified by the Government. The posts in respect of which such

common cadre of service may be constituted are Secretaries, Assistant

Secretaries, Executive Officers, Assistant Executive Officers, General

Managers, Assistant General Managers, Managers, Assistant Managers,

Development Officers, Chief Accountants, Chief Accounts Officers, Accounts

Officers and the like.

Suspension of erring employees of society

❖ Power to direct suspension of employees by society: Under section 70 of

the 1961 Act, the Registrar can issue only a direction to the committee of a

society to place or cause to be placed an employee of the society under

suspension, if he has committed misappropriation, breach of trust or other

offence in relation to the society. The said section did not provide power to

direct suspension of an employee against whom a complaint of criminal

offence (not relating to the society) is pending investigation or trial. The said

section did not also give power for placing the employees of the society under

suspension when the committee willfully disobeys or fails to comply with the

direction issued by the Registrar. The said section did not also provide for

issue of direction to place under suspension an employee of a financing bank

or a federal society who was responsible for or, colluded with others in

connection with the misappropriation or breach of trust or other offences

committed in an affiliated society.

❖ Power to suspend employees if society fails: Section 76 of the 1983 Act

provides for placing an erring employee of a society or of its federal society or

of its financing bank or an employee against whom a complaint of criminal

offence is pending investigation or trial, under suspension and also gives

powers to the Registrar to place such employee under suspension, if the

society, federal society or the financing bank willfully fails or refuses to place

such employee under suspension as directed by the Registrar. This power can

be invoked by the Registrar only when it is necessary in the public interest or in

the interest of the society to do so.

85

❖ Removal of a paid employe© of a society (Sec 77): 1961 Act did not provide

for the removal of an employee of a society. Provision has been made in

section 77 of the 1983 Act giving power to the Registrar to direct removal of a

paid officer or servant of a society who has been found guilty of, or convicted

by a competent court for, an offence involving moral turpitude and to remove

such paid officer or employee, by order, if the society fails to comply with the

direction issued by the Registrar. This power can be invoked only where it is

necessary in the public interest or in the interest of the society concerned.

❖ Responsibility for maintenance of accounts and books (Sec 84): Section

84 of the 1983 Act fixes responsibility on the chief executive or the President, if

there is no such chief executive in that society, for the proper and up to date

maintenance of accounts and books of a society and also for producing them

when called for in connection with audit, inquiry and inspection or investigation.

Such provision was not found in the 1961 Act.

Disciplinary action against employee responsible for Supersession:

Under the 1961 Act there was no provision for taking action against the

employees of the societies who have been responsible for the acts leading to

the supersession of the Boards. Provision has been made in sub-section (9) of

section 88 of the 1983 Act providing for taking disciplinary action including

suspension pending enquiry into grave charges against a paid officer or

servant of a society against whom there is a prima-facie evidence that he was

also responsible for the act leading to the supersession of the board under that

section.

❖ Payment of gratuity to employees not governed by the Payment of

Gratuity Act: There was no provision in the 1961 Act for payment of gratuity

to employees of cooperative societies not governed by the Payment of Gratuity

Act, 1972. In the 1983 Act, a specific enabling provision is made in Section 79

for payment of gratuity to the employees of cooperative societies which are not

governed by the Payment of Gratuity Act, 1972.

Employees societies - Remittance of deductions made by the employer

towards dues to the societies: Under the 1961 Act there was no provision for

enforcing the remittance of the amounts deducted by the employer from the

salary or wages of the employees. Sub-section (6) of section 48 of the 1983

Act provides for a fine up to Rs.500 and also stipulates that in case of

continuing offence the employer shall be punished with a further fine of Rs.50

for each day on which the offence is continued after conviction therefore.

Further, sub-section (8) of section 48 of the 1983 Act also provides for the

recovery of sums deducted by the employees together with interest from the

date of deduction as also the cost involved in such recovery under the

Tamilnadu Revenue Recovery Act, 1964 as if such sum were arrears of land

revenue.

