SO

C.
SC MODULE 5

(Weeks 12-14)

LIBACA
O
COLLEG
INTRODUCTION

For the learner:

Welcome to the SOC. SCI. 312 – Fundamentals of Cooperative Module 5 on Settlement

of Disputes, Winding Up and Dissolution of Cooperative Societies, and Execution of Decrees
and Awards. This module was designed to help you get familiar with the lesson and how
beneficial these topics can be. Different activities are presented for you to enjoy while learning
as you are also expected to improve and widen up your knowledge about these topics.

Kindly consider the following in using this module:

1. Use it with care. Do not put unnecessary mark/s on any part of this module.
2. Read the instruction carefully before answering or doing the task.
3. Observe honesty and integrity in doing the exercises and activities.
4. Return this module to your instructor once you are through on or before the deadline.

If you have any clarification on the given tasks in this module, kindly contact your
instructor. We learn as one.

We hope that through this module, you will be able to identify and understand what
Cooperation is all about.

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CONTENT

Appeal, Revision and Review

Right to appeal by a citizen is integral to ensuring fair justice and without this right, the
probability of miscarriage of justice is very high. The Constitution of India upholds this right of
citizen and it follows that every law enacted under the Constitution, co-operative law included,
recognize this right. Appeal involves the right of a citizen to approach a higher court/authority
against the decision of a lower court/authority. Substantive matter of law or fact is involved in
appeal. Revision on the other hand involve only questioning the procedure followed by the
lower court/authority. Exceeding of jurisdiction or failure to exercise its jurisdiction by the lower
court/authority could also be considered in a revision petition. The same court/authority may
review its own decision under special circumstances. A typical law on co-operatives provide for
all the three remedies mentioned above. Considering the nature of orders made by the
authorities i.e. quasi-judicial and purely administrative, the law provides for appeal to different
authorities; appeal against quasi-judicial orders to the tribunal and to Registrar/Government in
respect of orders that are only administrative in nature.

Constitution of Tribunal

The Government shall constitute a single member Tribunal to exercise the powers and
discharge the functions conferred on the Tribunal under the Act. The Tribunal shall be headed
by a District Judge and the term, salary and allowance and other conditions of service shall be
such as may be decided by Government from time to time. The Government shall make rules
for regulating the procedure for the disposal of the business of the Tribunal.

Appeals to Tribunal

(1) Any person aggrieved by the order or award of the Cooperative Arbitration Court or
the Registrar or the Empowered Officer or the Arbitrator in respect of settlement of disputes
under the Act, may, within sixty days from the date of such decision or award, as the case may
be, appeal to the Tribunal and the Tribunal, may pass such order on the appeal as it may deem
fit. The Tribunal shall decide the appeal within 6 months and arrange to communicate its order
to the parties within 15 days from the date of its order.

(2) The order made by the Tribunal shall be final

Revision by Tribunal

The Tribunal may call for and examine the record of any proceedings in which an appeal
lies to it for the purpose of satisfying itself as to the legality or propriety of any decision or order
passed and if in any case it shall appear to the Tribunal that any such decision or order should
be modified, annulled or revised, the Tribunal may pass such order thereon as it may deem fit;

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Provided that the Tribunal shall not take any action if;

(a) The time for appeal against the decision or order has not expired; or

(b) The decision or order has been made the subject matter of an appeal; Provided further that
no order shall be made unless notice has been given to all interested parties and they have
been given a reasonable opportunity of being heard.

Review of Order by Tribunal

(1) The Tribunal may, either on the application of the Registrar or on the application of
any party, review its own order in any case and pass in reference thereto such order as
it thinks fit;

 Provided that no such application shall be entertained unless the tribunal is satisfied that
there has been a discovery of new and important matter or evidence which after the
exercise of due diligence was not within the knowledge of the applicant or could not be
produced by him at the time when its order was made or that there has been some
mistake or error apparent on the face of the record or that there is any other sufficient
reason for reviewing its order;

 Provided further that no such order shall be made unless notice has been given to all
interested parties and they have been given a reasonable opportunity of being heard.

(2) An application for review at (1) by any party shall be made within ninety days from
the date of communication of the order of the Tribunal.

Interlocutory Order by Tribunal

Where an appeal is made to the Tribunal or where the Tribunal calls for the record of a
case for revision, it may, in order to prevent the ends of justice being defeated, make such
Interlocutory orders pending the decision of the appeal or revision as it may deem fit.

