TaxTMI 
TaxTMI 
Multi-State Co-operative Societies (Amendment) Act, 2023
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.... be construed as a reference to the coming into force of that provision. Amendment of section 3. 2. In section 3 of the Multi-State Co-operative Societies Act, 2002 (39 of 2002.) (hereinafter referred to as the principal Act),-- (i) after clause (a), the following clause shall be inserted, namely:- '(aa) "Authority" means the Co-operative Election Authority established under sub-section (1) of section 45;'; (ii) in clause (d), for the words, brackets and figures "under sub-section (1) of section 4", the words, brackets, letters and figures "as per clause (f) of article 243ZH of the Constitution read with sub-section (1) of section 4" shall be substituted; (iii) after clause (f), the following clause shall be inserted, namely:- '(fa) "Co-operative Ombudsman" means the Ombudsman appointed by the Central Government under section 85A;'; (iv) clause (i), shall be omitted; (v) after clause (k), the following clause shall be inserted, namely:- '(ka) "financial year", in relation to any multi-State co-operative society or class of such societies, means the year ending on the 31st day of March of the year and wher....
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....efusal stating therein the reasons for such refusal, to the applicant within the period specified in sub-section (3): Provided that no order of refusal shall be made, unless the applicant has been given an opportunity of being heard: Provided further that if the application for registration is not disposed of within the period specified in sub-section (3) or the Central Registrar fails to communicate the order of refusal within the said period, the application shall be deemed to have been accepted for registration and the Central Registrar shall issue the registration certificate in accordance with the provisions of this Act and the rules made thereunder.". Amendment of section 10. 4. In section 10 of the principal Act, in sub-section (2), in clause (a), for the word "address", the words and brackets "address, including e-mail address" shall be substituted. Amendment of section 14. 5. In section 14 of the principal Act,- (i) for the marginal heading "Change of address", the marginal heading "Address" shall be substituted; (ii) for the word "address", the words "address, including e-mail address," shall be substituted. Amendment of ....
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....d in the bye-laws," shall be substituted. Amendment of section 29. 11. In section 29 of the principal Act, for clause (b), the following clause shall be substituted, namely:- "(b) he fails to use the minimum level of the products or services as specified in the bye-laws for two consecutive years; or". Amendment of section 30. 12. In section 30 of the principal Act, in sub-section (2), for the words "one year", the words "three years" shall be substituted. Substitution of new section for section 35. 13. For section 35 of the principal Act, the following section shall be substituted, namely:-- Redemption of shares. "35. (1) The shares of the authorities referred to in clauses (c) and (d) of sub-section (1) of section 25, held in multi-State co-operative societies,-- (a) shall not be redeemed without the prior approval of such authorities; and (b) may be redeemed in such manner as may be agreed upon between the multi-State co-operative society and such authorities. (2) The shares held in a multi-State co-operative society by any of the authorities referred to in clauses (e) to (g) of sub-section (1) of section 25, shall....
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....ployee including the Chief Executive of that society. Explanation.--For the purposes of this sub-section, the term, "relative" with reference to an individual, includes- (a) spouse; (b) father (including step father); (c) mother (including step mother); (d) son (including step son); (e) son's wife; (f) daughter (including step daughter); (g) daughter's husband; (h) father's father; (i) father's mother; (j) mother's father; (k) mother's mother; (l) son's son; (m) son's son's wife; (n) son's daughter; (o) son's daughter's husband; (p) daughter's son; (q) daughter's son's wife; (r) daughter's daughter; (s) daughter's daughter's husband; (t) brother (including step brother); (u) brother's wife; (v) sister (including step sister); (w) sister's husband; and (x) Hindu undivided family. (7) Any director of the board who violates the provision of sub-section (6), shall be disqualified for being a member of the board and deemed to have vacated his office from th....