Powers of Registrar to issue certificate for recovery of sum due from

members: Section 150 of the 1983 Act gives power to the Registrar to issue a

certificate for recovery of such sum due from a member of society on an

application made in this behalf by the society which shall be accompanied by a

statement of accounts in respect of the sums to be recovered from the

members. This provision has been incorporated in the new Act with a view to

expediting the recovery of dues from a member in the case of direct and simple

monetary claim without “recourse” to the procedure of filing arbitration and

getting decree or decision. Further, the amount covered by the certificate

issued under section 150 may be recovered as if it were an arrear of land

revenue.

Provisions intended to improve-and extend credit and other services

rendered by societies to deserving persons: With a view to ensuring that

the services or benefits of cooperatives are not cornered by a select few

individuals, section 23(1) (g) of the 1983 Act provides that no person can be a

member of more than one society of the same class except as otherwise

prescribed in the rules. As per rule 30 of the Tamilnadu Cooperative Societies

Rules, 1988 an individual owning or cultivating lands in different places is

permitted to become member of the concerned primary agricultural service

societies or primary land development banks subject to the condition that his

borrowings from all such societies shall not exceed the individual maximum

borrowing power. An individual may also become a member in more than one

agricultural producers cooperative marketing society or a consumer society for

obtaining the services of the concerned societies.

Consideration of services rendered to directors and other near relations

by genera! body: With a view to avert the members of the board and their

near relatives from cornering the major chunk of the benefits of the society for

themselves, section 32(2) (d) of the 1983 Act specifies that the details of

services rendered to the directors and to their near relatives shall be placed

before the annual general meeting of its consideration.

Purchase of commodities intended for sale: There was no provision in the

1961 Act, or in the old rules regulating the purchase of commodities intended

for sale by cooperatives. Whereas Specific provisions have been made in sub­

section (3) of section 180 of the 1983 Act enabling the Government to make

rules making it obligatory on the part of societies to purchase commodities

intended for sale directly from producers themselves or from producers

cooperative societies (with a view to eliminate middlemen and their share of

profits and to make available commodities at competitive and reasonable price

to the consumers) and to purchase standardized goods bearing AGMARK or

ISI mark (with a view to make such quality or standardized goods available to

the public at large). Necessary provisions in this regard have been made in

rules 71 and 72 of the Tamilnadu Cooperative Societies Rules, 1988.

❖ Powers of financing bank to proceed against defaulting members of

indebted society: Under the 1961 Act, where an indebted society was unable

to pay its debts to the financing bank by reaison of its members committing

default in the payment of debts due to such society, there was no provision for

the financing bank to take any action in this regard against such members. It

was considered that the financing banks should have the power to step in and

collect the overdues in such cases, if the steps taken by such society were not

adequate. Therefore a provision has been made in sub-section (2) of section

149 of the 1983 Act that the financing bank may take action against such

defaulting members for the recovery of debts.

❖ Provision for undertaking joint business: There was no provision in the

1961 Act for carrying on any specific joint business by a cooperative society in

collaboration with any other cooperative society or any undertaking of the

Government (State or Central). Section 18 of the 1983 Act now provides for

undertaking such joint business by a cooperative society subject to previous

approval by the Registrar.

89

❖ Writing off non-recoverable assets: The Tamilnadu Cooperative Societies

Act, 1961 or the Tamilnadu Cooperative Societies Rules 1963 did not deal with

writing off of non-recoverable assets of cooperative societies. Section 178 of

the Act 1983 specified that assets of societies, which are bad and cannot be

recovered can be written off by the general body of the society with the

approval of the Registrar.

❖ Time limit for completion of certain statutory proceedings: Most of the

cooperative societies Acts in the country do not prescribe any time limit for

disposal of application for registration of a society or amendment of bylaws of a

society or for completion of certain other statutory functions. Even in a few

cases where time limits have been prescribed, the Registrar can make

reference to Government for extension of time or otherwise. In the 1961 Act

also there was no time limit for registration of a society or registration of

amendment of bylaws of a society or completion of audit under section 64,

inquiry under section 65, inspection under section 72. The 1983 Act specifies

time limit for disposal of application for registration of a society and application

for registration of amendment to bylaws and for completion of statutory

functions like audit, inquiry, inspection, surcharge, supersession:

Provisions for delivery of possession of records and properties of a society

❖ Magistrate to direct delivery of possession of records: Section 107 of the

1961 Act gave power to the Magistrate having jurisdiction over the area or

properties to direct delivery of possession of records etc., of the society on

application and on production of a certificate from the Registrar to the effect

that the society has been reconstituted, dissolved or ordered to be wound up

as the case may be. However, this section did not provide for taking

90

possession of records and properties of a society from a person not entitled to

be in possession thereof or before they are tampered with or destroyed by

miscreants.

