Andhra Pradesh Mutually Aided Cooperative Societies Act .
Andhra PradeshMutually Aided Cooperative Societies Act 1995[Act No 30 of 1995]This booklet contains1. The text of the Andhra Pradesh Mutually Aided Cooperative Societies Act1995 and comments thereon;2. The statement of objects and reasons for introducing the Bill;3. A brief background note on enactment of a parallel law for new generationcooperatives;4. A statement comparing provisions in the 1964 Act and the 1995 Act relatingto various aspects of cooperation; and5. List of Registering Offices.June 1999
ForewordThe Andhra Pradesh Mutually Aided Cooperative Societies Act,1995 (the APMACS Act or the 1995 Act) was passed unanimouslyby the Andhra Pradesh Legislative Assembly on 4th May 1995, afterthe floor leaders of various political parties had spoken in favour ofthe related Bill introduced by the Government. It was notified on 1stJune 1995. That all the parties wanted such a law for the people ofthe state speaks volumes for the spirit behind and the contents ofthis legislation. The Statement of Objects and Reasons forintroducing the Bill, a brief background note on enactment of aparallel laws for new generation cooperatives, and a statementcomparing provisions in the 1964 Act and the 1995 Act relating tovarious aspects of cooperation are given in the end.While the Statement of Objects and Reasons is unambiguous in itslanguage, since this piece of legislation was a landmark in the historyof the cooperative movement in India, many persons have expressedinterest in the intent behind and possible implications of variousprovisions in the APMACS Act.This publication seeks to explain the shifts made in this law from theolder cooperative law in Andhra Pradesh. Through the use of this lawby cooperators, many new nuances are being discovered in thevarious provisions – not all perhaps were intended at the time oflegislation! This law was enacted as a response to the anguish ofself-respecting cooperators frustrated by an archaic cooperative law.As a law is not just what the law makers wished it to be, but is alsowhat it becomes through usage, and through interpretation wheninterpretation is sought, this publication comments on the variousprovisions in the APMACS Act keeping in mind the causes behind theenactment, the possible intent, the actual implications in usage, andsome possible interpretation. It is hoped that this publication willbe useful to cooperators, administrators, law makers, academicians,and jurists.1st June 1999Cooperative Development Foundation
Andhra PradeshMutually Aided Cooperative Societies Act 1995ContentsSectionPagePreamble1. Short title, extent and commencement2. Definitions3. Cooperative principles and byelaws4. Registration5. Registration certificate6. Society to be a body corporate7. Registration with limited or unlimited liability8. Display of name9. Byelaws10. Amendment of byelaws11. Change of liability, transfer of assets and liabilities,division, amalgamation12. Promotion of subsidiary organisation13. Creation of new organisation with others14. Mobilisation of funds15. Investment of funds outside the business16. Disposal of surplus17. Management of deficit18. Reserve fund19. Eligibility of membership20. General body21. Board of directors22. Powers and functions of the board of directors23. Elections24. Meetings25. Staff26. Accounts and records27. Audit28. Special audit29. Inquiry30. Power to summon and examine persons and documents31. Action on special audit or inquiry report32. Constitution of tribunals33. Power of the tribunal to order recovery34. Filing of returns35. Rights and 272828293031323333343535
SectionPage36. Execution of decisions, decrees and orders36-A. Eligible cooperative banks37. Settlement of disputes38. Offences and penalties39. Dissolution by members40. Dissolution by tribunal41. Appointment of liquidator42. Duties of liquidator43. Powers of liquidator44. Final account45. Fee for services3636363839404142434344-xStatement of objects and reasons45Background note on Andhra Pradesh Mutually AidedCooperative Societies Act 199547Comparison of AP Cooperative Laws of 1964 and 199549List of Registering Offices53(ii)
Andhra PradeshMutually Aided Cooperative Societies Act 1995[Act No 30 of 1995]An Act to provide for the voluntary formation of cooperative societies as accountable,competitive, self reliant business enterprises, based on thrift, self-help and mutual aidand owned, managed and controlled by members for their economic and socialbetterment and for the matters connected therewith or incidental theretoBe it enacted by the Legislative Assembly of the State of Andhra Pradesh in the fortysixth year of the Republic of India, as follows:1. Short title, extent and commencement(1) This Act may be called the Andhra Pradesh Mutually Aided CooperativeSocieties Act, 1995.(2) It extends to the whole of the State of Andhra Pradesh.(3) It shall come into force on such date as the Government may, by notification,in the Andhra Pradesh Gazette, appoint.