Appeals to Other Authority

(1) An appeal shall lie to Other Authorities against the following orders:

(a) an order of the Registrar refusing to register a society, or

(b) an order of the Registrar refusing to register an amendment of the bye-laws of a society,
(c) a decision of a society refusing to admit any person as a member of the society or expelling
any member of the society, or
(d) an order of the Registrar apportioning the cost of inquiry or inspection, or
(e) an order of Registrar imposing surcharge, or
(f) an order of Registrar winding up the affairs of a society, or

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(g) an order of the liquidator made while exercising his powers in connection with winding up
the affairs of a society, or
(h) an order of the Registrar or the Sale Officer made while executing a decree, or
(i) an order of Registrar attaching any property before the final award/order, or
(j) any order made by any person exercising all or any of the powers of the Registrar.
(2) An appeal under (1) above, shall be made within sixty days from the date of the order
or decision-
(a) If the order or decision was made by the Registrar, to the Government; and
(b) In other cases to the Registrar. The Government, or the Registrar, as the case may be,
pass such order on the appeal as they or he deem fit.
Power of Revision of Registrar and Government

(1) The Registrar of his own motion or on application call for and examine the records of any
officer subordinate to him not being an officer exercising the powers of the Registrar. Mutatis
mutendis, the Government have powers in respect of orders made either by the Registrar or by
an officer exercising the powers of the Registrar.
(2) No order prejudicial to any person shall be passed by the two authorities, unless such
person has been given an opportunity of making his representation.
(3) The two authorities may suspend the execution of any decision or order pending the
exercise of their powers stated at (1) above.
(4) The two authorities may award cost in proceedings relating to revision before them paid
either out of the funds of the society or by such party to the application for revision, as they
deem fit.
(5) The two authorities may modify or reverse or cancel the decision of the lower authorities or
remit the file to the lower authorities with their observations.

SUPERSESSION OF COMMITTEE

Management of a co-operative society is vested with the elected committee, adhering to

the broad framework laid down by the Act, the Rules and the Bye-laws. In case of any
deviation, the Registrar using his powers issue warnings by giving general or specific directions
to the committee and ensure that his directions are complied with. When committee willfully or
otherwise breach the normal regulatory framework, the law empowers the Registrar to
supersede the committee and to appoint an administrator or an administrative committee
temporarily in its place. The particular circumstances that warrant such drastic action by the
Registrar, the procedure he need to follow, the alternative arrangement to be made and the
powers and responsibilities of the administrator/administrative committee are discussed in
detail in the following paragraphs.

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Circumstances of Supersession of Committee

Apart from provisions empowering the Registrar to supersede the committee as

explained above, some State Laws also require the Registrar to act either suo moto or on the
application of any member in cases involving constitutional breakdown in a society. Such
circumstances include;

(a) Where the term of office of a committee has expired and a new committee has not been
constituted, or
(b) where there is stalemate in the constitution or functions of the committee, or
(c)where a no-confidence motion is passed by the general body against the existing
committee, or
(d) where the existing committee resigns en block, or
However, the Committees of co-operative societies covered under the BR Act1949 can
be superseded even if the society is a non-assisted one and the period of supersession in such
cases is subject to a maximum of one year.

Circumstances Warranting Intervention by Registrar

Apart from provisions empowering the Registrar to supersede the committee as

explained above, some State Laws also require the Registrar to act either suo moto or on the
application of any member in cases involving constitutional breakdown in a society. Such
circumstances include;

(a) Where the term of office of a committee has expired and a new committee has not been
constituted, or
(b) where there is stalemate in the constitution or functions of the committee, or
(c) where a no-confidence motion is passed by the general body against the existing
committee, or
(d) where the existing committee resigns en block, or
(e) where vacancies occur in the committee either by resignation or otherwise and the number
of remaining members cannot constitute the quorum for the meeting of the committee, or
(f) where the committee fails to hold its regular meeting consecutively for six months, or
(g) where the Registrar is satisfied that a new committee cannot be constituted before the
expiry of the term of office of the existing committee or that a new committee is prevented from
entering upon office or a new committee fails to enter upon office, on the date on which the
term of office of the existing committee expires.
In the above circumstances, the Registrar appoint either an administrative committee or
an administrator initially for a period up to six months which period may be further extended by
another six months. In cases requiring extension of the period of the administrative committee/
administrator beyond one year,

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the law requires the Registrar to obtain the sanction from the State Government. Before
making his appointment, the Registrar is required to publish on the notice board of the head
office of the society inviting objections to the making of the order within a period specified in the
notice and consider such objections. However, it shall not be necessary to publish such notice
in cases where the Registrar is satisfied that it is not reasonably practicable to do so.

