Introduction: 

Maharashtra Cooperative Society Act, 1960 was enacted on 26th January 1962 by Maharashtra Legislative. It is also known as the MCS Act, 1960. It was established in compliance with Article 43B of the Directive Principles of State Policy in the Constitution of India. This legislation is specific to the state of Maharashtra and aims to consolidate and regulate the laws governing co-operative societies in the region. It provides an inclusive and easy registration system, membership perks and includes the privileges and duties offered all over Maharashtra. The Maharashtra Cooperative Act aims to provide a fair system and solutions in Maharashtra for cooperative societies. 

Nominal and associate member: 

As per the stipulations outlined in section 2(19)(a), a member is defined as an individual who participates in an application for the registration of a cooperative society, which is subsequently approved and registered. Additionally, a member can also refer to an individual who has been officially accepted as a member of a society after its registration. This definition encompasses nominal or associate members, as well as individuals who deposit funds or utilize financial services provided by a primary agricultural cooperative credit society. The term “associate member” is legally defined in section 2(19)(b) as an individual who jointly holds a share of a society with others, but whose name does not appear first on the share certificate. On the other hand, a “nominal member” is an individual who is granted membership after registration in accordance with the bylaws, as outlined in section 2(19)(c).

Section 22 of the Maharashtra cooperative society act 1960 provides information about the eligibility for the membership of a society. As per the aforementioned section, the entities eligible to enter into a contract under the Indian Contract Act, 1872 include an individual who possesses the legal capacity to contract, a firm, a company, or any other body corporate established under applicable legislation, a society that has been officially registered under the Societies Registration Act of 1860, a society that has been registered or is considered to be registered under this Act, the Government at the State or Central level, a local governing body, a public trust that has been registered under the applicable legislation governing the registration of such trusts, the individual depositing funds, or the user of financial services. Given the presence of certain exceptions.

Section 24 outlines the conditions for an individual to get a membership, namely as a nominal associate or sympathizer member. Notwithstanding any constraints delineated in section 22, a society has the jurisdiction to admit persons as nominal or associate members, as envisioned in section 24 of the Maharashtra Cooperative Society Act, 1960. A notional member is not eligible to receive any portion of the revenues or assets of the group as a member. Typically, a nominal member does not possess the privileges and rights that regular members have. However, it is possible for a nominal member or an associate member to be granted certain privileges and rights, as well as be subject to certain liabilities of a member, as outlined in the society’s by-laws, in accordance with the provisions stated in subsection (8) of section 27.

Procedure for Nomination:

To initiate the nomination process, a member of the society must fulfill one of two requirements: either create and sign a formal document, or make an official declaration in the designated book maintained by the organization for this specific reason. According to Rule 25 of the Cooperative Societies Rules, 1961, in cases where a nomination is established using a document, such document must be submitted to the society while the member is still alive. Alternatively, if the nomination is made through a statement, the member must sign the statement and have it certified by a witness.

Relevant Judgments:

• Laxman Dattatray Jadhav And Others Vs Taluka Co-Operative Election Officer And Others

Facts:

1. The case began on November 12, 2022, with an order by the Taluka Co-operative Election Officer and the Assistant Registrar of Co-operative Societies, Parbhani.
2. The case revolves around the eligibility of retired employees to continue as members of the Sinchan Karmachari Sahakari Patsanstha Ltd., Parbhani, a Salary Earners’ Credit Co-operative Society, and whether they can remain on the voters’ list after their retirement.
3. Five petitioners were employees of the Irrigation Department and members of the cooperative society. They were also elected to the Board of Directors.
4. The petitioners retired from service, and a complaint was filed on July 16, 2019, alleging that they continued to serve on the Board of Directors despite their retirements. This led to an order filed on November 18, 2019, by the Assistant Registrar of Co-operative Societies, Parbhani, removing them from their directorial positions.
5. The Divisional Joint Registrar of Co-operative Societies, Aurangabad, later set aside the Assistant Registrar’s order, allowing the petitioners to continue as Directors.
6. The issue arose when the Society’s elections were scheduled, and a provisional voters’ list was published. Respondent no.3 objected to the inclusion of the petitioners’ names in the list, resulting in their names being deleted from the final voters’ list.
7. On November 12, 2022, the Election Officer removed petitioners from the voters’ list due to their retirements, categorizing them as nominal members under Section 144-5A of the Act of 1960, making them ineligible to vote per Section 27(8).

Issues:

Whether retired employees can continue as active members of a Salary Earners’ Credit Co-operative Society.

Whether the Election Officer has the authority to determine the eligibility of members.

The interpretation of relevant sections of the Maharashtra Co-operative Societies Act, 1960.

