Monday, 2 September 2013

Salient features of the Maharashtra Co-operative Societies (Amendment) Act 2013

Some of Salient features of the MCS Act 1960 [AMENDMENT 2013] is as follow 

Some new provisions threaten the interests of voiceless and vulnerable sections such as aged citizens, troubled spinsters and NRIs. Such suffering and marginalized citizens – who are normally shy and reticent in every society -- will be compelled to attend general body meetings, or lose their voting rights or worse still, face expulsion, eviction notices etc. Their only hope lies in either being condoned by the very general body (which often acts as a mindless mob in the hands of the managing committees, victimizing and ostracizing such people) or in rushing off to appeal to the unresponsive and often corrupt officials of the cooperation department. Even if such society decisions are overturned after months or years of struggle, these vulnerable people will lose their peace-of-mind.

Other new provisions are a big blow to the influential managing committee members and society employees who carry the cooperative movement on their shoulders. Failure to comply with various deadlines can result in severe consequences, including dismissal, disqualification from contesting elections and cash penalties. Vindictive and vexatious members – who are present in every society – can invoke these provisions to do great damage to the society’s peaceful functioning. Auditors, who earn relatively small amounts (like Rs 2,500/-) by auditing the society’s accounts, are given the extraordinary mandate of filing an FIR (First Information Report) at a police station. Whenever this happens, managing committee members will become aaropi in an FIR, which may drag on for years, and result in needless harassment to managing committee members without coming to any conclusion. Currently, uniformed cops are a rare sight in societies; but now, as the new provisions slowly seep in, cops coming into societies and office-bearers being summoned to police stations will become a common sight. Needless to say, instances of bribery will become common.

The amendment has given the law some sharp edges, and also has guidelines and definite dates to societies for smooth functioning. It sets the bar on society administration unrealistically high. Below are the major changes in a nutshell.


Audits: Last date for getting books of account audited is four months after the close of financial year 31st July of every year.

Annual General Meetings: Last date for holding AGM is 30th  September. Default in this respect is almost certain to result in disqualification of the Managing Committee members for five years, and a cash penalty for responsible employees of upto Rs 5,000/-

Informing Election Authority when an election is due. The State Cooperative Election Authority must compulsorily be informed at least six months before the expiry of the present committee’s term of office. Failure to inform will disqualify them from contesting the elections.

Elections within 6 months in the case of managing committee being suspended. In case the managing committee is superseded for any default of theirs, and administrator/authorized officer is appointed by the Registrar, elections must be compulsorily held within six months, and control must be returned to the society members.


Immediate voting right. Members of housing/premises society are now allowed to vote immediately after enrollment. The earlier provision required a waiting period of two years.

In a society not having any government grant or loan, no Administrators will be appointed. Instead, an active member or group of active members who were not members of the earlier managing committee (which has been suspended) may be authorized to act as “Authorized Officer”. In a Society has government aid, an administrator may be appointed, but for six months only.

Only active members will have the power to vote in the affairs of the society including elections. Also, a non-active member cannot contest the election.  A member who does not attend at least one general body meeting and does not utilize the minimum level of services as prescribed in the bye-laws is liable to be classified as “non-active member”, unless his absence is condoned by a general body resolution.

CEOs, Functional Director and other employees will be considered as“representatives” of the society, but not “members” for the purpose of voting. 

Reservation of three seats for members from SC/ST/OBC etc. and two seats for women-members. This means that over and above the regular seats on the managing committee, there will be five reserved seats to be filled up by election from such class of members. If such seats are not filled up by election, then they may be filled up by co-opting or nominating suitable members.

The State Co-operative Election Authority will prescribe procedures and manner of holding elections. Even casual vacancies must be filled up as per such procedure, and under the scrutiny and supervision of this authority.


Tough audits. Each and every society must appoint a statutory auditor from an approved panel of qualified auditors, and have their books audited by them in deadline. The auditor is mandated to point out the particulars of the defects or the irregularities observed in the audit.

FIR against managing committee members etc. In case of financial irregularities, misappropriation or embezzlement of funds etc., The auditor is required to investigate and report the modus operandi, the entrustment, amount involvement and file an FIR with the police as per Criminal Procedure Code, after getting necessary permission from the Registrar. If the auditor fails to do so, he may be disqualified from the government panel, and also, the Registrar is required to get the FIR filed by authorizing someone suitably.

