Introduction

There are variety of co-operative societies and looking to the diversity of the activities of co-operative
movement, it is not possible to cover the requirements of all the types of cooperative societies in a
single legislation, i.e. Gujarat Cooperative Societies Act, 1961 and Rules thereunder. Therefore, there
is a provision for framing bye-laws under Rule of Gujarat Cooperative Societies Rules. 1965. There is
no provision for model bye-laws under the Act of Rules. However, Gujarat State Cooperative Union
and District Cooperative union are getting the bye-laws printed for the facility of the public. The
definition of bye-laws is given under Sec. 2(2) as under:

"Bye-laws means bye-laws registered under this Act and for. The time-being in force, and include
registered amendments of such bye-laws.

"Under Sec. 9, the bye-laws of the society are also registered along with the registration of the Society
if the bye-laws are not contrary to the Act and the Rules. The bye-laws, registered along with the
registration of the society are placed before the first Annual General Meeting under Rule 5. The first
Annual General Meeting is for approval of bye-laws under Rule 5. The Last Annual General Meeting
is convened under Sec. 114(3) after the liquidation proceeding and before the cancellation of
registration and, Annual General Meeting and Special General Meeting are convened under Sec. 77
and Sec. 78 of the Act, wherein bye-Laws can be proposed to be amended.

Subject-Matter by Bye-laws

The subject-matter of bye-laws is prescribed under Rule 5. which includes mainly the name and
address of the society, area of operation, objects, qualification of members and their rights, and
liabilities, restriction on borrowing, payment of Interest, provision for appropriation of profit,
constitution of managing committee etc. Under Rule 5, the list mentioned is only" illustrative and only
exhaustive and there may be other subjects also, which may be included in the bye-laws. The lists of
subjects, which are enumerated in Rule 5, are of course, illustrative but the language of Rule 5 is such.
that it is mandatory for the society to make bye-laws for the matters listed under Rule 5. Over and
above Rule 5. there are many provisions, which are touching the bye-laws in one way or the other. For
change of name, there is Sec. 15 read with Rule 8. which prescribed that there has to be an amendment
of bye-laws for ,change of name. Section 16 also requires amendment of bye-laws for change of
liability. Section 23 is attracted when there is a provision for declaration for becoming a member,
incorporated in the bye-laws. For exercise of the rights of a member, rights are restricted in terms of
Sec. 27, which also refers to bye-laws. Section 28(8) refers to the voting rights of individual members
of federal society, which may be regulated by the Rules and Bye-laws of the society and in particular,
the restrictions are there under Rule 15 and there may be other restrictions in the bye-laws. Rule 12
also refers for open membership, in which the person should be qualified as per the Act and the bye-
laws. For change address Rule 29 prescribes that the same can be changed by amendment of bye-laws.
Rule 32(1) (c) gives the scope for prescribing additional qualifications and disqualifications for the
members of the committee. Bye-laws prescribe the rights and duties of the members, officers of the
society as defined in Sec. 2(14) I restriction of borrowing, objects and nature of business of the society
procedure for election of officers of the society and many important aspects of functioning of the
society. Section 145-2 also refers to bye-laws for election of office-bearers in specified society under
Chapter XI-A.

The subject-matter of bye-laws are specified in Rule 5(2) and according to the same Rule, it is
mandatory for the society to make bye-laws for the subjects enumerated there in. It is not clear
whether this list is illustrative or exhaustive, but it appears from the construction of the Rule that the
list is only illustrative and not exhaustive list and therefore, there is a scope for making the byelaws for
the subjects. Which are not mentioned therein. Section 9 does not refer to the provision of Rule 5 to
restrict the scope of the bye-laws for the subjects mentioned in Rule 5 only and there may be other
subjects, which may be covered. However, it may be a disputed point whether the bye-laws framed by
the society and registered by the Registrar, if considered as sub-delegation of powers, wail necessarily
require the enabling provision in the mains statute. The subjects mentioned in Rule 5(2) are directly or
indirectly related to various sections mentioned herein under and the bye-laws are required to be in
consonance with the Act and Rules as per section 9.

