ASSOCIATE MEMBER OF A SOCIETY
ASSOCIATE MEMBER OF A SOCIETY
The definition of ‘Associate Member’ in a
co-operative housing society in Maharashtra has undergone change in the recent
2014 Model by-laws (“New By-laws”) published by the Commissioner for
Co-operation and Registrar, Co-operative Societies (“Registrar”). An
associate member is defined to mean “a member who holds the right, title and
interest in the property individually or jointly with other but whose name does
not stand first in share certificate”.
However section 2
(19) (b) of The Maharashtra Co-operative Societies Act, 1960 (‘the Act’)
defines associate member to mean “a member who holds jointly a share of a
society with others but whose name does not stand first in the share
certificate”. The definition of associate member in Model By-laws published by
the Registrar in the year 1984, 2001 and 2009 (‘Old By-laws’) is
identical to the Act. Section 26 of the Act is now amended to provide that no
member shall exercise rights until he has made payment for membership or
acquired such interest in the society as may be prescribed or specified in the
by-laws of the society. The Maharashtra State Co-operation Election Authority
(“SCEA”) which is constituted under the provisions of the Maharastra
Co-operative Societies (Election to Committee) Rules 2014 (“Election Rules”)
in a letter, a copy of which was published in Maharashtra Societies Welfare
Association’s Review magazine – July, 2015 interpreted section 2 (19) (b) of
the Act and clarified that “associate member” must hold share jointly with a
primary member whose name appears in the first place in the share certificate
of the society.
Rights of
Associate Member: The Act provides that an associate member
may subject to the provisions of section 27 (8) have such privileges and rights
and be subject to such liabilities of a member as may be specified in the Act,
Maharashtra Co-operative Societies Rules, 1961 (“Rules”) and By-laws
adopted by Co-operative Society. As per rule 20 of the Rules an associate
member is required to submit a declaration in writing that the person whose
name stands first in the share certificate shall have the right to vote and all
the liabilities will be borne jointly and severally by them as provided in the
Act, Rules and by-laws of the society.
Prior to 1969 an
associate member was neither eligible to vote nor stand for election to be
appointed as a member of the managing committee of the society.
In the year 1969,
section 27 (8) of the Act was amended which enabled an associate member to have
a right to vote at any general body meeting of society. Rule 20 of the Election
Rules provides that in case of associate member, the member whose name stands
first in the share certificate shall be eligible to be nominated as candidate
for election. In the absence of first member, such person whose name stands
second as associate member shall be eligible to be nominated as candidate for
the election. A news report appearing in the daily The Times of India published
on February 2, 2015 quoted Shrikrushna Wadekar, Assistant State Co-operative
Election Commissioner having clarified that “With consent of the original
owner (whose name is first in the share certificate), an associate member can
participate in elections and join the managing committee, provided his name is
on the share certificate”.
Since the
amendment to the Rules, enactment of the Election Rules and clarification
issued by SCEA, an associate member is now eligible to stand for election and
become a member of a committee of a society provided the original member has
submitted a no objection certificate and undertaking stating that he does not
wish to participate in the general body meeting or election process and
surrenders all his voting rights in favour of the associate member and authorises
the associate member to contest elections and become a member of the committee
of the society. In respect of housing societies which have adopted New By-laws
the prescribed form is Form 10A under New By-law No. 116(d).
Further the
Registrar has issued and published Housing Manual as a guide giving information
regarding adopting procedure for solving the complaints of members of the
society and thereby assists committee in taking decisions based on what is
given in the Housing Manual. The Housing Manual published by the Registrar has
given the following information with respect to rights of the Associate
Members:
“Since more
than one person made payment of the cost price in the purchase deed of flat in
co-operative housing society, they get ownership rights….. A person, who became
an Associate member by paying only admission fee, shall not get any right to
vote or stand for election on behalf of the original member. It is necessary
for the Associate member that his share/name is included in the ownership of
property for holding share jointly…”
Many housing
societies currently are still governed by Old By-laws and have admitted
associate member/s upon submission of the prescribed form, accepting an
entrance fee for associate membership of Rs.100/- and having added the name of
such associate member in the share certificate despite such associate member
not holding any right, title and interest in the property individually or
jointly with other. This practise will no longer be valid in view of the
clarification and interpretation of section 2 (19) (b) of the Act issued by
SCEA, amended section 26 and the changed definition of associate member
in New By-laws.
Currently there
are divergent views with regard to the eligibility conditions of an associate
member in housing societies governed by Old By-laws. One view is that an
associate member who is not a joint or co-owner ceases to be associate member
irrespective of the fact which By-laws the Society is being governed and the
committee shall take action towards cessation of such membership.
The counter view is that un-adopted model by-laws are not binding upon
societies and its members. The Definition in the Act having not undergone any
change, New By-laws cannot override the provisions of the Act and the Rules and
in any event cannot have any retrospective effect and rights already conferred
cannot now be abrogated. It is settled position in law that un-adopted By-laws
are not binding and that by-laws have to be in conformity of the Act and the
Rules. In the opinion of the author counter view may not be sustainable.
However pursuant
to the changed definition in New By-laws and clarification issued by SCEA, it
is now abundantly clear that only those individuals who have acquired an
interest, share or right in the property under a duly stamped and registered
document (agreement for purchase or gift deed or release deed or relinquishment
deed or sale deed) is eligible to be an associate member. This is a welcome
move and in conformity with other laws governing acquisition of immovable
property namely the Transfer of Property Act, Maharashtra Stamp Act and Indian
Registration Act.
It would be
interesting to see how this concept is further developed by the statutory
authorities since it is settled position that the Model By-laws have no binding
effect unless it is adopted by society and registered with the Registrar. The
best way forward would be for the Registrar to issue direction to societies
pursuant to the powers vested in him under section 14 of the Act read with rule
8 of the Rules. In the absence of such directions societies may either adopt
New By-laws or amend the definition of an associate member in its by-laws in
conformity to the interpretation of section 2 (19 (b) issued by SCEA and
amended section 26 of the Act.
Comments
Post a Comment