Power of Administrative Committee/Administrator:

Administrative committee or Administrator, whether appointed following the

supersession of the elected committee or appointed to plug any constitutional vacuum shall,
have power to exercise all or any of the powers and functions of the committee or of any officer
of the society and take all such action as may be required in the interest of the society.

Administrative committee or Administrator shall arrange for the constitution of a new

committee or for the entering upon office of the new committee as the case may be, before
their/his term expire.

Inquiry Inspection and Surcharge

While co-operatives are statutorily subject to annual audit, the law provide for other tools
like inquiry, inspection etc to supplement and complement audit. In fact, audit by itself is
insufficient to unearth grave irregularities, if any, in a co-operative society, as audit involves
mostly test checking. Inquiry or inspection, on the other hand, enable probing deep into
particular aspect/s of the working of a co-operative society, which an auditor cannot generally
do due to time constraint. However, unlike audit, which is a regular annual event, inquiry or
inspections are tools used only occasionally as and when the need for their use arises.

Inquiry by Registrar of Cooperative Societies

The Registrar may institute an inquiry in following condition:

(a) on his own motion; or

(b) on an inquiry report of the Vigilance Officer or
(c) on a report of the Director of Co-operative Audit; or
(d) on an application by the majority of the members of the committee of the society, or by not
less than 1/3rd of the members or the number required to constitute quorum of the General
Body meeting, which ever is less; or
(e) on an application by the apex society or financing bank of which such society is a member;
or
(f) on an application of the society to which the society concerned is affiliated; hold an enquiry
by himself or by a person authorized by order in writing in this regard by him, into the
constitution, working and financial condition of the society, if he is satisfied that it is necessary
to do so.

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The Registrar or the person authorized by him for the purpose of an inquiry shall have
the following powers, namely:

(a) he shall, at all reasonable times, have free access to the books, accounts, documents,
securities, cash and other properties belonging to, or in the custody of the society and may
summon any person in possession of or responsible for the custody of any such books,
accounts, documents, securities, cash or other properties, to produce the same at any place at
the headquarters of the society or any branch thereof or where there is no working office of the
society, at the office of the Registrar or at the office of any of his subordinate officers;
(b) He may summon any person who, he has reason to believe, has knowledge of any of the
affairs of the society, to appear before him at any place at the headquarters of the society or
any branch thereof and may examine such person on oath; and
(c) he may, notwithstanding any rule or bye law specifying the period of notice for a general
body meeting of the society, himself call a general body meeting or require the president or
secretary of the society to call a general body meeting at such time and place at the
headquarters of the society or any branch thereof, to determine such matters as may be
directed by him;
When an inquiry is made under this section, the Registrar may communicate the result
of the inquiry to the financing bank, if any, to which the society is affiliated and the circle co-
operative union.

When an inquiry made under this section reveals only minor defect, which in the opinion
of the Registrar, can be remedied by the society, he shall communicate the result of the inquiry
to the society and the society, if any, to which that society is affiliated. He shall also direct the
society or its officers to take such action within the time specified therein to rectify the defects
disclose in such inquiry.

The inquiry shall be completed within a period of six months or such further period as
may be permitted by the Registrar, which in any case shall not exceed one year.

If the Registrar, on completion of the inquiry finds that there is a major defect in the
constitution or working or financial condition of the society, he may initiate action to supersede
the committee.

Supervision and Inspection

Generally, the law provide for three kinds of inspection-inspection as part of routine
supervision, inspection on a specific order of the Registrar and inspection by the apex
society/federal society/the financing bank.

