Dissolved Committee members Operating Bank Account

[NITIN P GUPTA]

The cooperative society committee was dissolved by Registrar of coop societies and administrator was appointed. But he did not take over as signatory of bank account. Meanwhile the president and secretary kept signing the cheques. Is it a Misrepresentation to the bank / Criminal breach of trust. How can they exercise financial power if by the virtue of order of RCS they lose their status as President and Secretary. Under which section the Bank can take action against them ? Please advise.

[Dr. Ashok Dhamija]

From a previous question asked by you on the same subject, it appears that your question pertains to a cooperative society in Delhi.

Under the Delhi Cooperative Societies Act, 2003, an administrator is appointed by the Registrar in supersession of the committee of the society under Section 37 of the Act. Sub-section (3) of this section lays down as under:

“The administrator shall, subject to the control of the Registrar and to such instructions as he may from time to time give, exercise powers and perform functions of the committee or of any officer of the co-operative society and take all such actions as may be required in the interest of the co-operative society, but shall not be empowered to enroll new members without the prior approval of the Registrar.”

Therefore, the administrator has to act as per the instructions given by the Registrar and subject to his control. You can firstly check what were the instructions given by the Registrar in this case, i.e., whether any positive or negative instructions were given with regard to bank transactions.

If the administrator was empowered to take control of the banking transactions of the society, then it was not legally permissible for the committee (including the President and Secretary of society) to keep signing cheques. In such case, it may amount to violation of directions of the Registrar, and if the funds have been misused (for purposes other than the ones for which they are meant) then it may even be misappropriation.

The bank may not even be aware of the appointment of the administrator. If you are affected party, you can inform the bank about the change, i.e., about supersession of the committee of society by an administrator. Also inform the administrator about the banking transactions still being conducted by committee members, if there was an order to not do so.

Violation of an order of the Registrar may be an offence under Section 118 of the Delhi Cooperative Societies Act, 2003, which is as under:

“118. (1) Any co-operative society or an officer or member thereof, willfully making a false return or furnishing false information, or any person willfully or without any reasonable excuse disobeys any summons, requisition or lawful written order issued under the provisions of this Act, or willfully not furnishing any information required from it or him or by a person authorized in this behalf under the provisions of this Act, shall be punishable with fine which shall not be less than two thousand rupees but which may extend to ten thousand rupees.

(2) Any employer who, without sufficient cause, fails to pay to a co-operative society the amount deducted by him under section 52 within a period of fourteen days from the date on which such deduction is made shall, without prejudice to any action that may be taken against him under any other law for the time being in force, be punishable with fine which may extend to five thousand rupees.

(3) Any officer or custodian who willfully fails to handover custody of books, accounts, documents, records, cash, security and other property belonging to a co-operative society of which he is an officer or custodian, to a person entitled under section 38 or section 60 or section 61 or section 62 or section 99 shall be punishable with fine which may extend to two thousand rupees and in the case of a continuing breach, with a further fine which may extend to five thousand rupees for every day during which the breach is continued after conviction for the first such breach.

(4) Any person who acts in contravention of section 44 or section 45 or sub-section (2) of section 66 or section 67 or section 68 or section 138 shall be punishable with fine of five hundred rupees.

(5) The committee of a co-operative society or any of its officers or employees who falsify or tamper with the record of the co-operative society, shall be punishable with imprisonment which may extend to seven years and shall also be liable to fine.

(6) Any officer or employee of a co-operative society including the paid secretary who dishonestly or fraudulently misappropriates or otherwise converts for his own use or intentionally causes loss to the property of the co-operative society entrusted to him or under his control as such officer or employee, or allows another person so to do shall be punishable with imprisonment which may extend to seven years and shall also be liable to fine.

(7) If any allotment of plot or flat is made by the committee in contravention of the provisions of sub-section (1) of section 77, the committee and its members responsible shall be punishable with imprisonment which may extend to seven years and shall also be liable to fine.

(8) If a co-operative society fails to file return as required under section 32, the committee or the negligent officer shall be punishable with a fine, which may extend to five hundred rupees.

(9) If committee fails to dispose of application within the period prescribed in section 91, the committee members responsible shall be liable for a penalty of ten thousand rupees and in the case of a continuing breach, with a further fine of one hundred rupees for every day during which the breach is continued after the expiry of the prescribed period.

(10) On conviction, a member of the co-operative society shall be debarred from contesting election of a committee for a period of six years.”

 

     

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Dr. Ashok Dhamija is a New Delhi based Supreme Court Advocate and author of law books. Read more about him by clicking here. List of his Forum Replies. List of his other articles. List of his Quora Answers. List of his YouTube Videos.

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