Amendment of Bye-laws
Amendment of bye-laws is equally all important subject as the Bye-Laws itself and the powers are
vested with the General Body in General Meeting, since General Body is supreme under Sec. 73 and
(the co-operative society IS a body corporate under Sec. 39. As mentioned above, change of name,
change of address, change of objects etc. require amendment of bye-laws is given under Sec.13 read
with Rule 6, which requires the amendment of bye-Laws to be proposed in the Annual General Meeting
by a resolution by not less than 2I3rds of .the members present and voting. Such a resolution for
amendment by bye-laws is required to be forwarded to the Registrar Within a period of two months and
the Registrar can register the amendment under Sec. 13 and the amendment comes into effect only
when it is registered. Section 14 empowers the Registrar to impose an amendment of the bye-laws on a
society or a class of society for which the procedure is prescribed under Rule 7 and a notice is served to
the society in Form "C", whereupon the society is directed in convene a Special General Meeting for
consideration of the amendment. The interference of the Government for imposition of amendment on
a co-operative society, which is democratic in nature is diluted by the provision of prior approval of
State Co-operative Council. The imposition of the amendment of the bye-laws is also made subject to
giving the society an opportunity on being heard in case the society fails to make the amendment.

Whether amendment of bye-laws is prospective or retrospective. The date of effect of amendment is

clearly laid down in Sec. 13. which makes it clear that the amendment shall come into effect on the date
of registration. Therefore, one thing is clear that the general body in the general meeting passes a
resolution for the amendment, but the same is not effective from the date of the general body resolution
and subject to the approval of the Registrar and is effective from the date of its registration. There is a
tradition to make a foot-note when the amendment is approved that the same shall be put up before the
next annual general meeting. Therefore, a question arose whether the effect of the amendment will be
the date of approval by the Registrar or the date of taking note by next annual general meeting. The
language of the sec1ion is very clear that the same shall be effective from the date of registration by the
Registrar, and therefore, it is not necessary to give any importance to taking note by next annual
general meeting. The tradition is established only with a view to appraise the members about the
proposed amendment having been registered and taking note is only a formality to bring it to the notice
of annual general meeting and is not a legal requirement for effective date of amendment. This
controversy was resolved in the decision of the Gujarat State CO-operative Tribunal in 9-CTD-P-40 In
the case Keshavbhai Ranchhodbhai & . Anr. v. District Co-operative Purchase and Sale Association
Ltd. And 7 Ors., in Appeal No. 295 of 1969 decided on 18-3-1970. In a reported judgment of Hon'ble
Andhra Pradesh High Court in 9 COJ 209, the amendment of any law or bye-law will be only
prospective unless it is expressly or by necessary implication intended to be retrospective. However, in
that case, tile amendment, which was passed had the language of continuing the committee for three
years from the date of its construction, and therefore, it was held to be retrospective. Similar question
arose in ,case) of Ranuj Nagrik Sahakari Bank Ltd. in a reported decision of 1996(1) GLH 753, in
which bye-law No. 28 was amended for holding election every three years instead of 13rd retirement
every year by rotation. However, since the bye-laws were approved by the general meeting and by the
Registrar along with the foot-note that the present Board of Directors shall continue for three; years, the
effect of amendment was treated-as per the approval. However, the general principle remains that the
effect of the amendment will only be prospective and not retrospective.

Bye-laws are Public Documents

Section 33 gives right to member to inspect the bye-laws, However, Sec. 40 gives the right to inspect to
the public for the bye-laws, list of members etc. and therefore, bye-laws are public documents. This, is
also necessary for the outsider to deal with the society about having a limited liability or unlimited
liability and restriction on the borrowing and the powers of the various officers of the society.

