National Conference On Co-Operative Societies, Trusts, Organized by Institute of Chartered Accountants of India - Cell Tower Radiation Hazards and Solutions

National Conference on Co-operative Societies, Trusts, Redevelopment of Properties, Legal and Taxation Aspects
Disclaimer 1. 2. The material contained herein is for private circulation and reference purposes only. The views expressed in the articles, write-ups, surveys, etc., contained in the background material are those of the concerned authors, individuals, organisations, agencies etc., and should not be construed as the views of the Institute of Chartered Accountants of India or any of its Committees or Boards. The Institute of Chartered Accountants of India or any of its Boards or Committees does not undertake the responsibility for the accuracy or otherwise of any views expressed or facts included in the background material. The Institute of Chartered Accountants of India or any of its Boards or Committees also does not accept any responsibility for the actions taken by the reader on the basis of the material contained in the background material. The copyrights in respect of the material included in the background material rests with the respective authors, organisations, etc.
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I am pleased that Committee for Co-operatives & NPO Sectors of the Institute of Chartered Accountants of India (ICAI) is organising a National Conference on Co-operative Societies, Trusts, Redevelopment of Properties, Legal and Taxation Aspects, I am glad that the same is being hosted by Western India Regional Council (WIRC) of ICAI. It is overwhelming to see progress achieved by the co-operative sector in its century long movement after experiencing many ups and downs. Over the years, Cooperatives have strived hard to build a better world by advancing sustainable development, social integration and decent work. Cooperatives empower their members and thereby strengthen communities. They promote food security and enhance opportunities for small agricultural producers. They are better tuned to local needs and better positioned to serve as engines of local growth. By pooling resources, they improve access to information, finance & technology and their underlying values of self-help, equality and solidarity. They work for overall improvement of their members & other stakeholders in challenging economic times. Committee for Co-operatives & NPO Sectors has been working towards strengthening Co-operatives & NPO sectors and simultaneously exploring the new professional opportunities for members. In its endeavours, the Committee has sent various representations to authorities such as CBDT, NABARD, and various State Governments. The Committee has also been taking initiatives to update the knowledge of the members through various publications and conducting of conferences, seminars, workshops, etc. This seminar is another step towards imparting knowledge in the field. CCONPO has launched a certificate course on Management, Taxation, Laws, Accounting and Auditing concerning Co-operative societies & NPOs for the benefit of our members. I believe that programmes like this could be a great learning experience for Chartered Accountants. By attending these programmes and hearing the learned subject experts, members can emerge with greater comprehension and knowledge accompanied with invaluable tips and information from practical wisdom and experience of expert concerned. I wish all the delegates a fruitful, professionally enriching experience from this National Conference. With best Regards CA. Subodh K. Agrawal President The Institute of Chartered Accountants of India
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Dear Participants, It is heartening to note that the Committee for Co-operatives and NPO Sector of the Institute is organising a National Conference on Co-operative Societies, Trusts, Redevelopment of Properties, Legal and Taxation Aspects on 3rd & 4th August at Mumbai. By way of organising such programmes, the ICAI tries to be instrumental in enriching the professional base of its members. The Government along with other regulatory bodies takes all possible steps to regulate these sectors by enacting various laws and assuring their compliance by them. The Chartered Accountants can play a vital role in this area by ensuring the fulfilment of various regulatory provisions by these organisations. Definitely this leads to the need for our members to maintain and expand their knowledge base on these regulatory provisions. In todays busy schedule, taking out time to read and understand the new regulations or changes made in the existing ones sometimes becomes difficult. This Conference is aimed at not only towards disseminating the developments in the regulations in these sectors but also providing guidance to the members to explore more professional opportunities in other sectors also. Eminent speakers from professional fields have been invited to share their views with the audience which will be of great help in professional development not only to our Fellow Chartered Accountants but also for other stakeholders. I am impressed with the topics chosen for the workshop and the experts invited to share their wisdom amongst the delegates. I am sure that the deliberations in the workshop would be of high standard and provide an opportunity to the delegates to interact with the experts having experience and expertise in Co-operative and NPO Sector. I would like to congratulate CA. Anuj Goyal, Chairman, Committee for Co-operatives & NPO Sector, CA Tarun J. Ghia, Vice-Chairman, Committee for Co-operatives & NPO Sectors and other members of the Committee for organizing this National Conference which would surely help our members and other participants to be well equipped and take a lead. On this occasion, I extend warm greetings and felicitations to the participants and wish the programme all success. Date : July 24, 2013 Place: New Delhi CA. K. Raghu Vice-President, ICAI
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Welcome to all the participants, On behalf of the Committee for Co-operatives and NPO Sector of the Institute, I take the pleasure of welcoming all the participants to the two days National Conference on Co-operative Societies, Trusts, Redevelopment of Properties, Legal and Taxation Aspects at K.C Auditorium, Churchgate, Mumbai that is being hosted by Western India Regional Council of ICAI. With a comparatively new Committee for Co-operatives and NPO Sectors formed in 2011, we Chartered Accountants are now focusing on yet another sector of the Country. These two dynamic Sector provides an opportunities to the Chartered Accountants in the field of Internal Audit, Statutory Audit, Auditors on behalf of donors and funding agencies, reviewers of financial management systems, advisors on financial management systems, etc. NPOs are generally registered either as a society or a trust or a section 25 Company under the respective laws namely the Societies Act, Trust Act or the Companies Act, 1956. Depending upon the law under which it is registered, it has to get its accounts audited as required under the respective laws. I am sure that this Conference would enhance the understanding of the participants towards the importance of compliance and good governance in NPO and Co-operative Sector, professional opportunities for CAs in NPO Sector, redevelopments, fungible FSI, stamp duty registration aspects and many more. I would like to express my gratitude to CA. Subodh K. Agrawal, President, ICAI and CA. K. Raghu, Vice President, ICAI for giving this oppurtunity to the Committee for Co-operatives and NPO Sector for organising this National Conference. I wish to place on record my thanks to Justice V. M Kanade, Honble Justice, Bombay High Court, CA. Tarun J. Ghia, Vice-Chairman, CCONPO who has been instrumental in successful organisation of this Conference and my colleauges in Central Council for sparing their valuable time and making efforts for organising the Conference. I am confident that, this would be a great learning experience for the participants. Date : July 28, 2013 Place : New Delhi CA. Anuj Goyal Chairman Committee for Co-operatives and NPO Sectors, ICAI
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Dear Participants, I am immensely happy to welcome all the delegates to the National Conference on Co-operative Societies, Trusts, Redevelopment of Properties, Legal and Taxation Aspects being organised by the Committee for Co-operatives & NPO Sectors of ICAI on 3rd and 4th August at Mumbai. The 2 day Convention aims to focus and offer a clear picture on various functional areas, issues which have grey areas and require discussion and debate. It is an open secret that many of our CA members are frequently engaged in drafting of various property and commercial documents. In this context, it is pertinent to mention that CAs have been inculcated with high degree of analytical and interpretational skills. Some of the CAs are equally proficient in usage of the language of English and have very effective communication skills. They are drafting documents which are not only excellent in language but are second to none in terms of consideration of relevant laws and addressing minute issues of facts and possible situations. Such functions by the CAs will also recognise their true capability and will enhance image of the profession at large. The events like this are in continuation of the position of the ICAI as the partners in Nation building. For Chartered Accountants, the importance of updation of knowledge is of quintessential importance. Continuing Professional Education is all about absorption, assimilation, comprehension and practical application of the knowledge acquired for the benefit of clients, employers and for the professionals themselves. It is my firm belief that by attending programme like this and hearing the erudite faculties, one can emerge with a greater comprehension and knowledge, often loaded with invaluable tips and insights that come out of practical wisdom and experience and which cannot be readily found in a conventional text book or reference manual. I thank CA. Subodh K. Agrawal, Honble President, ICAI and CA. K. Raghu, Honble Vice-President, ICAI for encouraging and guiding in organising this Conference. I also thank CA. Anuj Goyal, Chairman, Committee for Co-operatives & NPO Sectors for his wholehearted support and able guidance and involvement in organising the Conference and my colleagues in Central Council of ICAI for sparing time to join and add value to this Conference. I am extremely thankful to his highness Justice V. M. Kanade, Judge, Bombay High Court for inaugurating this Conference and sharing his rich experience and words of wisdom with us. I welcome all of you to this Conference with the hope that the Conference turn out to be quite a learning and memorable experience to all of you. Date : July 28, 2013 CA. Tarun J. Ghia Place : New Delhi. Vice-Chairman Committee for Co-operatives & NPO Sectors, ICAI.
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Programme Structure
National Conference on Co-operative Societies, Trusts, Redevelopment of Properties, Legal and Taxation Aspects organised by Institute of Chartered Accountants of India, Committee for Co-operatives & NPO Sectors, on August 3 & 4, 2013 at Mumbai DAY-1 (3rd August, 2013) ACTIVITY SCHEDULE ACTIVITY/TOPICS BREAKFAST Inaugural Session Shri Justice V.M. Kanade Real Estate scenario in general and its impact Shri D. L. Desai on property redevelopments (to give complete picture of market scenario and expected impact on present as well as near future redevelopments) Recent developments in co-operative laws Shri N. R. Nikam (including 97th constitutional amendments, amendments in laws and procedural aspects, latest model bye-laws, appointment of auditors, etc.) GUEST/SPEAKERS TIME 8:30 am to 9:00 am 9.00 am - 11.00 am 11.00 am - 11.30 am
11.30 am - 12.00 noon
Redevelopments, joint developments, self CA. Tarun Jamnadas Ghia 12.00 noon - 01.00 pm developments : Legal and taxation issues (covering MOU, DA, Joint DA, Self development, Bank Guarantee, POA, freehold, leasehold, tenancy, MHADA properties, Taxation, TDS, Corpus Fund, Hardship compensation, rental compensation, TDR, fungible, role of PMC, tendering, invitation to offer) LUNCH Structural Audits in co-op societies - requirements Shri Satish Dhupelia and compliances responding to notices u/s. 354 of the MMC Act Laws governing co-operative societies, trusts, real Dr. Sanjay Chaturvedi estate transactions TEA 01.00 pm - 02.00 pm 02.00 pm - 02.30 pm
02.30 pm - 03.15 pm 03.15 pm - 03.45 pm
Concept and Working of Fungible FSI (Calculation Shri Manoj Daisaria and 03.45 pm - 04.30 pm and measurement of Fungible FSI, Methodology of Shri Sudhir Y. Ghate its application, premium payable, division between present owners and developer, changes in DCR in view of Fungible FSI) Cell Towers an income avenue or a menace? Prof. Girish Kumar and 04.30 pm - 05.00 pm (Analytical studies and views of both sides, Cell Ms. Neha Kumar Towers radiation hazards, precautions, probable solutions, rights of members dissenting to cell towers, taxation of cell tower income, TDS compliances)
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National Conference on Co-operative Societies, Trusts, Redevelopment of Properties, Legal and Taxation Aspects ACTIVITY/TOPICS GUEST/SPEAKERS TIME
Service tax aspects (w.r.t. redevelopments, Shri Sushil Solanki and 05.00 pm - 06.00 pm ordinary maintenance of co-op. societies, repairs CA. A. R. Krishnan to properties, renting of properties, cell towers spaces, trusts, etc.)