Fines for offenses under Section 146 have been enhanced. For example, where the penalty was Rs 500/-, it has been raised to Rs 5,000/-.

For assistance with statutory compliances, legal and financial matters, societies are encouraged to appoint expert directors. Expert directors are defined as persons with experience in the field of banking, management, finance, and cooperatives, and includes a person having specialization in any other field relating to the objects and activities undertaken by the concerned society.


a)      Active members are empowered. Members – including managing committee members -- who are negligent in attending meetings may lose their voting rights after five years. On the flip side, those who diligently attend meetings may be rewarded with more power, and appointed as “authorized officer” if the managing committee trips up. They will gain all the powers that administrators enjoy, for at least six months.

b)      Administrators will normally not be appointed if there is no govtmoney involved in the society. If there is a vacuum of power due to managing committee being unable to function, then active members will normally be appointed as “authorized officer” or “interim committee” by the Registrar. Only if there are no active members available to fulfill these responsibilities will an outside person be appointed as “authorized officer”

c)      Regular education & training for office bearers. Apex Co-operatives or State Federal Society will be required to conduct education and training in running of cooperative societies.  Managing Committee members and employees must compulsorily attend training at least once in five years. Each society is required to set aside funds to pay for such training.

d)      Co-op. The court will encourage Win-Win compromise, not Win-Losejustice. Cooperative court is mandated to seek settlement on terms that are acceptable to both the parties, through arbitration, conciliation, mediation etc.

e)      Deadlines must be strictly followed. Managing committees are required to now observe strict deadlines for completion of the statutory audit, submitting returns to the Registrar, holding the Annual General Meeting etc. Missed deadlines will have serious consequences such as disqualification of the managing committee, with no chances of being condoned. This may lead to better recordkeeping and management.

f)       Professionalism in management. Societies are mandated to adopt modern methods and technologies for management, record keeping, compliance with deadlines, statutory requirements etc. For this, they are encouraged to appoint professionals as “functional directors” and “expert directors”.

g)      Auditing is beefed-up. Statutory auditors will have to be appointed, and they are mandated to strictly ensure that accounting is proper.

h)      Filing First Information Report (FIR) will be filed in case of fraud, misappropriation etc. If manipulation of accounts is suspected, auditors and Registrar are mandated to register FIR with the police against the managing committee. In many wealthy societies, where office-bearers who have been skimming away handsome amounts and ordinary members have been struggling to expose them, a scalding hot cup of justice is about to be served!


a)      The 97th Amendment (which was NOT entirely struck down) has added a Directive Principle of State Policy to ensure “autonomous functioning” and “democratic control” of cooperative societies. So, it is sad and ironic that many provisions of the Amended MCS Act are diametrically opposed to autonomous functioning. They have the potential to vitiate the cooperative atmosphere and harm housing societies in the following ways:

b)      Curbing their autonomy and creating scope for constant interference by officials from State Cooperation Department, State Co-operative Election Authority etc.

c)      Giving scope for police interference and bribery, and making some managing committee members “aaropi” (accused persons) in criminal cases, which may drag on for years with “tareekh-pe-taareekh”.

d)      Declaring aged people, widows, NRIs etc. as non-active members for not attending meetings, depriving them of voting rights and ultimately expelling and evicting them from the flats. This is a grave violation of their fundamental rights. Although there is a provision for the general body to condone their absence, it is well-known that the general body often acts as a mindless mob, and can be vengeful to individuals who do not tow the line.

e)      Disqualifying managing committee members for petty procedural reasons. The many provisions for disqualifying the actual doers in societies will make them vulnerable to some vexatious and vindictive society members.

f)       Giving additional scope for disputes in co-operation department and lengthy court litigations arises from the increase in the number of statutory deadlines will cause

g)      Poisoning the atmosphere with divisiveness, caste-based quarrels and misuse of Atrocities Act, due to caste-based reservations mandated in every society. So far, nobody knows the cast of their neighbors, especially in cities like Mumbai. But now, caste-knowledge and caste-insults will be in everybody’s tongue.