(1)(a) The Registrar shall supervise or cause to be supervised by a person authorized by him
by general or special order in writing in this behalf, the working of every society as frequently
as he may consider necessary.
(1) (b) The supervision under clause (1)(a) may include an inspection of the books of the
society.
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(2) The Registrar may, of his own motion, or on the application of a creditor of a society,
inspect or direct by person authorized by him by order in writing in this behalf to inspect the
books of the society.
Provided that no such inspection shall be made on the application of a creditor unless
the applicant-

(a) Satisfies the Registrar that the debt is a sum then due and that he has demanded payment
thereof and has not received satisfaction within a reasonable time and
(b) Deposits with the Registrar such sum as security for the costs of the proposed inspection
as the Registrar may require.
Where the inspection is made on the application of the creditor, the Registrar shall
communicate the result of such inspection to such creditor.

The Registrar or any person authorized by the Registrar under either at (1) or (2) above,
shall at all reasonable times have free access to the cash, securities, properties, books,
records, documents and accounts of the society and may summon any person in possession of
or responsible for the custody of any such cash, securities, properties, books, records,
documents and accounts, to produce the same for inspection at any place at the headquarters
of the society or any branch thereof. It shall be the duty of every officer and employee of the
society to assist in such supervision or inspection and to furnish any information that may be
required for the purpose. Any officer or employee who fails to co-operate in this regard is
construed to have committed an offence under this Act.

The Registrar or the person authorized by him under either at (1) or (2) above, may, by
order in writing, direct the society or its officers to take such action as may be specified in such
order within the time that may be mentioned in such order.

The Circle Co-operative Union shall have the power to direct that a non-official member
thereof shall be present at an inspection

Apex society or Federal Co-operative Society or a financing bank shall have the right to
inspect the books of any registered society which is affiliated to it, through its officers.

An officer of an Apex society or Federal Co-operative society or a Financing bank,

inspecting the books of a society shall at all reasonable times have the access to the books,
accounts, documents, securities, cash and other properties belonging to the society and may
call for such information, statements and returns as may be necessary to ascertain the
financial condition of the society and the safety of the sums lent to it.

An officer referred to above, shall also have power to summon any person in possession
or responsible for the custody of any books, accounts, documents, securities, cash and other
properties to produce the same for inspection or verification at any place at the head quarters
of the society or any branch thereof.

Apex society or Federal Co-operative Society or the financing bank may also report to
the Registrar about the action to be taken against the society as a result of the inspection by its
officers.
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Power of Registrar of Cooperative Societies to Give Direction

Subject to the provisions contained in the Act and the rules made there under the
Registrar may issue general directions and guidelines to the co-operative societies in
furtherance of the purpose of this act or for implementing any public policies for the benefit of
members or of the general public.

Suspension of Officer

If the Registrar, in the course of any enquiry or on inspection or on audit or on the report
of Vigilance Officer, is satisfied that any officer other than the President, Vice president,
Chairman, Vice Chairman and member of the committee of any society or its members and
that there is reason to believe that such officer has indulged in misappropriation, manipulation
of accounts, forgery, destruction or tampering of records of the society, he may, for reasons to
be recorded in writing issue a direction to the committee of the said society to suspend the
officer or officers responsible for the offence forth with.

Reports and Statements to be filled before Registrar

The reports/ information required to be submitted by every society to the Registrar

annually, within six months from the date of close of the financial year include the
following,

(a) comprehensive annual report of its activities

(b) its audited statements of accounts ;
(c) plan for surplus disposal as approved by the general body of the co-operative society ;
(d) list of amendments to the bye-laws of the co-operative society, if any ;
(e) declaration regarding date of holding of its general body meeting and conduct of elections
when due ; and
(f) any other information required by the Registrar in pursuance of any of the provisions of this
Act or the Rules.
Cost of Inquiry or Inspection

Where an inquiry or an inspection is held on the application of a creditor, the Registrar

may, by order, apportion the cost, or such portion of the cost, as he may deem fit between the
society to which the society concerned is affiliated, the society, the member or creditor
demanding an enquiry or inspection, and the officers or former officers of the society:

Provided that no order of apportionment of the cost shall be made under this section unless the
society or the person sought to be made liable to pay the costs there under has had a
reasonable opportunity of being heard and the Registrar has stated in writing the grounds on
which the costs are apportioned by him.

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Surcharge

(1) If in the course of an audit, inquiry, inspection , or the winding up of the society , it is found
that any person, who is or was entrusted with the organisation or management of such society
or who is or has at time been an officer or an employee of the society , has made any payment
contrary to the Act and the rules or the bye-laws, or has caused any loss or damage in the
assets of the society by breach of trust or willful negligence or mismanagement or has
misappropriated or fraudulently retained any money or other property belonging to such society
or has destroyed or caused the destruction of the records, the Registrar may, of his own
motion or on the application of the committee, liquidator or any creditor, inquire himself or
direct any person authorised by him by an order in writing in this behalf, to inquire into the
conduct of such person.