DAY-2 (4th August, 2013) VAT issues (in re-developments, in repairing of Adv. Kishor T. Lulla properties) Property transactions by trusts (Acquisition of Adv. Aditya Prakash Rao properties, transfer of properties, development of properties, permission of Charity Commissioner, change reports, documentation, auditors responsibility, stamp duty on registration wrt trust properties) Stamp duty and registration aspects (w.r.t. society Shri Santosh Kumar transactions, renting of properties, release deeds, family partition, gifts, exchange of properties, power of attorneys, company owned flats, stamp duty in repairs of properties, see schedule to stamp duty, wills, etc.) Redevelopments and Self Developments Financing CA. Dilip Pendse Options Due Diligence and other critical issues Right to Information w.r.t. governance of co-op. Shri Shailesh Gandhi societies and charitable trusts and in the process of redevelopment (Legal and procedural aspects) Disputes, complaints, petitions, appeals before co- Imminent Faculty op registrars, co-op. court : laws and procedural aspects (Covering issues of jurisdictions, over lapping jurisdictions, co-operative disputes, redevelopment disputes) Labour and welfare laws : Legal and Procedural Shri M. B. Gajare Compliances (Concerning co-operative societies and trusts and associations) 09.30 am - 10.30 am 10.30 am - 11.00 am
11.00 am - 11.30 am
11.30 am - 12.00 noon 12.00 noon - 12.30 pm 12.30 pm - 01.00 pm
01.00 pm - 01.30 pm
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Contents
Sr. No. Technical Sessions 1.
Subject
Page No.
Redevelopments, joint developments, self developments : legal and taxation issues (covering MOU, DA, Joint DA, Self development, Bank Guarantee, POA, freehold, leasehold, tenancy, MHADA properties, Taxation, TDS, Corpus Fund, Hardship compensation, rental compensation, TDR, fungible, role of PMC, tendering, invitation to offer) CA. Tarun Jamnadas Ghia Laws governing co-operative Dr. Sanjay Chaturvedi societies, trusts, real estate transactions
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Concept and Working of Fungible FSI (Calculation and measurement of Fungible FSI, Methodology of its application, premium payable, division between present owners and developer, changes in DCR in view of Fungible FSI) Shri Manoj Daisaria and Shri Sudhir Y. Ghate Cell Towers - an income avenue or a menace? (Analytical studies and views of both sides, Cell Towers radiation hazards, precautions, probable solutions, rights of members dissenting to cell towers, taxation of cell tower income, TDS compliances) Prof. Girish Kumar and Ms. Neha Kumar Service tax aspects (w.r.t. re-developments, ordinary maintenance of co-op. societies, repairs to properties, renting of properties, cell towers spaces, trusts etc.) Shri Sushil Solanki and CA. A. R. Krishnan VAT issues (in redevelopments, in repairing of properties) Adv. Kishor T. Lulla Property transactions by trusts (Acquisition of properties, transfer of properties, development of properties, permission of Charity Commissioner, change reports, documentation, auditors responsibility, stamp duty on registration w.r.t trust properties) Adv. Aditya Prakash Rao Stamp duty and registration aspects (w.r.t. society transactions, renting of properties, release deeds, family partition, gifts, exchange of properties, power of attorneys, company owned flats, stamp duty in repairs of properties, see schedule to stamp duty, wills, etc.) Shri Santosh Kumar Right to Information w.r.t. governance of co-op. societies and charitable trusts and in the process of redevelopment (Legal and procedural aspects) Shri Shailesh Gandhi Labour and welfare laws : Legal and Procedural Compliances (Concerning co-operative societies and trusts and associations) Shri M. B. Gajare
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National Conference on Co-operative Societies, Trusts, Redevelopment of Properties, Legal and Taxation Aspects Sr. No. 11. 12. 13. 14. 15. 16. 17. Subject Redevelopments & Self Developments Legal and Tax Issues CA. Tarun Ghia 97th Amendment - Gujarat High Court Judgment Order (1) Multi State Co-operatives Bill, 2010 The Maharashtra Co-operative Societies (Amendment) Ordinance, 2013 Salient Features on 97th Amendment Act The Multi State Co-operative Societies Bill, Summary The Constitution 97th Amendment Act, 2011 Page No. 145 153 192 221 261 263 264
Shri D.L. Desai (Shankarbhai) has been elected as the Trustee of Builders Association of India (BAI) after having served as the Hon. Gen. Secretary, Hon. Gen. Treasurer, and Vice President of BAI. He was earlier the Chairman of Mumbai Centre during 1998-2000. Family circumstances compelled him to give up his studies after matriculation and he joined the family firm M/s. Desai Lallubhai & Co., doing business of trading in tiles, sanitaryware, cement and construction material. Later sometime in 1979, he started real estate business. He joined BAI in 1966 and is one of the founder members of BAI Mumbai Centre. He has the unique distinction of actively participating in all the All India Builders Convention held by the Centre in 1981, 1996, 2001 and 2003. The vexed problem of Sales Tax on Works Contract from 1986 to 1988 could be resolved during his tenure 1998-2000 as Chairman of Mumbai Centre. (Incidentally, he was heading the Centres Sub-Committee from 1988 onwards). It is due to his efforts that Indian Construction is now recognised as number one journal of the Construction Industry in India. He gave it a new look, refurbished it and started a series of new features in it. As a matter of fact, he charted a new path of giving service to the members through Bombay Construction and Indian Construction. Another area, which held his interest, was publishing series of books on topics affecting the industry. It is also worthwhile to mention here that, during his tenure, the financial strength of the Centre has leaped to greater heights. As an Editor, he has also published the following books for and on behalf of BAI Mumbai Centre: 1. 2. 3. 4. Central Excise and the Construction Industry also covering Service Tax. Civil Contractors Referencer Statutory requirements. Select Labour Laws for Construction Industry A Profile. Employees State Insurance Act, 1948 Its applicability to the Construction Industry An insight through judicial pronouncements.
He is the recipient of Journalist of the year 2001 Award from Accommodation Times and Institute of Construction Management & Research, Navi Mumbai, presented him an Award for his contribution to journalism in construction related journals and publications. During his tenure, as the Mumbai Centres Chairman, he started a new experiment of the Centre taking up stalls in construction industry related exhibitions. This resulted in a better co-operation with other likeminded organisations. In addition, BAI could increase awareness amongst architects, consultants and contractors by taking part in such exhibitions. He is the recipient of Honorary Membership from Practicing Engineers Architects & Town Planners Association (India).
CA. Tarun Jamnadas Ghia Elected Central Council Member of the ICAI At the ICAI, Member of the Direct Tax Committee, Member of BOS, Member of Committee on Industry, Member of Public Finance Committee, Member of the Disciplinary Committee, Member of Committee on Banking, Insurance and Pension, Member of Professional Development Committee, Member of Committee on Economic, Commercial Laws and WTO, Member of Editorial Board, Member of Internal Audit Standards Board, Member of Committee on International Taxation. Vice Chairman of the Committee on Co operatives and NPO Sectors of the ICAI Vice Chairman of the Committee on Governmnet Accounting of the ICAI Member, Committee for Government Accounting, South Asian Federation of Accountants (SAFA) Brief details of professional contributions: Born and brought up in Saurashtra and completed schooling from Kamani Forward High School, Amreli, Saurashtra, Gujrat. B. Com. From H R College of Commerce & Econ., Mumbai. Practicing Chartered Accountant since 1984. Partner in M/s. TMG and Associates with core area of practice being consultancy, appellate and drafting/documentation works. Consultant to various redevelopment projects. Pleaded in person Writ Petitions at Bombay High Court and Brought directions for transparency in empanelment for and allotment of bank branch audits. Obtained directions of transparency and objectivity in empanelment for and allotment of cooperative audits at State level as well as Divisional level. Has initiated steps for transparency and objectivity in empanelment for and allotment of cooperative audits at State level as well as Divisional level in Gujrat State. As also in empanelments in concurrent audits in banks. Several times Commissioners of Income Tax on Taxation of shares and securities transactions and Tax issues in construction industry, redevelopments and immovable property transactions etc. Officers of Registrar of Companies, Sales Tax Officers and Assistant Commissioners of Sales Tax on topics of professional interests. The Institute of Valuers comprising Architects, engineers and other valuers on legal and tax aspects on redevelopments. ICAI All India conferences on accounting and tax aspects in entertainment industry, tax issues in construction industry and immovable property transactions.
As a speaker addressed
National Conference on Co-operative Societies, Trusts, Redevelopment of Properties, Legal and Taxation Aspects Various seminars organized by WIRC. Public meetings on union budget proposals. Addressed more than 250 meetings of Chartered Accountants and others organized by WIRC, ICAI and others.
As a writer contributed articles in Newspapers like Times of India (Property Section), DNA (Money Section), Janmabhoomi, Vyapar, Commodity World, Asian Age, and trade journals like Construction World, Bombay Construction and Indian Construction. Was interviewed live on CNBC Awaz News when MOFA was not revalidated for a short period after March 2005. Professional journals like the Chartered Accountant Journal, Income Tax Review, Bombay Chartered Accountants Journal, the Chartered Accountant Practice Journal, Taxmann, Sales Tax Review.
Association with professional organisations: Co-opted member on the Representation Committee of the Institute of Chartered Accountants of India. Co-opted member on the Journal Committee of the Bombay Chartered Accountants Society. Co-opted in the Core Group of the Chamber of Tax Consultants. Was Member of WIRC and a Chairman of Members in Industry Committee of WIRC of ICAI. Was a member of the Managing Committee of Sales Tax Practioners Association of Maharashtra, Convener of Journal Committee and a Member of Committee for Protection of Tax Payers.
Advisor to: Builders Association of India on direct tax matters and for their representations to the Government and other concerned authorities. Right to Information Act: Regular writer on RTI in newspapers and professional journals. Addressed meetings of professionals and successfully pleaded petitions at State and Central levels. Arbitration: Successfully pleaded arbitration proceedings at appellate levels in respect of share market transactions. Forensic Accounting: Member of the India Forensic Research Foundation. Well read on Construction laws, property laws, BMC laws, rent control laws, co-operative laws, stamp duty and registration laws, RTI law and is conversant with reading of building plans related approvals and their respective relevance and significance under the general laws and under direct and indirect tax laws. Lecturer: Formerly, lecturer in senior colleges affiliated to Mumbai University in the subjects of accountancy and Income tax. Was a visiting faculty for the subject of Income Tax in the intensive Coaching Classes conducted by ICAI for Inter C.A. students. Am a a visiting faculty for the subject of Income Tax in the intensive Coaching Classes conducted by the Bombay Chartered Accountants Society. Always available : To members in respect of any issue pertaining to the fraternity at large or even individual issues pertaining to the ICAI.
