Mumbai: Cooperative society rows can be disputed only before co-op court

Grant of membership to a cooperative society to any person can be challenged only by filing a dispute before the co-operative court under section 91 of the Maharashtra Cooperative Societies Act (MCS Act), 1960, the Bombay High Court (HC) held recently.

"The proceedings under section 79A are misconceived. As there can be no public interest direction under section 79A of MCS Act in contravention of section 23 of MCS Act, the writ petition is dismissed," the Aurangabad bench observed.

What is Societies Act?

Section 23 of the Act provides that a society shall not refuse membership to any qualified person without any sufficient cause. Section 79A provides that the state government can pass directions against the cooperative society in public interest.

The HC was hearing a petition filed by office holders of the respondent Parner Taluka Sahakari Bank Limited – a cooperative society under the Act – challenging membership of 1405 members. The plea claimed that the bank illegally inducted 1,405 members without following due procedure only for the purpose of the election as they are favourable to the elected body. The petitioners further claimed that they had filed several complaints before the commissioner for cooperation and the registrar of cooperative societies, Ahmednagar.

Enquiry report ordered

The commissioner called for an enquiry report from the district deputy registrar and assistant registrar of the cooperative societies. The latter submitted a report saying that 144 members did not sign the membership application or complete KYC formalities. Hence, the assistant registrar recommended action under section 79A of the Act against the bank.

The bank contended that the documentation of only 13 newly inducted members was not complete. Hence, the commissioner declared that membership of 1,392 members is legal.

The petitioners filed a revision petition before the minister of cooperation, textile and marketing department which was dismissed. Hence, they approached the HC.

The court said that the fact that all the membership applications were accepted in one day makes no difference as the applications were scrutinised and found to be valid by the commissioner. The court further held that merely because the assistant registrar reported that 144 members did not sign the membership form or did not comply with the KYC norms, is not sufficient to revert their membership.