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....f) to get the audit of the society conducted within six months of the close of the financial year to which such account relate: Provided that before taking any action under this sub-section, he shall be given an opportunity of being heard by the Central Registrar.". Substitution of new section for section 45. 17. For section 45 of the principal Act, the following sections shall be substituted, namely:-- Establishment of Cooperative Election Authority. '45. (1) The Central Government shall, by notification, establish an Authority to be known as the Co-operative Election Authority which shall consist of a Chairperson, a Vice-Chairperson and Members not exceeding three to be appointed by the Central Government on the recommendation of the Selection Committee consisting of such persons as may be prescribed. (2) The head office of the Authority shall be at such place as may be notified by the Central Government. (3) A person shall not be qualified for appointment as a,-- (i) Chairperson of the Authority unless he held the post of Additional Secretary to the Government of India or equivalent rank; (ii) Vice-Chairperson ....
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....irperson or Member of the Authority shall not be removed from his office except by an order of the Central Government on the ground of his proved misbehaviour or incapacity after the Central Government has, on an inquiry, held in accordance with the procedure prescribed in this behalf by it, come to the conclusion that the Chairperson, Vice-Chairperson or Member of the Authority ought on any such ground to be removed. (3) The Central Government may suspend the Chairperson, Vice-Chairperson or Member of the Authority in respect of whom an inquiry under sub-section (2) is being initiated or pending until the Central Government has passed an order on receipt of the report of the inquiry. Disclosure and declaration of interest. 45C. (1) Before appointing any person as Chairperson, Vice-Chairperson or Member, the Central Government shall satisfy itself that the person does not have any such financial or other interest as is likely to affect prejudicially his functions as such Chairperson, Vice-Chairperson or Member. (2) The Chairperson, Vice-Chairperson or Members shall immediately after entering office and every year thereafter, make a declaration as....
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....ny defect in the appointment of a person as Chairperson or Member of the Authority; or (c) any irregularity in the procedure of the Authority not affecting the merits of the case. Meetings of Authority. 45H. (1) The Authority shall meet at such places and times and shall observe such rules of procedure in regard to the transaction of business at its meetings (including the quorum at its meetings), as may be prescribed. (2) The Chairperson of the Authority shall preside at the meeting of the Authority and if for any reason the Chairperson of the Authority is unable to attend a meeting of the Authority, the Vice-Chairperson of the Authority shall preside at the meeting. (3) All questions which come up before any meeting of the Authority shall be decided by a majority of votes of the members present and voting and, in the event of an equality of votes, the Chairperson or the Vice-Chairperson of the Authority presiding shall have the right to exercise a second or casting vote. (4) Save as otherwise provided in sub-section (1), every Member shall have one vote. Functions of Authority. 45-I. The Authority shall disch....
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....mbers of the board. (8) The Chairperson and the Chief Executive of the multi-State co-operative society shall inform the Authority, six months before the expiry of the term of the existing board, to conduct the elections within time. (9) The multi-State co-operative society in respect of which the election is being held shall provide such infrastructure, personnel, information, documents or other assistance to the Authority as it may require. Appointment of Returning Officer and other officers 45K. (1) The Authority may appoint a Returning Officer to conduct the election of the multi-State co-operative societies and discharge such functions, as directed by the Authority, in such manner as may be prescribed. (2) The Central Government shall provide such staff and officers to the Authority as may be necessary for the efficient discharge of functions by the Authority under the Act. (3) The Authority may appoint,- (a) such observers as it may consider necessary to supervise the elections and discharge such other functions as may be prescribed; and (b) such number of Assistant Returning Officers as it may consider n....
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.... be one-third of its total number of elected directors.". Amendment of section 51. 20. In section 51 of the principal Act, after sub-section (1), the following sub-section shall be inserted, namely:-- ''(1A) No multi-State co-operative society shall appoint or continue the employment of any person as the Chief Executive who- (a) is below the age of twenty-one years or has attained the age of seventy years: Provided that any person above the age of seventy years may be appointed by a special resolution passed by three-fourth of the board members, in which case the explanatory statement annexed to the notice for such motion shall indicate the justification for appointing such person; (b) is an undischarged insolvent or has any time been adjudged as an insolvent; (c) has at any time been convicted by a court of an offence and sentenced for a period of more than six months; or (d) does not meet the criteria for 'fit and proper', as determined by the Central Registrar in case of multi-State credit societies or in case of non-credit multi-State societies, does not meet the criteria as Central Government may prescribe in terms of....