CA. Tarun Jamnadas Ghia PART I : KEY ISSUES IN REDEVELOPMENT OF PROPERTIES Co-operative housing and premises societies having old and dilapidated structures contemplate redevelopment as the only viable alternative. In some cases even when the buildings are not old or dilapidated, they contemplate redevelopment to avail advantage of incentive schemes of higher Floor Space Index (FSI) including Transferable Developments Rights (TDR). Upon such contemplations, the first step is generally appointment of a project management consultant (PMC). The Notification of the Department of Co-operation in the context of redevelopments issued under the provisions of Section 79A of the Maharashtra Co-operative Societies Act, 1960 requires a co-operative society to appoint a project management consultant in the initial stage of the process of redevelopment. This requirement would also apply to a co-operative society undertaking self development or contract development. The spirit of the Notification inter alia is that the process of redevelopment should be carried out transparently, objectively and in accordance with and within the framework of applicable laws. Therefore, the process of inviting proposals should be such that, whether the developers are invited by tendering system or by invitation for expression of interest, all interested developers get an opportunity to submit their offers. Many a times it is observed that a developer is selected on the basis of highest offer. However, when it comes to drafting documents, differences arise about the details of the offer and the legal aspects to be incorporated in the documents. To avoid such scenario and to ensure that offers are not vague and are comparable, it is desirable that the tenders or the invitations are comprehensive and the legal aspects from the points of views of the society and the members are incorporated therein so that the commercial terms offered by the developers become really comparable. This will also lead to selection of the developer on objective criteria. It is desirable that the documents of redevelopment are drafted by the consultants of the society in an iron clad manner. People sometimes get attracted by good designs of the plans of the new buildings. However, they should realize that the new plans will materialize with the help of good documentation. In the interest of the society and its members, the redevelopment agreement, power of attorney, individual agreements and the bank guarantee should be as specific and elaborate as much possible leaving no vagueness for possible defalcation or disputes. The documentation process will not be complete in one stroke. The draft will be modified and remodified by the society and the developer to take care of their respective interests. The consultant of the society is required to ensure that the draft safeguards the interests of the society and its individual members and at the same time he should be able to accommodate the practical and reasonable requirements of the developer without prejudicing the interests of the society and its members. In such a scenario to maintain transparency in drafting, it is desirable and more convenient that the drafts get exchanged in the email track mode so that only the changes and the modifications are attended. Notification dated 24 10 2011 the Government of Maharashtra relaxed provisions of Development Control Regulations by granting option of additional floor space index of 0.33 by payment of premium. In this context, first aspect which needs clarity is that due to grant of such additional FSI aggregate of FSI
National Conference on Co-operative Societies, Trusts, Redevelopment of Properties, Legal and Taxation Aspects has not increased. Thus if a co-operative housing society is presently entitled to aggregate FSI at 2 including TDR-FSI, then the same remains capped at 2 only and does not increase to 2.33. In such an example, the original land FSI remains at 1 and in respect of TDR- FSI of additional 1, there is now an option that either one may buy entire TDR FSI from the open market or alternately one may buy newly introduced 0.33 FSI from municipal corporation and buy only 0.67 from the open market. One will be inclined to buy 0.33 FSI from the municipality for the reason that the premium for such additional FSI payable to the municipal corporation is far lesser than the prevailing market price of TDR- FSI. In the cases of redevelopments, the society/flat owners/occupants/tenants may expect that such benefit would be passed on by the developers to them. As an offshoot of such additional FSI upto 0.33 available at a premium from the municipality, the need and consequently the demand for TDR FSI would reduce to that extent and correspondingly the market price of TDR-FSI has started coming down. The salient features of the additional FSI being offered in place of TDR FSI to the extent upto 0.33 so far as relevant to redevelopments of co-operative housing societies are summarised below: i. ii. iii. iv. v. Additional 0.33 FSI is optional and non-transferable. It is to be granted as on application and to be used on the same plot. The total maximum permissible FSI, with 1.33 FSI, Road FSI and TDR shall be restricted to 2.00. As per concept of TDR, additional FSI shall be permissible on gross plot area. Additional FSI available as per Regulation 33, shall be related to basic FSI of 1.00 only. In Mumbai Suburban District, construction upto 1.00 additional FSI is permissible through use of TDR. 0.33 FSI being optional and part of overall ceiling of use of 1.00 TDR, any disclosure made for use of TDR / FSI, while making agreements with purchasers under MOFA Act, shall be held valid for use of 0.33 FSI. No vertical extension of existing building by utilizing 0.33 FSI shall be permitted with erection of columns in the required marginal open space. The relaxation of premium i.e.10% of normal premium shall be charged while condoning deficiencies in open spaces ( as applicable for use of slum TDR).
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Many a times, societies first enter into Memorandum of Understanding with the interested developer and development agreement is relegated to a subsequent stage. As far as entering into MOU is concerned, the recourse to MOU should be taken only when it is very much necessary and in general, entering into MOU should be avoided because MOU is generally drafted on broad terms and is many times dependent on happening or non-happening of a particular contingency. Thereafter, development agreement is drafted. Development agreement is drafted elaborately including even the minute and procedural aspects. The problems would arise if in such detailed draft, differences arise on some aspects between the society and the developer. In the ongoing competition amongst the developers to procure the re-development project, they are also ready and willing to take over the responsibility of obtaining conveyance and such other documents and that too within the specified time period. While drafting such MOU, the basic principle would apply that substance of the document and not the nomenclature of the document would decide its true nature and therefore the substance of the terms of MOU should be such that it does not create a development contract. The substance would also decide income tax implications. The society needs to be quite cautious as on substance even MOU may become an enforceable contract. The society should provide for expiry of the MOU at the end of an agreed period. That the society must get conveyance is not a new law. Law has always been the same since 1963 onwards that the housing entity is entitled to conveyance of the land underneath and appurtenant to the building(s) within the prescribed time period. However, as pre amended law was not effective at the implementation stage, therefore, amended provisions provide easy procedure for deemed conveyance
National Conference on Co-operative Societies, Trusts, Redevelopment of Properties, Legal and Taxation Aspects and the time limits have been cast upon the competent authority to decide the application for deemed conveyance. Law will have to settle in a manner that once a society or other kind of housing organization has been formed, then simply because a few agreements have not been stamped or registered cannot disentitle the housing organization from the benefit of deemed conveyance. This is for the reason that provisions continue that a housing entity can be formed under an application by only 60% is of the flats. Once the housing entity is formed, under the pre amended provisions also, there are numerous decisions of civil courts and consumer courts wherein while directing the promoters to convey property in favour of a housing entity, the courts have not, and very rightly so, looked into the aspect as to whether all the flat purchase documents were subjected to stamp duty payment and registration requirements. The provisions have been amended to be more beneficial in nature to provide for expeditions formation of society and deemed conveyance against the failure by promoters to do so within prescribed time period. Therefore, the amended provisions cannot deny the benefit which was available in the pre amended provisions as the amendments have been brought to make the law more beneficial to the flat purchasers. By the competent authority as well as by some other quarters a view is propagated that for obtaining deemed conveyance certificate, documents like building plans, commencement certificate, occupation certificate, completion certificate, property cards, would be required to be furnished by the society. Such a view appears to be beyond logic and not supported by the provisions of the law. Rules cannot travel beyond the specific provisions of the law. The matter of income tax on development agreements by transferable development rights has reached to the Bombay High Court. If the High Court rules that such development agreement is not taxable, no cause of concern arises. But in a possible adverse decision that such transaction per se is a taxable transaction, then the question would arise in whose hands the same is taxable. If the society is the taxable entity, tax burden would run into lacs or crores of rupees whereas the tax benefits available to individual assesses can reduce the tax liability to nil or negligible level and keep the society and its members safe. Here it may be noted that in the case of Aurovilla Co-operative Housing Society, argued by this writer, Income Tax Tribunal held that the society is not taxable entity in such a transaction. From legal as well as tax points of view, concept that the beneficial and de facto and therefore true ownership of the property are with the members and not the society is more appropriate view. Redevelopment transaction needs to be structured and documented accordingly. Such concept would recognize and protect individual property rights of the members in a better way and would make the document more tax friendly. Many legal, tax and stamp duty issues need to be discussed in the context of redevelopments so that the professional colleagues play meaningful roles in this field and particularly in the matters in which they are concerned either as stakeholders or as consultants. New concept of fungible FSI has been introduced very recently and is likely to have much impact on the entitlements of the flat owners and tenants even in cases where development agreements have been executed. Many societies in suburban areas are either contemplating or are in the process of redevelopments of their properties. The recent amendments in the Development Control Regulations would affect all such societies. The benefit of new fungible FSI is maximum being 35% for residential buildings. For the commercial and industrial buildings the same is quite moderate being only 20%. The Development Control Regulations have been recently amended under which inter alia for a residential building additional fungible FSI has been created to the extent of 35% including in respect of amenity areas including dry balconies, porches, flower beds, pocket terraces etc. Such additional compensatory FSI has been freezed at 35% of the normal FSI including TDR-FSI implying that if the aggregate FSI including TDR FSI is at 2 in respect of a plot of land, now in the proposed new residential building, such additional FSI can be available to the extent of .70. Such FSI of .70 has been named fungible FSI
National Conference on Co-operative Societies, Trusts, Redevelopment of Properties, Legal and Taxation Aspects which for all practicle purposes mean indirect increase in the FSI. Such FSI, except as available and to be utilized upon the existing rehab portion, is to be purchased by payment of premium calculated as a percentage of the ready reckoner rates. However, to protect the interests of the existing owners and occupiers so as to avoid the transfer of fungible FSI in respect of existing building to the free sale portion by the developers, it has also been further clarified that the fungible FSI in respect of rehab portion would not be transferable to the free sale area of the developer. The Municipal Commissioner was quite aware about the uses and misuses of the flexible amenity areas being created by the developers. In very few cases, hitherto the members of the societies were given the benefit of amenity area exceeding 25%, although much more was created as amenity area. To ensure that the benefits of redevelopment go to the members and tenants and is not unscrupulously transferred to sale portions of the developers, the Municipal Commissioner has categorically provided that firstly the fungible FSI emerging in respect of the rehab portion is to be used for rehab portion only and secondly that the same would have to be utilized proportionately for the members and tenants with reference to their existing premises. This has been done to ensure that the more influential members and tenants are not able to corner the same in higher proportions for their premises to the disadvantage of less influential ones. More importantly, the fungible FSI need not be distinguished from the normal FSI as far as design of the premises is concerned with the result that overnight the possible enhanced area would increase by 35%. This 35% may be used for creating dry balcony, niche, flowerbeds and alternatively may be used to create one more room. In most cases, a person having the choice now to have 35% for flower beds, dry balcony etc. or to have one more room, is likely to decide that instead of new flat comprising one bed room hall kitchen and flower bed, dry balcony, niche areas he would prefer to have outright a new flat comprising two bed room hall kitchen. Amended D. C. Rules will have overall positive effect as it would remove disparity between developers who were capable to manage higher usable FSI vis a vis those who were not either capable or were not willing to . Amended D. C. Rules will have more benefits for the members of the societies and the tenants. Upright professionals with sound legal technical knowledge and strong leanings towards the benefits and safety of the members and tenants only can enable them to reap the benefits created for them. Prevalent practice in respect of redevelopment of immoveable properties is that after obtaining Intimation of Disapproval (IOD) from the municipal authorities, the developer gives a notice to the occupants in the existing premises for the reasons inter alia that the terms of IOD require that only after the demolition of the existing premises/structures, the developer would be entitled to apply for and obtain Commencement Certificate(CC). This practice is fallacious in law as well as in logic. This practice is disadvantageous and risky to the developers as well as to the flat owners/tenants/occupants. However, once enlightened, the members of the society should be firm to get the same implemented. IOD is issued under the provisions contained in the Mumbai Municipal Corporation Act, 1888. Thereafter, the Maharashtra Regional Town Planning Act, 1966 got enacted. Section 2(7) of the MRTP Act contains definition of the term development. According to this definition, the term development includes inter alia demolition of any existing building, structure or erection or part of such building, structure or erection. Provisions of section 43, 44 and 45 of the said MRTP Act require that no development can commence without obtaining CC. Combined reading of the provisions of the MRTP Act would mean that demolition is also a development or is a part of the development process, and development process cannot commence without a CC from the concerned authority. Legally speaking, IOD contains various conditions, fulfillment whereof only leads to obtainance of CC implying that if any of the conditions of the IOD are not fulfilled, CC may not be granted. In such a view of the matter, imagine the situation, wherein, the existing building has been demolished on the basis of IOD and because of non-fulfillment of the conditions like aviation clearance, environmental
National Conference on Co-operative Societies, Trusts, Redevelopment of Properties, Legal and Taxation Aspects clearance, permission by tree authority or any of them not materializing. In such a situation, the project would get halted and the dwellers may become homeless. Early vacating of the existing premises is not advantageous even for a developer because, amongst other things, the developer has to start paying rental compensation from the date of vacating the premises. The above risk factors to the occupants and disadvantage to the developer are the result of non implementation of the correct position of the relevant law. Even if the developer is ready and willing to go for demolition of the building on the basis of the IOD, the members of the society can point out the correct law and dissent to such premature demolition. The law has been consistently and logically interpreted by the Supreme Court that if there are two statutes operating upon the subject matter and the provisions are contradictory then in that case, the provisions, to the extent they are contradictory, of the later statute will prevail. It is therefore very much necessary that the existing building is not allowed to be demolished before a Commencement Certificate is obtained or in any case all other compliances necessary to obtain Commencement Certificate are met. PART II. ROLE OF PROJECT MANAGEMENT CONSULTANT IN REDEVELOPMENT OF A PROPERTY IN A CO-OPERATIVE SOCIETY : Model of Redevelopment Services by a Project Management Consultant As a co-operative housing or premises society initiates process of redevelopment of its property, the first legal requirement it needs to fulfill in terms of relevant circular the department of co-operation is appointment of a project management consultant (pmc). Appointment of pmc lays down foundation of entire redevelopment as successful completion of redevelopment largely depends upon ability, integrity, uprightness and transparent and reasoned approach of pmc. PMC should be knowledgeable on all legal and construction aspects of the redevelopment and should be aware of the redevelopment business so that he applies his knowledge and imagination to various stages of redevelopment in a manner that the society gets the best of the terms without compromising at all with safety aspects. Although nature and quantum of redevelopment services to be provided by a pmc would differ from case to case but a generalized model list is presented below as prepared on the basis of experience of pgv project management consultants. A society may select all or any of the services depending upon facts of its case and after interaction with the pmc. 1. 2. 3. Preparation of the feasibility report in respect of the subject property. Taking steps for conveyance in favour of the society. Invite and receive offers from interested developers and present the same before the managing committee with recommendation about selection. The recommendation report to be speaking and reasoned one. Draft of tender document or offer form in consultation with the society. Such draft should also be given to interested members of the society who may like to invite the developers in their respective contacts. News paper advertisement, if considered necessary should be drafted in consultation with the managing committee. PMC to analyse the tenders analysed and to apprise managing committee about such analysis. Interested developers may seek clarifications from pmc. To each intending developer submitting the tender or offer form, pmc should issue an acknowledgement receipt.