Challenge of Bye-laws
The validity of bye-laws can be challenged and the validity of amendment can also be challenged under
Sec. 153 by preferring an appeal before the Registrar if order is made by the officer subordinate to
-Registrar, i.e., District Registrar and if the order is made by the Registrar, Addl. Registrar, Jt. Registrar,
then to the State Government. If the party is aggrieved by the order of the; appellate authority under
Sec. 153, revision application also lies under Sec. 155 before the State Government. The procedure
under Rule 6 are mandatory in nature and have to be followed Amendment of bye-law cannot be
proposed form the President's desk and it has to be in the agenda with due notice. Therefore. the bye-
lam can be challenged on tile procedural aspect described under Rule 6 for 2 amendment. The validity
of the bye-laws can also be challenged if the bye-laws are amended or registered with the approval of
the Registrar, who is a statutory authority and also a public authority. In my opinion, the bye-laws can
be challenged by raising dispute under Sec. 96, or by a writ petition before the Hon’ble High Court, in
addition to the remedy available under Sec. 153, since the bye-laws are in the nature of contact, the
disputes regarding validity of bye-laws essentially touches the business of the society and is a dispute
under Sec.96. Since the registration of the bye-laws under Sec., 9 and registration of amendment of
bye-laws under Sec. 13 imposed a duty upon Registrar that the same shall not be contrary to the Act
and the Rules, the same can be challenged even before Hon’ble Gujarat High Court ,by filing a petition.
In a judgment of Hon'ble Gujarat High Court reported In 1975 GLR 382. in the case of Ambalal
Manilal Makwana Khambhat Taluka Sahakari Kharid Vechan Sangh Ltd., Karia & Ors., it was held that
the bye-laws of a federal society in contravention to Rule 15 is ultra vires and granting of any sanction
by the Registrar to such if legal bye-laws cannot make it valid.

Whether Bye-laws have Statutory Force

The question came up for consideration before Hon'ble Gujarat High Court in the case of Lambha
Vividh Karyakari Seva Sahakari Mandli Ltd., Ahmedabad & Ors. v. District Registrar, Rural & Ors.,
reported in 1973 GLR 786. in which Hon'ble High Court has held by reading Sec. 28(9), 64 & 74 of
Bombay Co-operative Societies Act 1925 that the formation of managing committee and the voting
rights of the member to be regulated by the bye-law of the society, and therefore, bye-laws, which are
required to be registered and part of the status. It was further held in this judgment: -Therefore to the
extent that these bye-laws are in terms referred and cited in any provisions of the Act, they are re-
written in the Section and the Section could not be read without the language of the bye-laws: being re-
written therein. Therefore, it was held by Hon’ble Court that the bye-laws have statutory force and be
enforced by writ petition under arts. 226 and 227. This decision was also followed in the judgment
reported in 1975 GLR 1058, wherein the rejection of nominations was held to be illegal by Hon'ble
High Court by enforcing the bye-laws under writ Jurisdiction. However, the above view of the
judgment reported in 1973 GLR 786 was dissented in the case of Rajabhai Ranmal Meri & Ors. v.
Members of the Managing Committee of Shri Puna Taluka Sahakari Khan'd Vechan Sangh Ltd. & Ors.,
reported in 1976 GLR 583. Hon’ble High Court in this judgment held that the bye-laws made by co-
operative societies have their origin in contract and such bye-laws could not be enforced by a writ
under Art. 22G or Art. 227. It was held that they do not have the force of a statute and law like Article;
of Association of a Company, they constitute a contract between the parties. Therefore, such bye-laws
of a co-operative society could not be enforced by a writ of the High Court under Art. 226 or Art. 227
of the Constitution. In this judgment in para 4, an extract from reported judgment of AIR 1970 SC 245
is incorporated and the relevant portion is reproduced herein below:

" we are unable to accept the submission that the bye – laws of co-operative society framed in
pursuance of the provision of the Act can be held to be law or to have the force of law. It has no doubt
been held that if a statute gives power to a Government or other authority to make rules, the rules so
framed have the force of statute and are to be deemed to be incorporated as a part of the statute. That
principle, however, does not apply to bye-laws of the nature that a co-operative society is empowered
by the Act to make the bye-laws that are contemplated by the Act can be merely those which govern the
internal management, business or administration of a society. They may be binding between the
persons affected by them, but they do not have the force of a statute."