[Comment: This Act came into force, on 1st June 1995, even asthe Andhra Pradesh Cooperative Societies Act, 1964 was andcontinues to be in force. Obviously, a distinction was being soughtto be made between the cooperatives that were under the purviewof the 1964 Act, and those that were to come under the purview ofthis Act.This Preamble helps distinguish between the two types ofcooperatives. Not all, but many of the cooperatives which wereregistered under the 1964 Act came into existence, not of their ownvolition, but as a result of government policy and intervention.They, therefore, had government aid and not mutual aid as theirfoundation. They were instruments of government policy, notinstruments of their members, for their own good. They werechannels for distribution of scarce resources, and, therefore, wereat times monopolies - not competitive, nor business minded. TheGovernment, and other financial players were part owners, and,therefore, ownership, management, and controls did not rest fullywith members.1
Under the 1964 Act, too, there were cooperatives which were trueagents of their members, and that is the reason why this Act alsoprovides for such cooperatives to choose voluntarily to come underthe purview of this Act. Many court judgements have suggestedthat cooperatives are not creatures of the will of their members,and this Preamble makes clear that associations registered ascooperatives under this Act are indeed creatures of their members,working for their betterment.]2. DefinitionsIn this Act unless the context otherwise requires:(a) “board” means the board of directors of a cooperative society;(b) “byelaws” means the byelaws of a cooperative society as originally framed oras altered from time to time in pursuance of this Act;(c) “cooperative principles” means the cooperative principles specified in section3;(d) “cooperative society” means a mutually aided cooperative society registeredunder section 4 whose byelaws prohibit it from raising share capital from theGovernment, a cooperative society registered under section 7 of the AndhraPradesh Cooperative Societies Act, 1964, if it amends its byelaws wherenecessary to reconstitute its capital base and in respect of other relevantaspects to be in accordance with this Act, and returns to the Government itsshare capital, if any, and either enters into a memorandum of understandingwith the Government for any outstanding loans due to, or guarantees given bythe Government or returns to the Government of such assistance and furthergets itself registered under section 4 as a cooperative society under this Act;(e) “cooperative society with limited liability” means a cooperative society inwhich the liability of its members for the debts of the cooperative society inthe event of its being wound up, is limited by its byelaws to such amount asthey may undertake to contribute to the assets of the cooperative;(f) “cooperative society with unlimited liability” means a cooperative society themembers of which are, in the event of its being wound up, jointly andseverally liable for and in respect of all its obligations and to contribute to anydeficit in the assets of the cooperative society;(g) “cooperative tribunal” means the tribunal or tribunals constituted undersection 32;(h) “deficit” means the net excess of expenditure over income,(i) “delegate” means a member nominated by a cooperative society to representits interests in a federation;(j) “director” means a director of the board of directors;(k) “federation” means a mutually aided cooperative society registered undersection 4 whose members are mutually aided cooperative societies;2
(l)(m)(n)(o)(p)(q)(r)(s)“financial year” in relation to a cooperative society means the twelve monthaccounting period as provided for in the byelaws;“general body” in relation to a cooperative society means all the members ofthe cooperative society and includes a representative general body of thecooperative society referred to in section 20;“general meeting” means a meeting of the general body of a cooperativesociety;“Government” means the State Government of Andhra Pradesh;“member” means a member of a cooperative society;“office-bearer” means an individual elected by the general body or the boardof the cooperative society to any office of such cooperative society inaccordance with its byelaws;“Registrar” means the Registrar of Mutually Aided Cooperative Societiesappointed under section 4 of this Act, and includes any other person onwhom all or any of the powers of the Registrar under this Act are conferred;“surplus” means the net excess of income over the expenditure;3. Cooperative principles and byelawsIndividuals or cooperatives intending to form into a cooperative society under thisAct shall frame byelaws conforming to the following principles of cooperation,namely,(a) membership of a cooperative society shall be voluntary and available withoutrestriction of any social, political, racial or religious discrimination, to allpersons who can make use of its services and are willing to accept theresponsibilities of membership;(b) cooperative societies are democratic