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National Conference on Co-operative Societies, Trusts, Redevelopment of Properties, Legal and Taxation Aspects 6. Best of the financial terms including corpus fund, larger area flats for each member, hardship compensation, rental compensation at prevailing market rate with due increment in case of rental market going up, best of amenities, strict legal terms in documentation, flexibility on the part of the developer to meet peculiar needs of society and its members should be some of the prominent criteria for selection of the developer. Managing committee should tentatively select developer on consideration of recommendation by pmc and general body meeting should take final decision on selection of developer. Offers should be submitted by all the developers in standard tender or offer format to allow comparision. PMC should draft Letter of Intent/Appointment on consideration of legal implications thereof.
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10. PMC should co-ordinate with the office of registrar of co-operative societies in respect of redevelopment process and should draft correspondence, papers and documents to be submitted to the office of the registrar in connection with redevelopment process. 11. Drafting of redevelopment documents as per society instructions and in consideration of applicable laws including MOFA, 1963, MCS Act, 1960, Transfer of Property Act, 1882 and other property laws, laws and regulations concerning developments and constructions, bye laws of the society. 12. Drafting documents on consideration of income tax, VAT, service tax laws. 13. Drafting/amending bank guarantee. 14. Drafting power of attorney. 15. Drafting individual agreement for each member. 16. Vetting TDR documentation from legal and taxes point of view. 17. Provision of services of the architect, engineer, chartered accountant, advocate in the matters connected with the process of redevelopment. 18. As may be needed, attending meetings of members to explain and/or to interact with members. 19. Filing of income tax returns of the society for the years during which redevelopment project continues. 20. Manner of disclosure of benefits of redevelopment in individual income tax returns of the members in the relevant years, at the request of the member. 21. Drafting correspondence on behalf of the society with architect, municipal authorities and others in relation to redevelopment project. 22. Drafting various circulars and letters and resolutions for the society in relation to matters connected with redevelopment project. 23. Drafting documents should be in absolutely transparent manner. 24. PMC services should primarily be in the nature of consultation and suggestions. Drafting of documents should also done after thorough discussion of the issues at stake and after considering views of the society and after explaining pmcs views. Ultimate decisions should be left upon the society. PMC should help society in decisions making process but should not insist that the decisions must be taken only in the manner it wants. Redevelopment is a subject wherein lot of misconceptions lie; wherein lot of public concern lies. Drafting of iron clad documents is the single most important aspect in any redevelopment and the pmc should be
National Conference on Co-operative Societies, Trusts, Redevelopment of Properties, Legal and Taxation Aspects able to assure that as far as redevelopment documentation is concerned, any member can compare the same with that of any other society and the member will himself be able to satisfy that documentation is the safest and takes care of every interest of the individual member as well as the interests of the society as well as takes care of the safety of the committee members. Drafting of tender form or offer form should be such that only the developers with merits and commitment would come forward as the drafting would clearly convey message that draftsman knows construction laws, property laws, stamp duty, registration laws, revenue laws, regulatory provisions and more importantly the draftsman knows the possible wrongs in the redevelopment projects and the necessary plugs to prevent such possible wrongs. Before accepting assignment, pmc should understand expectations of society and should explain the exact role that the pmc would perform in a particular project. PMC appointment should be under proper documentation. Nothing speaks better than actual work. PART III. DEEMED CONVEYANCE IN FAVOUR OF A CO-OPERATIVE HOUSING SOCIETY OR OTHER HOUSING ENTITY: 1. MOFA, the regulatory territorial law in the State of Maharashtra : Maharashtra Ownership Flats (Regulation of the promotion of construction, sale, management and transfer Act, 1963 (in this article referred to as the Act) popularly known as MOFA was enacted initially for a temporary period of five years to regulate the promotion of construction, sale, management and transfer of flats in the State of Maharasthtra. The duration of the Act was extended, from time to time till 31st March, 2005. Thereafter, probably inadvertently, the Act was not extended for some time. It was realized that the acute shortage of housing in several areas of the State of Maharashtra, especially in metropolitan cities like Mumbai, Pune, Nagpur, etc., was increasing day by day due to continuous flow of population from rural areas to urban areas and in order to prevent the mal-practices it was expedient to have this Act as perpetuity. Therefore, an Ordiance was promulgated extending the Act perpetually with a retrospective effect from 1st April, 2005. Time bound provisions for formation of housing entity and execution of conveyance : Provisions contained in the Act since its enactment in 1963 did require a promoter including a builder, developer, a cooperative housing society constructing flats for sale to take steps to form a housing entity i.e. either a co-operative society, company or apartment ownership association, by submitting application for formation of a co-operative society or a company or taking steps for constitution of apartment ownership association, as the case may be, within 4 months from the date on which 60% of the total number of the flats are sold. The original Act also provided for mandatory conveyance of the subject land and building in favour of the housing entity either within the agreed time period, and in the absence of any agreed time period, within 4 months from the date of registration of cooperative society or a company or constitution of the association of apartment owners, as the case may be.
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3. MOFA in its original form did not have required teeth : However, the Act did not have required teeth and as a consequence hardly any promoter must have formed housing entity within the prescribed time period and in majority of the cases conveyances have not been executed by the promoters for years. Although, it is possible to form a housing entity of the flat purchasers without co-operation of the promoter but legal remedies available for enforcing conveyance at the civil court for specific performance or at consumer court for deficiency in service and/or at criminal court for violation of MOFA have been time consuming and the problems are more compounded in the cases wherein landlord has expired and the legal heirs are scattered.
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National Conference on Co-operative Societies, Trusts, Redevelopment of Properties, Legal and Taxation Aspects 4. Implementation of MOFA has not been effective so far : The very objective of MOFA since its enactment is to effectively prevent abuses and malpractices due to acute shortage of housing in the several areas of the State. Government has realized that the implementation of the Act has not been effective enough particularly with reference to some of its provisions with the result that the objective behind enactment of the Act has not been fully achieved. Therefore, in the year 2005 Government initiated steps in an effort to remedy the situation. 5. Amendments carried out to MOFA and Rules : It is in this background that effort of the Government in the form of amendments carried out by the Amendment Act 2005 passed in the year 2008 and followed by amendment in rules as notified on 27 09 2010 is to be appreciation. The amendments carried out by the Amendment Act 2005 and the MOFA Rules include provisions for formation of a co-operative society within the prescribed time period and more importantly provision for execution of conveyance in favour of the housing entity to be formed of flat purchasers within the prescribed time period. Amendments to the Act and Rules strengthen provisions for formation of housing entity and for mandatory conveyance : Amendments carried out to the Act and the Rules do strengthen provisions for formation of a co-operative society, in case the promoter fails to do so within the prescribed time period. Predominantly, the Act has been amended to strengthen the provision of execution of convenience in favour of the housing entity within the prescribed time period by providing for issuance of unilateral deemed conveyance in favour of the housing entity. Flat agreements must be duly stamped and registered : For registration of a co-operative society, the flat purchasers should elect a chief promoter at their meeting. For enforcing formation of a co-operative society and for enforcing unilateral deemed conveyance under amended MOFA and amended rules, it is necessary that agreements between the promoter and the flat purchasers are duly stamped and registered as required under the provisions of under Bombay Stamp Act 1958 and Registration Act 1908 respectively. Competent Authority : Task of implementation of amended provisions concerning mandatory formation of cooperative society and granting unilateral deemed conveyance has been entrusted to a Competent Authority being an officer not below that rank of District Deputy Registrar of Co-operative Societies to be appointed by the State Government. Provisions for mandatory formation of a co-operative society : It is provided that if the promoter fails within the prescribed time period to submit an application to the Registrar for registration of society in the manner provided in the Maharashtra Co-operative Societies Act, 1960, the Competent Authority may, upon receiving an application, in the prescribed form, affixed with court fee stamps of Rs. 1,000/-, from the persons who have taken flats from the promoter, after verifying authenticity of the applicants request and after giving the concerned promoter a reasonable opportunity of being heard, direct the District Deputy Registrar, Deputy Registrar or, as the case may be, Assistant Registrar concerned, to register the society. Such application may be presented either by the Chief Promoter or an authorised agent accompanying an authority letter duly signed by the applicant and accepted by the authorised representative. An authorised agent may be an advocate or any other person.