  1. Thank you for a great information. Please correct the date of election to 30th Sep instead of 31 Sep.

  2. We are a 100+ members SRA society under development registered recently.I have following queries-
    1. Whether court stay lifted for 2013 new byelaws
    2.MC strength is 13. If No VJ/NT/SBC member is available whether seat should be kept vacant or can be filled by other caste member?
    3.Whether CEO,Expert dir, Functional director should be a original member ? Or others like nominal or associate members or outsider can hold above positions?
    4.Can we co-opt for 1 CEO, 2 expert dir, 2 functional dir. . ? In such case MC strength will be 13 + 5 (without voting rights)
    5.Similarly Grievance settelment commiittee members should be from original members or others will do


  3. 1. As per my Knowledge their is no stay lifted by Hon. Court. till now. Model Bye-Laws 2013 is also still not approve by Commissioner of Co-operation. M.S. Pune till now.
    2. If no VJ/NT/SBC/OBC etc then this seat will remain vacant.You can not fill this seat with other member.
    3. For Housing Society their is no CEO. Expert dir is their if you appoint some lawer or consultant for the year. Functional dir is their if you appoint Property Manager who look after you property day to day maintenance. EXpert & Functional director should be from outside.
    4. you can not increase strength from 13 to 18 . It should be 13 only.
    5. Grievance settelment committee member is as follow
    1 member is Present Chairman OR Secretary of MC.
    1 woman member who hold flat in her name [either his single name or in joint with other flat/shop should be their]
    1 member is expert director OR if expert director is not their then 1 flat owner suggest by GB.

  4. Dear Visariya,
    I am a member of the new committee. The old committee is going to handover the charge on 1st of November. Ours is a new society of just one year old. What all papers to be collected from the old committee. Will you please the detailed list of what to be collected from them.

  5. Old committee can not hand over the charge on November. Since you election is not conduct by State Co-operative election commission. All election due upto dec-13 from Feb-13 is conduct by Commission in Dec-13. Till that time old committee get extension

    1. So What should i convey to the secretary now. The present committee is a provisional committee formed last december. They decided to terminate their service and to form a new managing committee. Please give full details regarding this issue. THe committee called an AGM last month and adopted the 97th amendment. What should be my stand as a secretary in the new committee. Pls advise.

  6. You have to inform your Dy. Registrar of C.S. to conduct election for New MC. Since provisional MC is elect in Dec. they should continue till Dec. You should not take charge as new MC else you are in problem as you are not elect under supervision of Election Commission so you have to pay all the expense done for society as mc member from your pocket only.

    1. I informed the present committee regarding the election issue. What they say is that the new committee is formed by the general body and so there is no problem. I asked them to communicate with Dy. Registrar and do the needful before hand over the society. The existing committee is not giving a proper answer. Sir, will you please give the details regarding the order which i can printout and give to them. It would be highly appreciated If you could give an idea about the legal details and their web address of the same. I expect an urgent reply.

    2. As per Amendment in MCS Act 2013 all election is conduct by State Election [co-operation] Commission. This is done by in Dec-2013. You can down load the Act from following link. Pl ref. Pg. 16 point 15

      The Maharashtra Co-operative Societies Act (MCS Act) [Amendment 2013] :
      As published on 13.08.2013

      MCS Act : effective from 14.02.2013

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  8. From last 3 years no audit has been done for our society. Few months back society has appointed one auditor for the same. He is taking long time to delclare audit. Please guide us, what to do.

  9. For audit of 1 F.Y. It required normally 1 month if A/C writting is done properly. If A/C writting is not done then consider 1 month extra. So in your case for 3 years audit normally it required 3 months time considering A/C writting is done properly.

    While giving appointment letter to auditor you should mension the time fram / dadline for complating the audit. If you have not mension then you have to follow auditor every for progress of audit.

  10. Sir, the total numbers of members in our society is approx 294 flats according to this how many members can be taken as a committee member & should it has to be from each building or according to their willingness..

  11. 11 member as committee member according to their willingness

  12. 11 member as committee member according to their willingness

  13. Can co-opted member become office bearer for housing society ?

  14. What is the procedure to co opt a member for managing committee as per section 73 CB of amended act ?

    1. read link:-

  15. Sirji

    In our society we have donesome approvals in AGm for MC, like

    1- tenure is reduced to 2 years from 5 years
    - eventhough the size of society is 400 + flats in 9 buildings we have made provirion in AGM for 11 MC Members ( 1min. per building )

    - Asscoiate member has be share holder only or any relative is eligible to become Associate member?