Judgment:

The court determined that, as a Salary Earners’ Credit Co-operative Society, only serving employees ideally qualify as active members. Retired members pose difficulties in terms of loan recovery since society relies on salary deductions for repayment. Byelaw D-1.1, specifying eligibility criteria for permanent employees, was found to be relevant not only for admission but also for maintaining active membership. This means that if a person ceases to be a permanent employee, they lose eligibility to continue as an active member. The court upheld the provision of Section 144-5A, stating that retired employees could be treated as nominal members, which doesn’t grant them voting rights as per Section 27(8). The court rejected the argument that previous proceedings conclusively settled the petitioners’ membership status, as those proceedings did not address the specific issue of continued active membership after retirement. It was ruled that the Election Officer had jurisdiction to determine the petitioners’ status as nominal members, not active members, and therefore correctly deleted their names from the voters’ list. The court emphasized that accepting the petitioners’ interpretation would lead to absurd results, defeating the purpose of the Salary Earners’ Credit Co-operative Society. Consequently, the petition was dismissed as lacking merit, with no costs imposed. The rule was discharged.

• Gondia District Central vs. State Of Maharashtra And Others

Facts:

– Shankarlal Agrawal, a shareholder/member of the appellant bank, held 20 shares.

– Before his death, Shankarlal Agrawal nominated respondents 4 to 15 to transfer his shares to them.

– Respondents 4 to 15 applied to the appellant bank for the transfer of shares.

– The bank, acting as the appellant, rejected the application without providing substantiated reasons.

– Respondents 4 to 15 then applied to the Divisional Joint Registrar Co-operative Societies, Nagpur, and their application was allowed.

– The appellant-Bank and respondents 4 to 15 filed writ petitions challenging the decision.

– The learned Single Judge dismissed the appellant-Bank’s writ petition and allowed respondents 4 to 15’s writ petition, directing the transfer of shares.

Issues:

– Whether the appellant bank was justified in rejecting the application for transfer of shares.

– Whether the Divisional Joint Registrar Co-operative Societies, Nagpur, had the authority to allow the application.

– Whether the provisions of Section 30 of the MCS Act applied in this case.

Judgment:

– The learned Single Judge dismissed the appellant-Bank’s writ petition and allowed respondents 4 to 15’s writ petition.

– The presiding Single Judge issued a directive to the appellant-Bank, instructing them to transfer the shares owned by the deceased member to respondents 4 to 15 in accordance with the procedures outlined in Section 30 of the MCS Act and Rule 25 of the MCS Rules, or any other relevant rule that may apply.

– The Divisional Joint Registrar acted within his authority in allowing the application for transfer of shares.

– The provisions of Section 30 of the MCS Act applied, and the appellant bank was obligated to transfer the shares.

– The policy of the Reserve Bank of India and certain bye-laws did not override the rights of the heirs and legal representatives to claim membership and transfer of shares.

• Jay Anant Sagar Co op Housing Societyvs. Divisional Joint Registrar And Ors

Facts:

1. Jay Anant Sagar Co-op. Housing Society (petitioner) is a cooperative society under the Maharashtra Co-operative Societies Act, 1960 (MCS Act).
2. Vishnu Tukaram Sarang, the father of respondent no.3, is a member of the petitioner society and was assigned apartment no. A/2 inside the premises of the petitioner society.
3. On the 17th of February, 1999, Mr. Vishnu Tukaram Sarang executed a registered agreement for sale, transferring the aforementioned unit to the third respondent.
4. The respondent no.3 applied for deemed membership of the petitioner society in respect of the said flat under section 23(2) of the MCS Act.
5. The Assistant Registrar of Co-operative Societies, referred to as respondent no.2, officially recognized respondent no.3 as a member of the petitioner society by virtue of deeming provisions. Consequently, the Assistant Registrar instructed the petitioner to update their documents, including the share certificate, to include the name of respondent no.3.
6. The petitioner filed a revision case challenging the decision of respondent no.2 before the Divisional Joint Registrar, Co-operative Societies (respondent no.1). However, the revision application was subsequently rejected.
7. The petitioner initiated legal proceedings by submitting a writ petition to the High Court of Bombay, contesting the decisions made by respondent no.1 and respondent no.2.

Issues:

Whether the respondent no.3 is a member of the petitioner society.

The question at hand is to the authority of respondent no.2 in declaring respondent no.3 as a presumed member of the petitioner organization.

The question at hand pertains to the authority of respondent no.2 in invoking section 79(2) of the MCS Act in order to officially document the name of respondent no.3 in the records of the petitioner society and to assume control over the original records of such society

Judgment:

The High Court of Bombay determined that respondent no.3 does not possess membership in the petitioner society, and further concluded that respondent no.2 lacked the authority to designate respondent no.3 as a presumed member of the petitioner organization. The High Court determined that the second respondent lacked the authority to use section 79(2) of the MCS Act in order to officially document the name of the third respondent in the petitioner society’s records and to acquire control of the society’s original documents.

The High Court quashed and set aside the orders of the respondent no.1 and respondent no.2.

Conclusion: 

Therefore, a nominee may be described as an individual who is granted membership status upon registration in line with the established by-laws. Section 24 offers the option of a nominal associate or sympathizer membership. It might be inferred that an individual who has nominal membership status is not entitled to the same benefits and rights as a full-fledged member. The nomination has no legal significance and does not have the power to impede the rightful claim of an heir or legatee to the portion or stake of a dead member. The principle of nomination does not possess the authority to supersede the fundamental legal framework of succession. When a nomination is submitted in line with legal provisions, the organization is precluded from conducting any investigation or soliciting any opposition.

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