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National Conference on Co-operative Societies, Trusts, Redevelopment of Properties, Legal and Taxation Aspects 10. Provisions for unilateral deemed conveyance : 10.1. Submission of Application : If the promoter fails to execute conveyance in favour of the housing entity, within the prescribed period, the members of such housing entity may make an application in prescribed form affixed with court fee stamps of Rs. 2,000/- to the concerned Competent Authority accompanied by the true copies of the registered agreements for sale, executed with the promoter by each of the individual members of the housing entity who have purchased flats and all other relevant documents (including the occupation certificate, if any ), for issuance of unilateral deemed conveyance in its favour and to have it registered. Such application may be presented either by the housing entity or its authorised agent accompanying an authority letter duly signed by the applicant and accepted by the authorised representative. An authorised agent may be an advocate or any other person. 10.2. Scrutiny and admission of application : On receipt of an application, office of the Competent Authority shall endorse date of receipt thereupon and shall as soon as possible, examine it and satisfy itself that the person presenting it has authority to do so and that it conforms with all the provisions of the Act and the Rules made thereunder. If the Competent Authority is satisfied that the application is complete in all respect, it shall cause the application to be registered, as admitted, in the appropriate register to be maintained in the prescribed form. However, if the application is not complete, the Competent Authority may send a notice in the prescribed form to the applicant/s to rectify the defects or comply with such requirements, as it may deem fit to conform with all the provisions of the Act, and the Rules, within a period of fifteen days of the receipt of such notice, which for sufficient cause may be extended for a further period of not more than 15 days. If the stated defect in an application is rectified, the Competent Authority shall cause it to be admitted and register the application in the appropriate register to be maintained in prescribed form.
10.3. Written statement by the Opponent: On admitting the application, the Competent Authority shall, within a period of fifteen days thereof, issue a notice in prescribed form to the opponent/s requiring him/them to file the written statement on the day, date and place as may be specified therein. Such notice shall be served on the opponents by registered post acknowledgment due or under certificate of posting on the last known address. On the date fixed as aforesaid, the opponent shall appear either in person or through his advocate or his authorized representative before the Competent Authority and shall file a written statement.
10.4. Hearing of application : The Competent Authority shall issue necessary notice to all the parties regarding the date fixed for hearing the application and publish or display the date fixed for the hearing thereof on its office notice board sufficiently in advance. On the date of hearing, if the applicant appears and the opponent or any of the opponents, does not or do not appear, as the case may be, the Competent Authority shall decide the application ex-parte. However, if before deciding the application, the Opponent appears and shows a sufficient cause for his non-appearance on the earlier occasion(s), he shall be heard in the matter as if he had appeared before the Competent Authority on the earlier day.
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National Conference on Co-operative Societies, Trusts, Redevelopment of Properties, Legal and Taxation Aspects If on the date fixed for hearing or on any other day to which the hearing may be adjourned, the applicant does not appear either in person or by his authorised representative, when application is called for hearing, the Competent Authority may dismiss the application. If, on the date fixed for hearing or any other day to which the hearing may be adjourned, the Opponent/s does/do not appear either in person or through his/their authorised representative, when the application is called for hearing, the Competent Authority may decide the same on merits after hearing the applicant or his authorised representative, if present.
10.5. Production and inspection of documents: The parties shall file the documents referred to in the pleadings at the time of filing application and written statement, as the case may be. If either party satisfies the Competent Authority that any document is relevant and the same is in the custody of the opposite party, the Competent Authority may, by an order in writing, direct such party to produce such document on the next date of hearing. If the party so ordered, fails to produce such documents on the next date of hearing, the Competent Authority may draw adverse inference against such party and hearing of the original application shall not be postponed till filing of such documents or for the reasons of such non compliance of the order. If the Competent Authority is satisfied that the documents required to be produced, cannot be brought before the Competent Authority for sufficient reasons like its volume or otherwise, the Competent Authority may allow the opposite part to take inspection of the documents within seven days from the date of order of such inspection. If the Competent Authority is satisfied that the opponent had no access to the documents earlier and the filing of additional statement is necessary, it may allow the filing of such additional statement.
10.6. Procedure for hearing the application: On receipt of the statement of the opponent, the applicant shall prove contents of the application and also deal with the contention of defences. The opponent likewise may file reply in support of the defence on the next date, if he so desires. No cross-examination of any of the parties shall be permitted. On receipt of the replies, the Competent Authority shall proceed to hear oral arguments of the parties and after hearing, shall close the proceedings for the order.
10.7. Decision on application within 6 months : The Competent Authority shall, within reasonable time and in any case not later than six months from the date of receipt of the application, after making such enquiry as may be deemed necessary it and after verifying the authenticity of the documents submitted by the parties and after hearing them and giving the parties sufficient opportunities as required under the Act and the principles of natural justice, pass such appropriate order as it deems fit, as provided under the Act. 10.8. Issuance of unilateral deemed conveyance by the Competent Authority : On being satisfied that it is a fit case for issuing such certificate, the Competent Authority shall issue a certificate to the Sub-Registrar or any other appropriate Registration Officer under the Registrar or any other appropriate Registration Officer under the Registration Act, 1908, certifying that it is a fit case for enforcing unilateral execution of conveyance deed conveying the right, title and interest of the promoter in the land and building in favour of the applicant, as deemed conveyance.
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National Conference on Co-operative Societies, Trusts, Redevelopment of Properties, Legal and Taxation Aspects 10.9. Registration of unilateral deemed conveyance : Along with the unilateral instrument of conveyance, the Sub-Registrar or the concerned appropriate registration Officer shall, notwithstanding anything contained in the Registration Act, 1908, issue summons to the promoter to show cause why such unilateral instrument should not be registered as deemed conveyance and after giving the promoter and the applicant(s) a reasonable opportunity of being heard, may, on being satisfied that it was fit case for unilateral conveyance, register that instrument as deemed conveyance.. PART IV : ISSUES IN DEEMED CONVEYANCE Maharashtra Ownership Flats (Regulation of the promotion of construction, sale, management and transfer Act,1963 (in this article referred to as the Act ) popularly known as MOFA regulating promotion of construction, sale, management and transfer of flats in the State of Maharashtra did have onerous provisions inter alia for formation of a housing entity and execution of conveyance in a time bound frame. However, the Act did not have required teeth. Provisions of deemed conveyance have recently become operative. However, law and the procedure are yet to be digested. Here is an attempt to address some of the issues involved. First of all the provisions of deemed conveyance can be activated only when the promoter (including builder/developer ) has failed to execute conveyance within the prescribed time period. MOFA continues to provide that only when no time period for conveyance has been agreed upon between the flat purchasers and the promoter then the prescribed time period of four months from the date of formation of the housing entity i.e. a co-operative society, an association of apartment owners or a limited company. In all likelihood, the promoter will mention a longer time period for conveyance in new agreements thereby making the deemed conveyance provisions inoperative during such agreed time period. Buyers have little or no choice but to sign the flat purchase agreements with the promoters on dotted the lines. Although, the law continues to provide an option to form a society, an association or a company and duty has been cast upon promoter to form such housing entity within four months from the date of sale of minimum 60% of the flats, amended provisions provide expeditious process for formation only society type of entity. Formation of a company would not require a promoters involvement. Vaguely worded amended provisions providing that if a promoter fails to form a society within prescribed time period, then the Competent Authority may, upon receiving an application from the persons who have taken flats from the promoter, direct the concerned co-operative registrar to register a society, cannot mean that the amended provisions require that all the flat purchasers must apply for registration of society as only 60% or above would suffice. This is because the Circular requiring that minimum 60% of flat purchasers can file application for registration of society continues to be operative. Amended provisions are only for facilitating expeditious registration of a society on default by promoter. If a view is taken that all the flat purchasers would have to apply for registration of a society then the very provisions enabling expeditious registration of a society would get defeated as there may be a flat purchaser being a relative of the promoter or a flat purchaser interested in acting for the benefit of the developer for some reasons who may decline to join in formation of the society. In the matter of registration of society, Court has, even in the pre-amended provisions, taken a logical and upright view that a builder/developer has no locus standi to oppose such registration as his rights to sell his flats do not in any manner get prejudiced by society registration. The most important issue arises with regard to requirement of stamping and registration of individual flat agreements. Amended provisions require that application for deemed conveyance will be accompanied by the true copies
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National Conference on Co-operative Societies, Trusts, Redevelopment of Properties, Legal and Taxation Aspects of the registered agreements for sale, executed with the promoter by each individual member of the housing entity. Such wordings have led to a view that the purchase agreements in respect of all the flats have to be stamped and registered. Such a view appears to be incorrect for reasons including that provisions enabling formation of a society under an application by only 60% of the flats continue; amended provisions are beneficial intending for expeditious formation of society; wordings of the amended provisions refer to the members and not to flat purchasers. What will happen in a case when all the agreements including, chain of agreements in cases of resales of flats, are either not fully stamped or not registered Pre-amended provisions enabled societies to get conveyance without reference to stamp duty payment and registration aspects of the individual flat purchase agreements. Even if some of the flat purchase documents are not stamped, the government does not lose revenue, because government in any case collects stamp duty on present market value of the entire property minus stamp duty paid on flat purchase agreements with the promoter. Further, the government can always enforce payment of stamp duty on unstamped or deficiently stamped documents. The society can recover the loss due to defective documents of members billing the members. If non-payment of stamp duty by a few flat purchasers results into non conveyance, it would mean an advantage to delinquent promoter. Once a housing entity has been legally formed, conveyance should be an automatic process as otherwise requirement of stamp duty and registration by all the flat purchasers would tantamount loop holes against the spirit of the amended beneficial provisions. Under the pre-amended provisions we have court decisions directing promoters to convey property in favour of a housing entity without going into details, and very rightly and logically so, as to whether stamp duty and registration requirements were complied with in respect of all flat transactions or not. Under the law, if some flat agreements with promoter are unstamped or unregistered, the promoter is more responsible if he has collected more than 20% of the price of the flat. A view is being propagated that for obtaining deemed conveyance certificate, documents like building plans, commencement certificate, occupation certificate, completion certificate, property cards, would be required to be furnished by the society. Such a view seems grossly misplaced as such requirements would be directly in contradiction to letter and spirit of amended provisions relating to deemed conveyance which even otherwise have not specified such requirements. Providing such documents are the duty and obligations of the promoter unless he has given the same to the housing entity. It seems, such additional requirements are propagated so that non availability of such documents can lead to unreasonable demands. Competent Authority would only issue a certificate to Registration Authority that it is a fit case for granting unilateral deemed conveyance in favour of the housing entity. Thereafter, the Registration Authority would serve summons to promoter to show cause as to why unilateral instrument of conveyance should not be registered as deemed conveyance. Apprehensions are being expressed as to what kind of hearing will once again take place. It is submitted that the Registration Authority cannot in any case review the decision already taken by the Competent Authority that it is a fit case to grant unilateral deemed conveyance. Powers of Registering Authority will have to be confined to as provided in the Registration Act,1908 in respect of verification of documents and identity of persons appearing before it. No time limit has been specified within which Registration Authority would have to act but in the absence of substantial powers and duties on its part, unreasonable delay may not be possible.
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Dr. Sanjay Chaturvedi a Commerce Graduate from University of Mumbai and was conferred PhD degree in Real Estate Finance from University of Mumbai. He has presented many papers in National and International conferences and published. He authored eight books on various aspects of Real Estate and allied subject. He is visiting faculty at Department of Commerce, University of Mumbai, NMIMS University and other reputed institutions. At present he is Executive Editor of Accommodation Times and Maharashra Cooperative Housing Society Times. He is also Director at Accommodation Times Institute of Real Estate Management and Research Foundation. In the past he had freelanced for Reuters and other international news agencies
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Laws governing co- operative societies, trusts, real estate transactions

Dr. Sanjay Chaturvedi
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NAME ADDRESS
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Shri. Manoj V. Daisaria 801, Skyline Epitome, Kirol Road, Nr.Jolly Gymkhana, Vidyavihar (West), Mumbai 400 086. 29th November, 1959 H.S.C. K.J.Somaiya College, Mumbai. GD ARCH. 1982 From Rachna, Sansad Academy of Architecture, Mumbai. B. ARCH. 1982 From Academy of Architecture, Mumbai.