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....mptroller and Auditor-General of India. (3) The Committee shall spend the money out of the Fund for carrying out the objects for which such Fund has been established. Rehabilitation and reconstruction of sick societies. 63B. (1) If, at any time, the Central Registrar, is of the opinion that a multi-State co-operative society has become sick, he may, by an order, declare such society as sick co-operative society. (2) Where a multi-State co-operative society is declared as a sick co-operative society under sub-section (1), the Central Government or any person or agency authorised by it, may prepare a scheme for rehabilitation and reconstruction of the society and hand it over to the society for approval of the general body. (3) The Central Government may, on the recommendation of the general body and to give effect to the scheme for rehabilitation and reconstruction referred to in sub-section (2), re-organise the board of such society with such persons, having experience in the field of co-operation, management, finance, accountancy and any other area relating to such societies as may be recommended by the general body: Provided t....
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....ng as assigned to it in clause (e) of section 2 of the Reserve Bank of India Act, 1934 (2 of 1934); and (ii) "nationalised bank" means a corresponding new bank constituted under sub-section (1) of section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (5 of 1970.) and the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980 (40 of 1980.); or (f) in such other manner as may be determined by the Central Government.'. Amendment of section 67. 26. In section 67 of the principal Act, in sub-section (1), in the first proviso, for the words "ten times", the words "such multiples as may be determined by the Central Government" shall be substituted. Amendment of section 70. 27. In section 70 of the principal Act,-- (a) in sub-section (2), for the proviso, the following provisos shall be substituted, namely:- "Provided that such auditors or auditing firm shall be appointed from a panel approved by the Central Registrar: Provided further that in case of multi-State co-operative banks, multi-State credit societies with deposits of above five hundred crore rupees and multi-State non-credi....
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....ulti-State co-operative banks shall adopt the standards of accounting and auditing, if any, laid down by the Reserve Bank.". Amendment of section 78. 30. In section 78 of the principal Act, after sub-section (1), the following sub-sections shall be inserted, namely:-- "(1A) If the Central Registrar is satisfied on the basis of information available with him or furnished to him by a Government agency, that the business of a multi-State co-operative society is being carried on for a fraudulent or unlawful purpose, he may, after informing the multi-State co-operative society of the allegations made against it, by a written order, call on the multi-State co-operative society to furnish in writing any information or explanation, with the endorsement of the board of the society, on matters contained in such order within the time specified therein: Provided that if the Central Registrar is not satisfied with the explanation of the society, he shall either himself or through an office or agency authorised by him, conduct inquiry into the constitution, working and financial condition of the society. (1B) Notwithstanding anything contained in this Act, the Ce....
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....2. In section 86 of the principal Act,- (a) in sub-section (1), after the words and figures "under section 79", the words and figures "or section 108" shall be inserted; (b) in sub-section (2),- (i) for clause (a), the following clause shall be substituted, namely:-- "(a) where the number of members or the number of societies or the number of persons, as the case may be, has at any time reduced below the number of members or societies or persons as specified in sub-section (2) of section 6: Provided that the multi-State co-operative society shall be given six months' time to restore the number of members or societies or persons to the requisite number;"; (ii) in clause (b), for the words "co-operative principles.", the words "co-operative principles; or" shall be substituted; (iii) after clause (b), the following clause shall be inserted, namely:-- "(c) where the Central Registrar has reasons to believe that the registration was obtained by misrepresentation of facts, submission of false or misleading information, suppression of material facts or fraud thereby compromising the spirit of co-operation.". ....
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....ion or order: Provided also that the Central Registrar may entertain any such application made after such period, if the applicant satisfies that he had sufficient cause for not making the application within such period.''. Amendment of section 103. 36. In section 103 of the principal Act, in sub-section (1), the following provisos shall be inserted, namely:- "Provided that where all the successor States take necessary steps to divide or reorganise such deemed multi-State co-operative society into State co-operative societies in order to confine their objects, services and the members to respective States within a period of three years, such deemed multi-State co-operative society shall cease to be a multi-State co-operative society: Provided further that the deemed multi-State co-operative society other than those mentioned in the first proviso shall submit an application for registration and obtain the certificate of registration from the Central Registrar.". Amendment of section 104. 37. In section 104 of the principal Act,- (a) in sub-section (1),- (i) after the words "furnishing false information", the words "or failing to file a....