organisations; their affairs shall beadministered by persons elected or appointed in a manner agreed by themembers and accountable to them. Members of primary cooperativesocieties shall enjoy equal rights of voting (one member, one vote) andparticipation in decisions affecting their cooperative societies. In other thanprimary cooperative societies, the administration shall be conducted on ademocratic basis in a suitable form;(c) share capital shall only receive a strictly limited rate of interest, if any;(d) the economic results, arising out of the operations of a cooperative societybelong to the members of that cooperative society and shall be distributed insuch a manner as would avoid one member gaining at the expense of others,which shall be achieved:(i) by provision for development of the business of the cooperative society;3
(ii) by provision of common services; or(iii) by distribution among the members in proportion to their transactions withthe cooperative society;(e) all cooperative societies shall make provision for the education of theirmembers, officer-bearers and employees and of the general public, in theprinciples and techniques of cooperation, both economic and democratic;(f) all cooperative societies, in order to best serve the interest of their membersand their communities, shall actively cooperate in every practical way withother cooperatives at local, national and international levels having as theiraim the achievement of unity of action by cooperators throughout the world.[Comment: The APMACS Act came into force before the GeneralAssembly of the International Cooperative Alliance met inSeptember 1995 to revise the cooperative principles. As such theinternationally accepted cooperative principles as they existed atthe time of enactment of this Act have been incorporated in the Act.The Statement of Cooperative Identity passed by the ICA inSeptember 1995, includes all the concepts mentioned above, andhas further expanded on them, and added some new concepts.]4. Registration(1) Where not less than ten individuals each being a member of a different familyintend to form a cooperative society, or two or more cooperative societiesregistered under this section wish to form into a federation, or a societyregistered under section 7 of the Andhra Pradesh Cooperative Societies Act,1964 intends to convert itself into a cooperative society under this Act, theyshall frame byelaws for this purpose in accordance with section 3 in the firstinstance.[Comment: The 1995 Act could have provided for any cooperativeunder the 1964 Act to be deemed to be registered under the newAct, if it had no government share capital or loan or guarantee.Automatically, all savings and credit cooperatives, and severalother cooperatives would have come under the purview of the newAct.However, since the Preamble makes it clear that registration underthe new Act has to be the result of the will of the members of acooperative, and that registration under the new Act comes withaccountability and competitive spirit, the new Act leaves it to each4
cooperative under the old Act to choose to remain under the oldAct, or to shift to the new one.](2) Thereafter an application for registration shall be submitted to the Registrarby hand or by registered post.(3) Every such application shall be accompanied by(a) the original and one copy of the byelaws of the proposed cooperativesociety as adopted by the individuals or delegates of cooperative societieswho wish to form into a cooperative society under this Act or by thegeneral body of a society registered under the Andhra PradeshCooperative Societies Act, 1964 which wishes to convert itself into acooperative society under this Act;(b) a list of names of individuals or cooperatives who wish to form into acooperative society under this Act or of the members of the committee ofthe society registered under the Andhra Pradesh Cooperative SocietiesAct, 1964 which intends to convert itself into a cooperative society underthis Act with their addresses, occupations andtheir financialcommitments to the proposed cooperative society;(c) a true copy of the minutes of the meeting at which the byelaws wereadopted, duly signed by atleast a majority of individuals or delegatespresent at the meeting where the byelaws were adopted, or by a majorityof the members of the committee of the cooperative concerned where asociety registered under the Andhra Pradesh Cooperative Societies Act,1964, intends to convert itself into a cooperative society under this Act;(d) registration fee amounting to one percent of the total authorised sharecapital by whatever name called subject to a minimum of one hundredrupees and a maximum of ten thousand rupees; and(e) in the case of a society registered under section 7 of the Andhra PradeshCooperative Societies Act, 1964 and wishing to convert itself into acooperative society under this Act, evidence to show that the society isnot in possession of any share capital from Government, and evidencealso to show that the society is not in receipt of any government loans orguarantees at the time of applying for registration as a cooperative societyunder this Act, or that it has entered into a memorandum of understandingwith the Government for any such outstanding loans or guarantees.[Comment: The procedure for a new registration and forconversion from the old Act to the new one is provided for in5