DATE OF BIRTH : QUALIFICATION : EXPERIENCE
: - Joined Fathers Firm in 1982 - - Handled Project From Major, Developers in and around Mumbai, Goa, Ahmedabad At present involved in development of I.T. Parks, Multiplexes, Malls Corporate Offices, Residential Town Ship, Slum Redevelopment etc. Also involved in Charitable works like Hospitals, Schools, Cemetery etc
PROFESSIONAL EXPERIENCE AND ACHIEVEMENT Our firm is appointed as Project Management Consultant in Category A by Maharashtra Housing Area Development Authority. Shri. Manoj Daisaria was appointed as a special invitee for District Planning Committee appointed by Government of Maharashtra in the year 2000. Shri ManojDaisaria was President of PEATA (INDIA) (Practicing Engineers Architect & Town Planners Association) (2007 2009)
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FACTS
FIGURES
FORMULAE
COMPILED BY:- MANOJ DAISARIA
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DCR 35(4) Compensatory FSI (Floor Space Index):

Residential Industrial Commercial DCR 33(7), 33(9), 33(10) Percentage 35% 20% 20% Premium 60% 80% 100%
This FSI admissible for Rehab. component - without charging premium.
DCR 33(5) & Re-development in suburbs (1.0 + TDR) Fungible fsi on consumed fsi of existing structure - without charging premium. This fungible FSI for rehab. component to be used for over and above eligible area for existing tenants and not for sale components.
Applicability :1)
Not applicable if I.O.D. is issued but building is not completed and apply at the option of owner. New rules can be availed. If I.O.D. is issued for layouts / sub-divisions This rule to be applicable to balance plot potential. The fungible FSI is useable as regular FSI. Not permissible in C.R.Z
2)
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PROVISIONS PRIOR TO AND AFTER MODIFIED D.C. REGULATION

IMPACT ON: RESIDENTIAL BUILDING COMMERCIAL BUILDING 33(7) REDEVELOPMENT OF CESSED BUILDINGS IN ISLAND CITY REDEVELOPMENT IN SUBURBS
OPEN SPACES
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RESIDENTIAL BUILDING
FREE OF FSI AREA AS PER EARLIER REGULATION.
RESIDENTIAL BUILDING
FREE OF FSI AREA AS PER PRESENT POLICY
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COMMERCIAL BUILDING
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COMMERCIAL BUILDING
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33(7) REDEVELOPMENT ON CESSED BUILDING ON ISLAND CITY

33(7) REDEVELOPMENT ON CESSED BUILDING ON ISLAND CITY

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REDEVELOPMENT IN SUBURBS
FREE OF FSI AREA AS PER EARLIER REGULATION
REDEVELOPMENT IN SUBURBS
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THANK YOU
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Shri S. Y. GHATE
B. E. CIVIL Distinction passed in the year 1976 Retired as Chief Engineer Devlopment Plan Of Municipal Corporation Of Greater Mumbai He is well conversant with Development Control Regulations Of Greater Mumbai n worked in M C G M for 35 years
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Dr. Girish Kumar received Ph.D. degree in Electrical Engineering from IIT Kanpur in 1983. From 1983 to 1985, he was a Research Associate in the Electrical Engineering Department, Univ. of Manitoba, Winnipeg, Canada. From 1985 to 1991, he was an Assistant Professor in the Electrical Engineering Department, Univ. of North Dakota, Grand Forks, USA. Since 1991, he is at IIT Bombay, where he is currently a Professor in the Electrical Engineering Department. His areas of interest are: Microstrip Antennas and Arrays, Broadband Antennas, Microwave Integrated Circuits and systems. He has written more than 200 papers in the international and national journals and conference proceedings. He is an author of the book entitled Broadband Microstrip Antennas published by Artech House, USA in 2003. He has been working on hazards of microwave radiation for the last one decade. He has written several reports and given presentations at various forums on the topic related to Cell Phone and Tower Radiation Hazards and Solutions. He is also chairman of the company Wilcom Technologies Pvt. Ltd., which is an IIT Bombay incubated company. Wilcom has developed more than 100 products, such as, mobile phone jammers, signal enhancers, radiation shield, antennas, power dividers, couplers, filters, amplifiers, etc.
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Cell Towers - an income avenue or a menace ?

Dr. Girish Kumar
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Ms. Neha Kumar Ms. Neha Kumar completed her B.Tech. in Industrial Biotechnology from Anna University, Chennai in May 2009. Immediately after graduation, she joined as Director of Wilcom Technologies Pvt. Ltd., which is an IIT Bombay incubated company. She specializes in the study of biological effects of electromagnetic radiation emitted from devices such as, cell phones, cell towers, TV and FM towers, Wi-Fi, etc. on the health of humans, birds, animals and the environment. She has studied several 100s of journal publications and websites on this subject and has interacted with several experts, researchers, doctors and patients around the world who have been affected with prolonged exposure to mobile tower/phone radiation. Her report Biological effects of Electromagnetic Radiation co-authored with Prof. Girish Kumar, IIT Bombay has received great appreciation and several media articles have appeared based on the same. She has presented papers at international conferences and written articles for newspaper and college magazines. She has also given talks at KEM Hospital, Mumbai, Xavier Institute of Engineering, Rotary Clubs, Environmental Hazards Protection Forum - Penang, Malaysia and several other places. She is involved with radiation measurements from cell tower antennas at several residential areas and offices, and has found a strong correlation between high radiation levels and health effects like headaches, fatigue, memory problems, joint pains, miscarriages and even cancer. Recently she started her own company NESA (stands for Non- Ionizing Electromagnetic Radiation Shielding Alternatives), which carries out radiation measurement and has cell tower radiation measurement products as well as several radiation shielding products like Radiation Shield, Window Shielding Films, Curtains, Wall Papers etc.
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Cell Towers Radiation Hazards and Solutions

Neha Kumar
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Dr. K S Parthasarathy
Dr. K S Parthasarathy is formerly Secretary, Atomic Energy Regulatory Board (AERB) and formerly Raja Ramanna Fellow, Department of Atomic Energy. A Ph.D in medical physics from the University of Leeds, UK, he was a consultant to the International Atomic Energy Agency (IAEA) Vienna. He was a Research Associate in the University of Virginia Medical Centre, Charlottesville, USA. He has assisted AERB in developing radiation protection policies on radiation installations, equipment and practices. He is a free lance science journalist registered with the EurekAlert news agency of the American Association for the Advancement of Science, the British Medical Association, the American Medical Association and the NucNet, The Communications Network for Nuclear Energy and Ionizing Radiation
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Do Not Fear The Tower

Shri K.S. Parthasarathy Possible risks from cell tower/phone radiation have been a topic of discussion in the media. With breathtaking progress in mobile phone technology, there has been unbridled increase in the use of mobile phones nationwide. Cell towers have sprung up everywhere. The agents selling protective accessories have attributed all types of diseases and symptoms to these towers and encouraged the public to believe in them. Cell tower radiation has a million times less energy than that of x-rays or gamma rays. It cannot damage the cells in the body to change some of them into rogue cells, which multiply uncontrollably to cause cancer. It may just warm up the tissue. Since all the studies on this subject have been conducted for a period of less than 20 years, we may still have to go a longer way before we get definitive proof. But the results obtained thus far are reassuring. After a comprehensive review of the relevant literature, the World Health Organization, in its factsheet number 304, stated thus: Considering the very low exposure levels and research results collected to date, there is no convincing scientific evidence that the weak RF [radio frequency] signals from base stations and wireless networks cause adverse health effects... The International Agency for Research on Cancer of the WHO has the remit to decide whether an agent or an activity is a carcinogen or possibly carcinogenic to humans. In The Lancet Oncology of July 1, 2011, the IARC indicated that it mainly depended on the interphone study and the pooled analysis by a Swedish group led by Lennart Hardell to arrive at a decision. The interphone study supported by WHO is the largest case study of the possible relation between mobile phones and brain tumours conducted till date. Patently absurd The researchers of the interphone study did not observe any increase in the risk of brain cancer with the use of mobile phones. There were suggestions of an increased risk of glioma at the highest exposure levels, but biases and error prevent a causal interpretation, they concluded. The IARCs list of possibly carcinogenic agents has 275 items; it includes coffee, pickled vegetables, certain fatty acids in coconut oil used to make soaps, talcum powder and so on. None of them received as much media publicity as cell phone radiation. The International Commission on Non-Ionizing Radiation Protection is the standard body which sets up guidelines for matters pertaining to radiation. Most countries enforce the ICNIRP guidelines. On a recommendation from an Inter Ministerial Committee, India enforced a radiation limit of one tenth of the ICNIRP guidelines nationwide. Indias guidelines have a safety factor of 500. Lowering the guidelines for cell tower/phone radiation was a symbolic gesture because people wanted it. It appears to have set a bad precedent; specialists must decide such matters on the basis of scientific merit and not on popular sentiments. The IMC did a great disservice by selectively listing a number of reports which showed adverse effects while ignoring many reports which did not show any adverse impact. The IMC did say that there is no conclusive proof of harm from cell tower radiation. But scaremongers demand lower levels quoting the IMCs report. The IMC unwittingly gave them leeway. A cell phone may cause a small increase in body temperature in areas close to the phone. Thermoregulatory mechanisms such as blood flow reduce the heat, establishing equilibrium, in about six minutes. Thereafter, there will not be any increase in temperature. So it is patently absurd to say that using a phone longer multiplies the risk.
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Shri Sushil Solanki, IRS is presently posted as Commissioner of Service Tax, Mumbai. He joined Indian Revenue service in the year 1985. He is also a Chartered Accountant. He completed MSc in Fiscal Studies from University of Bath, England in 1995 where he secured first rank in the university. He has worked at many places like Mumbai, Delhi, Pune, Bangalore and Surat. In Delhi, he was working in the Ministry of Finance where he was involved in Budget making for Govt of India. During 1994, he was associated with introduction of Service Tax in India. He is also closely associated with formulation of GST (Goods and Service Tax ) in India. He has been part of number of committees set up by Govt on issues relating indirect taxes. He has authored books on Excise Audit and other subjects. He was conferred with prestigious Presidential Award in 2001 for meritorious service. He was one of the member of Expert Group, which formulated and introduced a professional system of Audit, known as EA 2000, in the Central Excise department. He also introduced Computer Assisted Audit Technique tool for audit in Excise and Service Tax.
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Shri A. R. Krishnan Shri A. R. Krishnan is B.Com. (Hons.), Grad. C.W.A., F.C.A. (22nd rank in Inter CA) practicing as a Chartered Accountant since 1981. His present areas of expertise and practice are Service Tax. He has authored a Publication Guide to Service Tax published by Western India Regional Council (WIRC) of Institute of Chartered Accountants of India (ICAI) and the Continuing Professional Education Committee of the Institute of Chartered Accountants of India, New Delhi in 2002. He has contributed to the study material on service tax when it was first introduced in CA final as a subject. He has also written a detailed paper on Service Tax on Cross Border Transactions for International Tax & Finance Conference organized by Bombay Chartered Accountants Society (BCAS) in 2006 and 2012. He has been contributing to BCAS Referencer Diary in the area of Service Tax for the past 11 years. He has been writing a regular column on service tax for the newsletter published by the Western India Regional Council of the Institute of Chartered Accountants of India for the past 12 years readership of over 50000 professionals. He lectures on Service tax at various Forums, Seminars and Conferences and also contributes articles on service tax in various periodicals. As of now he has spoken over 1000 places all over India in various forums including at National Academy of Customs, Excise and Narcotics, Bhandup, Mumbai [a training forum for Government Officers]. He is regularly providing inputs to the ICAI, Bombay Chartered Accountants Society, Chamber of Tax Consultants and the Government of India in the area of service tax by way of pre-budget and postbudget memorandum. He is/has been a member of various committees of ICAI, WIRC, Bombay Chartered Accountants Society and Chamber of Tax Consultants. He has been featured as one of the top 10 indirect tax advisors in India based on a survey conducted by International Tax Review an International journal published from London in April, 2011.