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....(6) Where the board of directors or officers of the multi-State co-operative society receive any unlawful gains while transacting matters related to such society or utilise any assets of the society for personal unlawful gains, such directors or officers concerned shall be punishable with imprisonment for a term which shall not be less than one month but which may extend to one year or with fine which shall not be less than five thousand rupees but may extend to one lakh rupees or with both and the proceeds of such unlawful gains shall be recovered from them and deposited in such manner as may be prescribed.". Insertion of new section 105A. 38. After section 105 of the principal Act, the following section shall be inserted, namely:- Provisions of this Act not in derogation of any other law. "105A. The provisions of this Act shall be in addition to, and not in derogation of, any other law for the time being in force.". Substitution of new sections for section 106. 39. For section 106 of the principal Act, the following sections shall be substituted, namely:- Appointment of Co-operative Information Officer. "106. (1) Every multi-State c....
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....ding to the co-operative principles in the list."; (iii) in sub-section (2), for the word, brackets and figure "sub-section (1)", the words, brackets, figures and letter "sub-sections (1) and (1A)" shall be substituted. Amendment of section 120. 43. In section 120 of the principal Act,- (i) for clause (a), the following clause shall be substituted, namely:- "(a) annual report of the activities including details of board decisions which were not unanimous;"; (ii) for clause (f), the following clauses shall be substituted, namely:- "(f) disclosure regarding employees who are relatives of Members of board; (g) declaration of any related party transactions by the board of directors; and (h) any other information required by the Central Registrar in pursuance of any of the provisions of this Act or the rules made thereunder.". Insertion of new sections 120A and 120B. 44. After section 120 of the principal Act, the following sections shall be inserted, namely:- Filing of applications, documents, inspections, etc., in electronic form. "120A. (1) Notwithstanding anything to the contrary contained i....
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.... Provided that in case of a multi-State co-operative society carrying on the business of banking, the provisions of the Banking Regulation Act, 1949 (10 of 1949) shall also apply.". Amendment of section 121. 45. In section 121 of the principal Act, in sub-section (1), for the words and figures "the Companies Act, 1956 (1 of 1956.)" and "the Monopoly and Restrictive Trade Practices Act, 1969 (54 of 1969.)", the words and figures "the Companies Act, 2013 (18 of 2013.)" and "the Competition Act, 2002 (12 of 2003)" shall respectively be substituted. Amendment of section 123. 46. In section 123 of the principal Act,- (i) in sub-section (1),- (a) for the portion beginning with "or has committed any act" and ending with "the aggregate period does not exceed one year", the following shall be substituted, namely:- "or has committed any act including fraud, misappropriation and the like which is prejudicial to the interests of the society or its members, or has omitted or failed to comply with any directions given to it under section 122 in public interest or that there is a stalemate in the constitution or functions of the board or the Co-operative El....
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....le to, and other terms and conditions of service of the Chairperson, Vice-Chairperson and Members of the Authority under sub-section (5) of section 45; (kc) the other powers and functions of Chairperson under section 45A; (kd) the procedure of inquiry under sub-section (2) of section 45B; (ke) time, places and the procedure to be observed by the Authority in regard to transaction of business at its meetings under sub-section (1) of section 45H; (kf ) other functions of the Authority under clause (iii) of section 45-I; (kg) the manner of election of members of board by secret ballot under sub-section (3) of section 45J; (kh) the manner of bearing the expenses for holding elections by the Authority under sub-section (6) of section 45J; (ki) the manner of discharge of functions by the Returning Officers and observers under sub-section (1) and clause (a) of sub-section (3) of section 45K; (kj) other functions of the observers under clause (a) of sub-section (3) of section 45K;"; (iv) after clause (m), the following clause shall be inserted, namely:- "(ma) the procedure for recruitment of emp....