(2) Where an inquiry is made under (1) above, the Registrar may , after giving the person
concerned an opportunity of being heard, by order in writing, require him to repay ore restore
the money or other property or any part thereof , with interest at such rate, or to pay
contribution and costs or compensation to such extent, as the Registrar may consider just and
equitable.

(3) Where the money, property, interest, cost or compensation is not repaid or restored as per
(2) above, the Registrar shall take urgent steps to recover such amounts from the concerned
persons as arrears of public revenue due on land as specified in relevant section of the Act.”

Procedure for Conduct of Inquiry and Inspection

(1) An order, authorising inquiry or inspection shall among other things contain the
following:
(a) the name of the society whose affairs are to be inquired into or whose books of accounts
are to be inspected:
(c) in specific point or points on which the inquiry or inspection is to be completed and report
submitted to the Registrar;
(d) costs of inquiry or inspection;
(e) any other matter relating or pertaining to the inquiry or inspection.
(2) A copy of every order authorising inquiry or inspection shall be issued to the
President or the Secretary of the society concerned by registered post with
acknowledgement due. A copy of the order shall also be made available to the central
society or societies, to which the society in respect of which the order is issued, is
affiliated;

(3) If the inquiry or inspection cannot be completed within the time specified in the order
referred to in (1) ( c) above, the person conducting the inquiry or inspection shall submit
an interim report stating the reasons for failure to complete the inquiry or inspection,

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and the Registrar, if he is satisfied, may grant such extension if time as he may deem
necessary or he may withdraw the inquiry or inspection from the officer to whom it is
entrusted and hold the inquiry or inspection himself or entrust to such other person as
he deems it.

(4) On receipt of the orders referred to at (1) above, the person authorised to conduct
the inquiry or inspection shall proceed to examine the relevant books of accounts and
other documents in the possession of the society or any of its officers, members,
agents or servants and obtain such information or explanation from any such officers,
members, agents or servants of the society in regard to the transaction and working of
the society as he deems necessary for the conduct of such inquiry or inspection.

(5) The person authorised to conduct the inquiry or inspection shall submit his report to
the Registrar on all points mentioned in the order referred to (at (1-c) above. The report
shall invariably contain a latest balance sheet of the society and the last known
addresses of the members of the Committee and of the Secretary. The report shall also
contain his findings and the reason therefore; supported by such documentary or other
evidence as recorded by him during the course of the inquiry or inspection. He shall
also specify in his report the costs of the inquiry or inspection together with reasons
and recommend to the Registrar the manner in which the entire cost or a part thereof
may be apportioned amongst the parties. The Registrar shall pass such orders thereon
as may be considered just after giving a reasonable opportunity of being heard to the
society, person or persons concerned.

Vigilance Officer

Some laws have created a separate office in the form of Vigilance Officer to investigate
into cases of grave irregularities that may arise in co-operative societies. The provisions under
the Kerala Co-operative Societies Act 1969 on the subject are reproduced below for guidance.
Three salient points to be noted in these provisions are; the Officer is from Police Department,
he shall work under the Registrar and he shall not act suo moto and take investigation of only
those cases referred to him by the Registrar.

The Government shall appoint an officer, not below the rank of Deputy Inspector
General of Police, as Vigilance Officer with powers to enquire into and investigate the cases of
misappropriation, corruption and any other major irregularities in the society as may be referred
to him by the Registrar.

The vigilance officer shall conduct the inquiry and investigation in such manner, as may
be prescribed.

The Vigilance Officer shall be under the administrative control of the Registrar of Co-
operative Societies provided that the powers of the Registrar under this section shall not be
conferred on any other person.

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EXERCISES

A. Essay.
1. Sometimes there are rules that are already good but to change them will take time
because of the steps to follow in order for these revised, changed or new rules to
take effect. What do you think is the reason why rules have to somehow change?
2. How will you act if you saw a suspicious member doing things against the rules?

SELF-ASSESSMENT

1. What have you learned from this module?

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2. What do you like about this lesson?

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3. What area do you need to learn more?

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REFERENCE/S

Cooperative Management App.

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