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Service tax Issues

Shri A. R. Krishnan (w.r.t. Redevelopments, Ordinary Maintenance of Co-operative Societies, repairs to properties, renting of properties, cell tower spaces, trusts etc.) 1. Taxability of revenue streams of a Co-operative Society: S l . Nature of Revenue Streams No. (a) (b) (c) Members contribution towards repairs, muncipal taxes, water charges, security, lift maintenance, sinking fund etc. Transfer premium paid by outgoing members (i) Space given to (a) erect hoarding (b) cell towers etc. (ii) Space given to exhibit advertisement in societys hoarding 2. Renting of flats/residential dwellings by flat owners Service by way of renting of residential dwelling for use as residence is covered under the negative list. Would renting of residential dwellings be liable for service tax under the following scenario? Sl. No. (i) Scenario Departments view in Education Guide ARKs Views to be discussed Taxability
residential house taken on Not covered in the negative rent is used pre-dominantly list entry for commercial or nonresidential use If a house is given on rent Transaction not covered and the same is used as a in the negative list entry hotel or a lodge because the person taking it on rent is using it for commercial purpose Furnished flats given on rent Such renting as residential for temporary stay ( a few dwelling for the bona fide use days) of the person or his family for a reasonable period shall be residential use; but if the same is given for a short stay for different persons over a period of time the same would be liable to tax.
(ii)
(iii)
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National Conference on Co-operative Societies, Trusts, Redevelopment of Properties, Legal and Taxation Aspects Sl. No. (iv) Scenario House given on rent is used partly as residence and partly for non-residential purpose like office of lawyer, doctor etc. Departments view in Education Guide Services not naturally bundled in the ordinary course of business hence to be treated as provision of service which attracts highest amount of service tax. May be considered as renting of commercial property [para 9.2.2. of EG] Residential dwelling means any residential accommodation, but does not include hotel, motel, inn, guest house, campsite, lodge, house boat, or like places meant for temporary stay. [ para 4.13.1of CBEC Education Guide] Partial reverse charge / Reverse Charge for a Co-operative Housing Society (CHS) [Payment of Service tax as recipient of Service] Notification No. 30/2012-ST dated 20.6.2012. Sl. No. Nature of Service Normal Scenario Service Provider liability (i) (ii) (iii) Goods service Transport agency Nil Service recipient liability 100% 100% Exempt (See note 2) 100% (see note 2) Nil 60% 100% (see note 3) 40% 75% 100% (see note 2) 50% 100% (see note 2) Co-operative Society Scenario Service Provider liability Cooperative Society Liability 100% (see note 1) ARKs Views to be discussed
3.
Legal Services to business Nil entity Renting of motor vehicles, by non-corporates to corporate business entity Abatement claimed Abatement not claimed
(iv)
supply of manpower or security 25% services by non-corporate to corporate business entity works contract (e.g. repairs etc.) 50% by non-corporates to corporate business entity
(v)
Note: 1. In the case mentioned in Sl. No. (i) above co-operative societies would be liable if it pays the freight.
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National Conference on Co-operative Societies, Trusts, Redevelopment of Properties, Legal and Taxation Aspects 2. in other cases co-operative society is not liable to pay service tax as a recipient of service since it is possible to argue that it is not a business entity.Business entity means any person ordinarily carrying out any activity relating to industry, commerce or any other business or profession [Section 65B(17)] 100% of the abatement amount which is 40%.
3. 4.
Tax implications of redevelopment agreements between builders and society Fortune CHS Limited (Fortune) has a 2 storey building, consists of 12 members, each member owning one residential unit and an undivided interest in the land. Being constructed in 1960, the society has entered into a re-development agreement with M/s. Aggressive Limited (Aggressive), the salient aspects of which are as under: (i) Fortune has granted to Aggressive the entire development rights pertaining to the said land whose FSI is 1.0 (almost 80% consumed) and on which under the TDR Scheme an additional FSI of 1.0 is permissible. In consideration for the grant of the development rights, Aggressive would construct a new building consisting of 6 storeys and 24 members, at its own cost (by utilizing the entire FSI including loading TDR purchased from open market) by demolishing the existing structure within 18 months.
(ii)
(iii) The existing 12 members would occupy 12 units in the new building, each unit of the existing member having about additional 30% carpet area. (iv) The existing members would also be entitled to a rent compensation of Rs. 40,000/- per month till the time the new structure is developed. (v) Aggressive will also contribute an amount of Rs. 3 crore to the corpus of Fortune.
(vi) The balance 12 units would be marketed by Aggressive to prospective buyers. (vii) The agreement clearly provides that the ownership of the land shall remain with Fortune until the construction is complete. However, Fortune is obliged to convey an undivided interest in the land on which the residential complex is constructed by being a party to the agreement which Aggressive will have with each new member. (viii) Stamp duty has been paid on the said redevelopment agreement. (ix) Aggressive has by an irrevocable licence from Fortune to enter the land for the performance of its obligations. What are the service tax implications as between Fortune and Aggressive?
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National Conference on Co-operative Societies, Trusts, Redevelopment of Properties, Legal and Taxation Aspects Relevant Text of the Legal provisions/Departments Education Guide I. Relevant Provisions of the Finance Act, 1994. a. Definition of Service (44) service means any activity carried out by a person for another for consideration, and includes a declared service, but shall not include(a) an activity which constitutes merely,(i) a transfer of title in goods or immovable property, by way of sale, gift or in any other manner; or (ii) such transfer, delivery or supply of any goods which is deemed to be sale within the meaning of clause (29A) of article 366 of the Constitution; or (iii) (b) ; (c) ... Explanation 1. -.,Explanation 2.-. Explanation 3.- For the purposes of this Chapter,(a) an unincorporated association or a body of persons, as the case may be, and a member thereof shall be treated as distinct persons; (b) .. Explanation 4.-; (54) works contract means a contract wherein transfer of property in goods involved in the execution of such contract is leviable to tax as sale of goods and such contract is for the purpose of carrying out construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, alteration of any movable or immovable property or for carrying out any other similar activity or a part thereof in relation to such property; b. Negative list of services 66D. The negative list shall comprise of the following services, namely:(a) .... to (f).... (g) selling of space or time slots for advertisements other than advertisements broadcast by radio or television; (h) ...... to (l).... (m) services by way of renting of residential dwelling for use as residence; (n) .... to (q)..... a transaction in money or actionable claim;
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National Conference on Co-operative Societies, Trusts, Redevelopment of Properties, Legal and Taxation Aspects c. Declared services 66E. The following shall constitute declared services, namely:(a) renting of immovable property; (b) construction of a complex, building, civil structure or a part thereof, including a complex or building intended for sale to a buyer, wholly or partly, except where the entire consideration is received after issuance of completion certificate by the competent authority. Explanation.- For the purposes of this clause,(I) the expression competent authority means the Government or any authority authorised to issue completion certificate under any law for the time being in force and in case of non-requirement of such certificate from such authority, from any of the following, namely:(A) architect registered with the Council of Architecture constituted under the Architects Act, 1972; or (20 of 1972.) (B) chartered engineer registered with the Institution of Engineers (India); or (C) licensed surveyor of the respective local body of the city or town or village or development or planning authority; (II) the expression construction includes additions, alterations, replacements or remodelling of any existing civil structure; (c).... to (g).... (h) service portion in execution of works contract; (i)..... d. Valuation of taxable services for charging service tax 67. (1) Subject to the provisions of this Chapter, where service tax is chargeable on any taxable service with reference to its value, then such value shall (i) in a case where the provision of service is for a consideration in money, be the gross amount charged by the service provider for such service provided or to be provided by him; (ii) in a case where the provision of service is for a consideration not wholly or partly consisting of money, be such amount in money as, with the addition of service tax charged, is equivalent to the consideration; (iii) in a case where the provision of service is for a consideration which is not ascertainable, be the amount as may be determined in the prescribed manner. (2) Where the gross amount charged by a service provider, for the service provided or to be provided is inclusive of service tax payable, the value of such taxable service shall be such amount as, with the addition of tax payable, is equal to the gross amount charged.
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National Conference on Co-operative Societies, Trusts, Redevelopment of Properties, Legal and Taxation Aspects II. Relevant Provisions of the Mega Exemption Notification No. 25/2012 dated 20.6.2012 1. .. to 5. 6. Services provided by(a) an arbitral tribunal to (b) an individual as an advocate or a partnership firm of advocates by way of legal services to,(i) an advocate or partnership firm of advocates providing legal services; (ii) any person other than a business entity; or (iii) a business entity with a turnover up to rupees ten lakh in the preceding financial year; or (c) a person represented on an arbitral tribunal to an arbitral tribunal; 7. .. to 27.. 28. Service by an unincorporated body or a non- profit entity registered under any law for the time being in force, to its own members by way of reimbursement of charges or share of contribution (a) ..; (b) .; or (c) up to an amount of five thousand rupees per month per member for sourcing of goods or services from a third person for the common use of its members in a housing society or a residential complex; III. Relevant Provisions of the Abatement Notification No. 26/2012 dated 20.6.2012 In exercise of the powers conferred by sub-section (1) of section 93 of the Finance Act, 1994 (32 of 1994) (hereinafter referred to as the said Act), and in supersession of notification number 13/2012Service Tax, dated the 17th March, 2012, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number G.S.R. 211 (E), dated the 17th March, 2012, the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts the taxable service of the description specified in column (2) of the Table below, from so much of the service tax leviable thereon under section 66B of the said Act, as is in excess of the service tax calculated on a value which is equivalent to a percentage specified in the corresponding entry in column (3) of the said Table, of the amount charged by such service provider for providing the said taxable service, unless specified otherwise, subject to the relevant conditions specified in the corresponding entry in column (4) of the said Table, namely;-
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National Conference on Co-operative Societies, Trusts, Redevelopment of Properties, Legal and Taxation Aspects Sl. No. 12. Description of taxable service Construction of a complex, building, civil structure or a part thereof, intended for a sale to a buyer, wholly or partly, except where entire consideration is received after issuance of completion certificate by the competent authority,(a) for a residential unit satisfying both the 25 following conditions, namely: (i) the carpet area of the unit is less than 2000 square feet; and (ii) the amount charged for the unit is less than rupees one crore; (b) for other than the (a) above. C. For the purposes of exemption at Serial number 12 The amount charged shall be the sum total of the amount charged for the service including the fair market value of all goods and services supplied by the recipient(s) in or in relation to the service, whether or not supplied under the same contract or any other contract, after deducting(i) the amount charged for such goods or services supplied to the service provider, if any; and (ii) the value added tax or sales tax, if any, levied thereon: Provided that the fair market value of goods and services so supplied may be determined in accordance with the generally accepted accounting principles. 30 Percentage Conditions (i) CENVAT credit on inputs used for providing the taxable service has not been taken under the provisions of the CENVAT Credit Rules, 2004; (ii) The value of land is included in the amount charged from the service receiver.
