In cooperative housing societies, the appointment of the Managing Committee (MC) must strictly adhere to the Maharashtra Cooperative Societies (MCS) Act, 1960 and MCS (Election to Committee) Rules. If the committee is not formed as per these rules, it is considered irregular, and necessary steps must be taken to rectify the issue.
Issue Identified by the Auditor
The auditor has pointed out that the Managing Committee (MC) of your society was not appointed according to the provisions of the MCS (Election to Committee) Rules. The appointments were based on members attending general body meetings rather than a proper election process. As per the MCS Act, societies must conduct elections through a structured process rather than through informal selection.
Additionally, while your society has been conducting AGMs regularly up to 2020-2021, there were delays due to the pandemic-related extensions. Despite these extensions, the election process was not followed, leading to the auditor’s concern.
Steps to Rectify the Managing Committee’s Validity
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Conduct Pending AGMs and File Necessary Documents
- Your society needs to hold the pending AGMs for the financial years 2021-2022, 2022-2023, and 2023-2024.
- Ensure that all financial statements, audit reports, and compliance documents are submitted to the Registrar of Cooperative Societies (RCS) as required under the MCS Act.
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Inform the Registrar About the Irregularity
- Since the MC was not elected as per MCS (Election to Committee) Rules, the auditor is required to report the irregularity to the registrar.
- The society may also take proactive steps by writing to the Registrar of Cooperative Societies, offering to dissolve the existing MC and conduct fresh elections.
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Resignation of the Existing Managing Committee
- As per Bye-law 131(e), if the entire Managing Committee (MC) intends to resign, the resignations must be placed before the general body for approval.
- The resignations become effective from the date of acceptance by the general body.
- The outgoing office-bearers must inform the registrar about the acceptance of the resignations.
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Registrar’s Role in Transition Management
- Once informed, the Registrar of Cooperative Societies may take action under Section 77A of the MCS Act to ensure smooth governance until a new MC is elected.
- The registrar may:
- Appoint a three-member committee from within the society to temporarily manage its affairs.
- Appoint one or more authorized officers to handle routine functions.
- Allow the existing MC to continue for routine work until fresh elections are conducted.
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Conduct Fresh Elections as per MCS Rules
- The Election Authority under the Cooperative Election Rules will conduct fresh elections for the Managing Committee.
- The election process should comply with:
- MCS (Election to Committee) Rules
- Model Bye-laws of Cooperative Housing Societies
- The newly elected MC will take over after completing the proper nomination and voting process.
Consequences of Non-Compliance
Failure to follow the MCS Election Rules and MCS Act provisions may result in:
- Registrar’s intervention in the society’s management.
- Dissolution of the current MC and appointment of an administrator.
- Legal consequences under the MCS Act.
- Financial penalties for not complying with regulatory requirements.
Conclusion
To regularize the Managing Committee, your society must conduct fresh elections, comply with MCS Rules, and report the irregularities to the registrar. The society must also hold pending AGMs and file the necessary documents. By following these steps, the society can avoid penalties, ensure smooth governance, and uphold transparency in its management.