Provisions for taking delivery: Specific provisions have been made in sub­

section (2) of section 165 of the 1983 Act enabling the Registrar to arrange for

taking delivery of possession of the records and properties of a society in the

following cases:

i) where the records and properties of the society are in possession of

a person not entitled to be in possession thereof for any reasons;

ii) where the Registrar is satisfied that the records and properties of the

society are likely to be tampered with or destroyed; or

iii) the funds and properties of the society are likely to be

misappropriated or misapplied.

Punishment for misuse of properties (Sec 161): Section 71 of the 1983 Act

provides that moveable or immoveable property of a society shall not be used

or allowed to be used except in accordance with the provisions of the Act, rules

and the bylaws of the society. According to section 161 of the 1983 Act, any

officer of a society or an employee or paid servant or any member of such

society, who uses or allows the use of properties other than funds of any

society otherwise than in accordance with the provisions of the Act, the rules or

the bylaws of the society, shall be punishable with fine which may extend to

five hundred rupees.

Punishment for corrupt practice: Section 162 of the 1983 Act declares that

where any officer of a society or an employee or a paid servant or any member

of such society commits any irregularity or and found guilty of any corrupt

91

practice shall be punishable with imprisonment for a term which may extend to

one year or with fine which may extend to five hundred rupees or with both.

❖ Provision for compulsory supersession of board of management of a

society for overdues: Section 88 of the 1983 Act provides for compulsory

supersession of the board of management of a society for its failure to collect

dues from its members. No such provision was made in the 1961 Act.

❖ Provision for removing stalemate in the functioning of board of

management of a society: There was no provision in the 1961 Act to make

immediate arrangements to secure proper management where there is

stalemate in the functioning of the committee of a society due to resignation or

otherwise.

Section 89 of the 1983 Act provides for appointment of special officer in a

society for the purpose of running the management without resorting the

supersession in the following circumstances.

❖ Where the term of office of the board has expired and a new board cannot be

constituted in accordance with the provisions of the Act, the rules of the

bylaws; or

❖ Where the new board constituted fails to enter, or it is prevented from entering

upon office on the expiration of the term of office of the earlier board; or

❖ The existing board has tendered resignation enbloc; or vacancies have arisen

for any reasons; or one or more members of the board have tendered

resignation; and the number of remaining members cannot form the quorum for

the meeting of the board.

Disposal of dispute relating to cooperative societies

❖ Period of Limitation: Under the rules made under the 1961 Act, it was

specified that the period of limitation for referring a dispute to the Registrar

shall be governed by the provisions of the Indian Limitation Act 1963 (Central

Act No. 36 of 1963) as applicable to civil court. But according to sub-section

(9) (a) of section 90 of the 1983 Act the period of limitation shall be regulated

by the provisions of the Limitation Act, 1963 subject to certain modifications.

❖ Provision for Registrar to admit dispute even after expiry of period:

Further, according to clause (b) of sub-section (9) of section 90 of the 1983

Act, if the person filing the dispute satisfied the Registrar that he had sufficient

cause for not referring the dispute within the period of limitation, the Registrar

may admit any dispute even after the expiry of the period of limitation.

❖ Exclusion of application of Arbitration Act: New provisions have been made

in sub-sections (7) and (8) of the section 90 of the 1983 Act excluding the

application of the provisions of Arbitration Act, 1940 and of section 34 of the

Code of Civil Procedure 1908 respectively to settlement of disputes arbitration

under section 90 of the 1983 Act.