section 4. Some doubts have arisen on whether the new Act canlay the procedure for conversion from the old Act, or whether it isnecessary for the old Act to have some provisions in this regard. Itmust be noted that both the Acts were passed by the AndhraPradesh Legislature. The 1995 Act was the later Act.The Legislature was fully conscious of the continuance of the oldAct, even as it was ushering in the new Act. It chose to determinethe procedure for conversion only in the new Act, and as such,newly forming cooperatives as well as cooperatives which areunder the 1964 Act need to follow the provisions of section 4 of thenew Act to come under the purview of the 1995 Act.In particular it must be noted that the use of the term “conversion”in the 1964 Act is quite different to its use in the 1995 Act. In the1964 Act it is used in the context of a change in the objectives of acooperative, and, therefore, a possible change in membershipinterests in the cooperative. In the 1995 Act, the term is usedmerely for change in registration from the old Act to the new one,objectives, membership, etc, all remaining the same, and thegeneral body choosing greater freedom accompanied by greaterresponsibility for their cooperative through “converting” to the 1995Act. As such, the provisions relating to conversion under the 1964Act are not relevant for conversion to the new Act.](4) The Registrar shall, if he is satisfied that(a) the application is in conformity with the requirements of this Act;(b) the proposed byelaws are not contrary to the provisions of this Act; and(c) the name of the proposed cooperative society is not the same as that of acooperative society already registered under this section, or the same asthat used by a class of societies already registered under section 7 of theAndhra Pradesh Cooperative Societies Act, 1964,register the cooperative society and also its byelaws and communicate byregistered post a certificate of registration and the original of the registeredbyelaws signed and sealed by him, within a period of sixty days from the dateof submission of application, to the chief promoter mentioned in theapplication.[Comment: Under most state cooperative laws, since cooperativesare seen as instruments of government policy, and as channels fordistribution of scarce government resources, the registeringauthority has the power to refuse to register a cooperative on the6
grounds that it might not be financially viable, or that its existencewas likely to affect the viability of another cooperative already inexistence. Under the 1995 Act, since cooperatives are seen asagents of their members, the registering authority has not beengiven any discretion in refusing registration. Time limits have beenfixed for registration or refusal to register to be communicated tothe applicants.The Registrar has only to ensure that the provisions of the Act havebeen adhered to by the applicants for registration, and that thename they have proposed for their cooperative is not already in useby another. The right to freedom of association, guaranteed by theConstitution of India, is respected and provided with the necessarylegal framework, where those associating desire such a legalframework for their association.Most other forms of organisations, such as, companies, orsocieties, are not required to declare their “area of operation”. Thisconcept of area of operation was introduced in mid-60s incooperative laws in the country, to ensure that there was no“overlapping or conflict of jurisdiction” between cooperatives. Thevery use of the term “jurisdiction” in relation to a cooperative spokevolumes of the perception of cooperatives as arms of thegovernment. The 1995 Act avoids the use of the terms “area ofoperation”, and “jurisdiction” in relation to the functioning ofcooperatives. In order to identify which registering authority, orwhich tribunal has jurisdiction over which area, the StateGovernment has clarified that the registering authority and tribunalin the case of any cooperative will be those who have jurisdictionfor the location at which the headquarters of a cooperative issituated.](5) If the conditions laid down in sub-section (4) are not fulfilled, the Registrarshall communicate by registered post the order of refusal together with thereasons therefor, within sixty days from the date of submission of application,to the ch
(1) This Act may be called the Andhra Pradesh Mutually Aided Cooperative Societies Act, 1995. (2) It extends to the whole of the State of Andhra Pradesh. (3) It shall come into force on such date as the Government may, by notification, in the Andhra Pradesh Gazette, appoint. [Comment: This Act cam
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