In the same judgment, para 7 refers a Division Bench judgment of Hon'ble Gujarat High Court tin
S.C.A. NO.1005 of 1965 and 1531 of 1965 decided on April 24-25, 1972 in the case of The Gujarat
State Co-operative Bank Ltd. v. Ahmedabad District Bank's State Union & Ors. In AIR 1984 SC 192,
para 15, it was held that “they are neither statutory in character nor they have statutory flavour so as to
be raised to the status of law." The importance by bye-laws diluted by the above decisions was raised to
its right level in case of Rajkot Nagrik Sahakari Bank Ltd. reported in 1977 GLR 692. In this judgment,
it was held that High Court has powers to issue writ of certiorari under Art. 227 and not a writ of
mandamus under Art. 226 enforce a bye-law. It was held that the erroneous Legal proposition, which is.
the basis of its decision by misreading the bye-laws can be interfered by a write of certiorari under Art.
227. The same view is again taken in Ranuj Nagrik Sahakari Bank Ltd. by Hon'ble Gujarat High Court
In decision reported in 1996(1) GHL 753. Therefore, the bye-laws when they are registered can’t be
misread while taking a decision. The erroneous decision of the Registrar or the Nominee based on
misreading of bye-law is an error of law and can be interfered with by Hon'ble High Court by a writ of
certiorari under Art. 227."

Voting Rights of a Member

As against the company law, the co-operative law provides for a single vote for a member irrespective
of his share holding. However, the important question, which is often raised is that whether the voting
rights of member can be restricted by the provisions of the bye-laws. In case of credit co-operative
societies or the Urban Co-operative Banks, we often find that bye-laws which restricts voting rights of
defaulter members and they are not allowed to exercise the voting rights, for which a provision is made
in the bye-law. Question is whether such bye-law is consistent with provisions of the Co-operative Act,
in particular Gujarat Act, Sec. 28. In Rule 5(e), the rights and liabilities of the members in consequence
of default can be prescribed by bye-laws. Section 27 also provides for restrictions in case of default in
payment of dues. Therefore, it was held by Gujarat State Co-operative Tribunal in Appeal No.10 of
1973 and recently in Revision Application No.136 of 1996 decided on 4-12-1996, that such bye-laws
restricting voting' rights are valid and not inconsistent with Sec. 28. In case of primary milk co-
operation societies, which are collecting milk from the members and supplying the same to the co-
operative union at District level, like Amul and others, the question is also relevant when large number
of members do not provide the milk to the primary milk. co-operative societies and still continue to be
a member and still insist upon exercise of voting rights. Model byelaws are, therefore, framed and
adopted to restrict the voting rights of members, who do not supply the milk to the society in the
prescribed quantity and prescribed number of days per annum. If this is not done, the members who are
actively associated in the activity of the society, will go in the hands of management of the members,
who are not associated with the activity of the society, therefore, such bye-laws providing for
restriction on the voting rights are desirable also depending upon the objects of the society.

Right to contest election of the committee member

The Co-operative Act, in particular. Rule 32 provides for qualifications and disqualifications of the
members of the Managing Committee for contesting the election as well as for continuing as members
of the committee. This Rule 32, the title mentions about qualifications, but the Rule really describes
disqualifications. One of the provision IS Rule 32(1)(c) which reads as follows: "if he is not otherwise
disqualified for appointed as such as follows : This has been interpreted to leave the scope for provision
of additional qualifications and disqualifications by the bye-laws of the society, in Revision application
No. 26 of 1993 and is consistently followed by the Gujarat, State Co-op. Tribunal.

Conclusion
Bye-laws of the society are very much important to differentiate the class of the societies, objects of the
societies, areas of operation and the rights and liabilities of the members interse In fact, bye-laws are
the recognition of the society or the identify of the society and give the directions and guidelines, which
the society is heading towards. Individual identity of the society, is much in bye-laws than the Co-
operative Societies Act and Rules, which are general in nature and are prescribed irrespective of the
type of the society. The real form of the society is reflected from the byelaws only. Bye-Laws are in the
nature of contracts interse members and like Articles of Association of the company for the governing
principles of management within and outside the society. Bye-laws generally cover the spirit of the Co-
op. Act and Rules and are supposed to be consistent in the Co-op. Act and rules and will be invalid for
any inconsistency to the extent of inconsistency. 2002-(1) GLR – 241 – GTSCB v/s state. The RCS has
to consider overall interests of the coop. Movement. Rejection to the proposed a amendment was based
on solid and proper around.