❖ Appeals and Revision: Under 1961 Act, each Cooperative Tribunal consisted

of one person only who was a judicial officer not below the rank of a

subordinate judge. Section 151 of the 1983 Act provides for constitution of

Cooperative Tribunal consisting of one or more persons possessing such

qualification as may be prescribed provided that at least one person shall be a

judicial officer not below the rank of a subordinate judge. Rule 167 of the

Tamilnadu Cooperative Societies Rules 1988 deals with qualifications of

members of Cooperative Tribunal.

93

Insertion of a separate chapter on land development banks: The working

of land development banks was governed by the provisions of a separate

enactment, namely The Tamilnadu Cooperative Land Development Banks Act

1934. The said Tamilnadu Cooperative Land Development Bank’s Act 1934

has been repealed and a new chapter viz. Chapter XIV on Land Development

Banks has been included in the 1983 Act with a view to make the 1983 Act a

single piece of legislation covering all cooperative societies including land

development banks.

ConclusionThis chapter evidences the improvements of the 1983 Act over the 1961

Act with respect to organization and registration administration and business and

regulatory functions of the cooperatives in Tamil Nadu. The Act has provided for a

separate chapter on employees of the cooperatives. Provisions related to

constitution of the management board giving representation to weaker sections of

the community are very specific. As such the Tamil Nadu cooperatives societies

Act 1983 and the rules made there under (given in the appendix) are very

comprehensive in their structure and operations. The Act claims its importance by

the inclusion of several ‘do’s and don’ts which were unsketched in 1961 Act on the

one hand and vesting responsibility of attending to a few micro aspects of the

management and administration pertaining more of tactical operations of

cooperatives to the Registrar of cooperatives on the other. The reason for these

could be due to growing complexicities and diversities in the constitution,

management and business of cooperatives and, the need for unified and

coordinated direction and control for cooperatives perforce, it leads us to think that

encouraging and preserving the cooperatives with their basic characteristics seem

to remain to be a root question.94

References

Arthanareswaran.K.N. (1987), Report of the Committee on Cooperative Law for Demoralisation and Proffesionalisation of Management of Cooperatives, Government of India Publications, New Delhi.

Brahm Prakash (1991), Report of the Committee on Model Cooperatives Act 1991, Yojana Bhavan, New Delhi 110001 (May 1991).

Cooperative Initiative Panel, Anand (2000), Restrictive Provisions in Cooperative Laws in India, CIP, Anand, 2000.

Government of India (1942), The Multi State Cooperative Societies Act 1942. (ACT VI of 1942), Government of India Publications, New Delhi

Government of India (1958), The Multi Unit Cooperative Societies Rules, 1958 Notification No F-10-1/58, coop-1 Dated 19 September 1958, Government of India Publications, New Delhi.

Government of India (1904), The Cooperative Societies Act (1904), (India Act X of 1904 passed on 25 March 1904), Government of India Publications, New Delhi.

Government of India (1912), The Cooperative Societies Act (ACT II of 1912), Government of India Publications, New Delhi.

Government of Tamilnadu (1976), Tamil Nadu Cooperative Societies (Appointment of special officers) Act, 1976 - No.25 of 1976, Government Press Publications, Madras.

Government of Tamil Nadu (1983), The Tamil Nadu Cooperative Societies Act 1983, Tamil Nadu Gazette publications 1983.

Government of Tamil Nadu (1988), The Tamil Nadu Cooperative Societies Rules 1988, The Director of Printing and Stationary, Madras.

Registrar of Cooperatives (1988), Registrar's circular No.37/88 CL Dated 21-5- 1988.

Registrar of Cooperatives (1988), Registrars circular No.49/88 CL Dated 8.6.1988.

Superintendent of Government Press, (1932), The Madras Cooperative Societies Act, 1932 (Madras Act VI of 1932), Madras Government Press Publications, Madras.

Superintendent of Government Press, (1932), The Rules framed under Madras Cooperative Societies Act 1932, Madras Government Press Publications, Madras.

95

Superintendent of Government Press, (1961), The Madras Cooperative Societies Act, 1961 (Act III of 1961), Madras Government Press Publications, Madras.

Superintendent of Government Press, (1963), The Madras Cooperative Societies Rules 1963, Madras Government Press Publication, Madras.