    Thanks n regards

    1. This provision is against the Maharashtra Co-operative Act 1960 & Rule 1961 and as per 97th amendment. So this is null and void.
      Committee tenure should be 5 year
      for 301 to 500 members society MC strength should be 17 (12 for general , 2 for woman, 1 for SC/ST , OBC, VJ/NT/SBC each )

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  17. I am a member of Co-op Hsg Soc in Mumbai.

    Is it mandatory for all Society to adopt Maharashtra Co-operative Societies (Amendment) Act 2013 . If yes then what's the deadline for adopting the Act 2013.

    1. Yes. It is mandatory. Deadline was 6 month. But English version comes in 2014 so Dec-14 was last deadline

  18. Recently our managing committee completely forgot to hold the agbm before 30th sept
    after reminding them of their default on 28th sept they ran to the registrar office for pardon and willingness to pay fine of rs. 5000
    the undersigned wrote to registrar office pleading to invoke byelaw 93 and thereby disqualify the entire mc and also penalise all 19 comm members
    the registrar has still not responded to our pleas

    now the mc is confidentlay stating that they will not be disqualified but will get away by paying fine of rsl 5000
    the present mc was elected in the month of april2014
    the previous administrative committee handed over all documents to the new committee in june 2014

    the new mc is now claiming to registrar that they could not hold the agbm before deadline bcos the previous committee did not hand over the accounts to them till today and also the previous admn comm has not appointed an auditor for 2014-15

    will the above facts save the present mc from disqualification

    1. if registrar is not responding the file complaint against registrar in DDR (Dist. Dy. Registrar) office.

      Above fact will not save from disqualification

    2. as per your advice and guidance we filed a complaint with dy registrar citing bye law 93 and praying for disqualification of the managing committee.
      the hearing was fixed for 28th October and the managing committee members (19) requested for documents regarding my complaint and were given time to respond now on 9th November.
      the management committee has recently held a SGM on 14th October to appoint an auditor for auditing accounts for period 2013-14 and have also negotiated the fees @ Rs. 50/- per member against the legal minimum Rs. 75/- per member

      The MC is also prepared a draft reply from their lawyer stating they had not received accounts data before 2nd week of September and previous administrative committee had not appointed the auditor for 2013-14, hence they were unable to hold the AGBM before 30th September..

      Will this above explanation save them from disqualification?

      Is the appointment of auditor for 2013-14 correct when made in sgm dated 14th October?

      is it legal to negotiate the remuneration for audit @ Rs. 50/- per member?

      the office bearers in registrar office seem to be hand in glove with the MC who enjoys the support of the builder.... our conveyance is still pending and this MC has been planted by the builder for getting conveyance as per his terms.

      the MC has also passed a resolution in SGM to repair lifts ... 50% cost to be borne by the respective building flat owners? is it legal....

      please advise and looking forward to your valuable opinions with respective rules and regulations

    3. No this explanation not save them.
      They can hold AGM before 30th Sep. 2015 and appoint the auditor for 2013-14 and do other business as listed in bye-laws which required AGM approval.

      You have to appoint auditor for audit so appointment is correct.
      yes you can negotiate. Govt. has given maximum rate for audit fees not minimum rate

      For conveyance go for deem conveyance if builder is not co-operative.

      No if hand over of lift and conveyance is not given then cost should be bear by builder only.

    4. We did file an application for disqualufication of managing committee on 1st oct
      After proper hearing dyregistrar gave the mc clean chit on grounds that they didnot receive audit accounts data from previous mc
      Is this judgement correct for not holding agbm bfor 30th sept or should we file an appeal against this order and on what grounds

    5. Your guidance would be highly appreciated

  19. Can a nominee become associate member by filling in form given in Bye-laws with permission of Falt holder? Thereafter can this associate member become MC member? I understand the fee involved is rs. 100

    1. He/She can become associate member but can not become MC member

  20. what is exact procedure for appointment of new committee after completion of tenure of old committee ? members are below 60. is it ok to appoint new committee with majority votes of members at AGM and submit M-20 bond at registrar office?


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