IV. Relevant Provisions of Notification No. 30/2012 dated 20.6.2012 In exercise of the powers conferred by sub-section (2) of section 68 of the Finance Act, 1994 (32 of 1994), and in supersession of (i) notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 15/2012 Service Tax, dated the 17th March, 2012, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i),vide number G.S.R 213(E), dated the 17th March, 2012, and (ii) notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 36/2004 Service Tax, dated the 31st December, 2004, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R 849 (E), dated the 31st December, 2004, except as respects things done or omitted to be done before such supersession, the Central Government hereby notifies the following taxable services and the extent of service tax payable thereon by the person liable to pay service tax for the purposes of the said sub-section, namely:I. The taxable services,(A) (i) .; (ii) provided or agreed to be provided by a goods transport agency in respect of transportation of goods by road, where the person liable to pay freight is,-
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National Conference on Co-operative Societies, Trusts, Redevelopment of Properties, Legal and Taxation Aspects (a) any factory registered under or governed by the Factories Act, 1948 (63 of 1948); (b) any society registered under the Societies Registration Act, 1860 (21 of 1860) or under any other law for the time being in force in any part of India; (c) any co-operative society established by or under any law; (d) any dealer of excisable goods, who is registered under the Central Excise Act, 1944 (1 of 1944) or the rules made thereunder; (e) any body corporate established, by or under any law; or
(f) any partnership firm whether registered or not under any law including association of persons; (iii) ..; (iv) provided or agreed to be provided by,(A) .., or (B) an individual advocate or a firm of advocates by way of legal services, or (C).. to any business entity located in the taxable territory; (v) provided or agreed to be provided by way of renting of a motor vehicle designed to carry passengers to any person who is not in the similar line of business or supply of manpower for any purpose or service portion in execution of works contract by any individual, Hindu Undivided Family or partnership firm, whether registered or not, including association of persons, located in the taxable territory to a business entity registered as body corporate, located in the taxable territory; (B) .; (II) The extent of service tax payable thereon by the person who provides the service and the person who receives the service for the taxable services specified in (I) shall be as specified in the following Table, namely:Table Sl. No. Description of a service Percentage of service tax payable by the person providing service Percentage of service tax payable by the person receiving the service 100%
in respect of services provided or Nil agreed to be provided by a goods transport agency in respect of transportation of goods by road in respect of services provided or Nil agreed to be provided by individual advocate or a firm of advocates by way of legal services
100%
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National Conference on Co-operative Societies, Trusts, Redevelopment of Properties, Legal and Taxation Aspects Sl. No. Description of a service Percentage of service tax payable by the person providing service Percentage of service tax payable by the person receiving the service 100 %
(a) in respect of services provided Nil or agreed to be provided by way of renting of a motor vehicle designed to carry passengers on abated value to any person who is not engaged in the similar line of business (b) in respect of services provided 60% or agreed to be provided by way of renting of a motor vehicle designed to carry passengers on non abated value to any person who is not engaged in the similar line of business
40%
8.
in respect of services provided or 25% agreed to be provided by way of supply of manpower for any purpose or security services in respect of services provided or 50% agreed to be provided in service portion in execution of works contract
75 %
9.
50%
Explanation-I.- The person who pays or is liable to pay freight for the transportation of goods by road in goods carriage, located in the taxable territory shall be treated as the person who receives the service for the purpose of this notification. Explanation-II.- In works contract services, where both service provider and service recipient is the persons liable to pay tax, the service recipient has the option of choosing the valuation method as per choice, independent of valuation method adopted by the provider of service. 2. This notification shall come into force on the 1st day of July, 2012.
V.
Relevant Questions of Education Guide on development /re-development agreements 6.2.1 What would be the liability to pay service tax on flats/houses agreed to be given by builder/ developer to the land owner towards the land /development rights and to other buyers. If payable, how would the services be valued? Here two important transactions are identifiable: (a) sale of land by the landowner which is not a taxable service; and (b) construction service provided by the builder/developer. The builder/ developer receives consideration for the construction service provided by him, from two categories of service receivers: (a) from landowner: in the form of land/development rights; and (b) from other buyers: normally in cash. Construction service provided by the builder/developer is taxable in case any part of the payment/development rights of the land was received by the builder/ developer before the issuance of completion certificate and the service tax would be required to be paid by builder/ developers even for the flats given to the land owner.
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National Conference on Co-operative Societies, Trusts, Redevelopment of Properties, Legal and Taxation Aspects It may be pointed out that in a recent judgement passed by the Mumbai High Court in the case of Maharashtra Chamber of Housing Industry and Others vs. Union of India [012-TIOL-78- HCMum-ST] has upheld the Constitutional validity of levy of service tax, under clauses (zzzh) and (zzzzu) of section 65, on similar construction services provided by a builder. A relevant portion of the judgement is reproduced below29. The charge of tax under Section 66 of the Finance Act is on the taxable services defined in clause (105) of Section 65. The charge of tax is on the rendering of a taxable service. The taxable event is the rendering of a service which falls within the description set out in sub-clauses (zzq), (zzzh) and (zzzzu). The object of the tax is a levy on services which are made taxable. The fact that a taxable service is rendered in relation to an activity which occurs on land does not render the charging provision as imposing a tax on land and buildings. The charge continues to be a charge on taxable services. The charge is not acharge on land or buildings as a unit. The tax is not on the general ownership of land. The tax is not a tax which is directly imposed on land and buildings. The fact that land is subject to an activity involving construction of a building or a complex does not determine the legislative competence of Parliament. The fact that the activity in question is an activity which is rendered on land does not make the tax a taxon land. The charge is on rendering a taxable service and the fact that the service is rendered in relation to land does not alter the nature or character of the levy. The legislature has expanded the notion of taxable service by incorporating within the ambit of clause (zzq) and clause (zzzh) services rendered by a builder to the buyer in the course of an intended sale whether before, during or after construction. There is a legislative assessment underlying the imposition of the tax which is that during the course of a construction related activity, a service is rendered by the builder to the buyer. Whether that assessment can be challenged in assailing constitutional validity is a separate issue which would be considered a little later. At this stage, what merits emphasis is that the charge which has been imposed by the legislature is on the activity involving the provision of a service by a builder to the buyer in the course of the execution of a contract involving the intended sale of immovable property. 30. Parliament, in bringing about the amendment in question has made a legislative assessment to the effect that a service is rendered by builders to buyers during the course of construction activities. In our view, that legislative assessment does not impinge upon the constitutional validity of the tax once, the true nature and character of the tax is held not to fall within the scope of Entry 49 of List II. So long as the tax does not fall within any head of legislative power reserved to the States, the tax must of necessity fall within the legislative competence of Parliament. This is a settled principle of law, since the residuary power to legislate on a field of legislation which does not fall within the exclusive domain of the States is vested in Parliament under Article 248 read with Entry 97 of List I. Value, in the case of flats given to first category of service receiver will be the value of the land when the same is transferred and the point of taxation will also be determined accordingly.
6.2.2 What would be the service tax liability in the following model - land is owned by a society, comprising members of the society with each member entitled to his share by way of an apartment. Society /individual flat owners give No Objection Certificate (NOC) or permission to the builder/developer, for re-construction. The builder/ developer makes new flats with same or different carpet area for original owners of flats and additionally may also be involved in one or more of the following: (i) construct some additional flats for sale to others; (ii) arrange for
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National Conference on Co-operative Societies, Trusts, Redevelopment of Properties, Legal and Taxation Aspects rental accommodation or rent payments for society members/original owners for stay during the period of reconstruction; (iii) pay an additional amount to the original owners of flats in the society. Under this model, the builder/developer receives consideration for the construction service provided by him, from two categories of service receivers. First category is the society/ members of the society, who transfer development rights over the land (including the permission for additional number of flats), to the builder/developer. The second category of service receivers consist of buyers of flats other than the society/members. Generally, they pay by cash. Re-construction undertaken by a building society by directly engaging a builder/developer will be chargeable to service tax as works contract service for all the flats built now.
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Adv. Kishor Lulla Advocate Kishor Lulla is B.Com, L.L.B. & by profession, he is Sales Tax Consultant since 1980. He is practicing in the firm T.B.Lulla & Company at Sangli, which is established in 1959. He is having two Partners, Adv.Amol Mane who looks after Sales Tax matters & C.A. D.S.Palkar who takes care of Income Tax & Audit work. His son Amit has also joined him as Sales Tax Consultant. He is partner in the firm of Shah Lulla Estate Developers since 1993, which is in land development business in Sangli district. He is Managing Committee Member of Builders Associations of India, Sangli. He is also member of Promoters and Builders Association, Sangli. He was Managing Committee Member of STPAM from 2005-06 to 2008-2009 and he was Hon. Joint secretary of The Sales Tax Practitioners Association of Maharashtra for the years 2010-11 and 201112. He was Vice President of STPAM for the year 2011-12. He was the President of STPAM in the year 2012-13. At present he is Immediate Past President of this Association. He was the First President unopposed elected out of Mumbai during last 60 years. He got the best convener award of this Association for conducting 21 seminars on taxation throughout the State of Maharashtra during the year 2007-2008. He presented paper on Backward Area of Incentives at R.R.C. in Mahabaleshwar in the year 1996. As a paper writer in seminars, study circles & coaching classes, he spoke on various topics of VAT & also on Right to Information Act. In the residential refresher course at Udaypur in Jan 2010, he received the best paper writer award by STPAM on the subject Goods & Services Tax, which was presented for the 1st time in STPAM. He also presented 1st time in STPAM a paper on Local Body Tax in seminar held at Mumbai on 4th June 2013. A book Fun Tax Stic is released on 26th July 2013 consisting of 62 cartoons drawn by him relating to taxation field were published in the Sales Tax Review from June 2008 to July 2013. Mr. Lulla is past president of Taxation Consultants Association, Sangli. Other than taxation field, he does a lot of social work of Consumer Awareness since 1986. He has collected confidential or concealed information of various Government & Semi-government departments under R.T.I. He is activist of Akhil Bharatiya Grahak Panchayat and President of Grahak Panchayat Sangli. He is treasurer of Jankalyan Samittee, Sangli which works for students from North East. He is past president of Bharat Vikas Parishad, Sangli. He is Chairman of Lulla Charitable Trust through which donations are given for educational and charitable purposes. He continuously writes articles on taxation, consumer awareness, Right to Information in newspapers & magazines. A number of talks on these subjects were delivered in Radio & T.V.
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VAT Issues (in redevelopments, in repairing properties)

Adv. Kishore Lulla When C A. Tarun Ghia called me to present a paper on the subject, I accepted the challenge to myself because neither I have come across this topic in my practice nor there are co-operative societies having far old buildings which require redevelopment in my nearby district areas. Nothing is said about redevelopment or SRA scheme under the MVAT Act. So I had to study various judgments and apply my mind therein. This paper is legal based paper instead of Law book based paper. Hence there is wide scope to form different opinion than expressed by me if you come across any other decision not referred by me or some other type of agreement. I have divided my subject in three parts. First is about, what is redevelopment and types of redevelopment, second, historical background of works contract as applicable to land owners, contractors, builders and developers. Lastly VAT on redevelopment of property by taking into consideration the concepts of sale, sale of goods, sale price, consideration, price, works contract, barter and exchange. Entire concept of my paper may be changed after the pending decision before the Apex Court in the cases of M.C. H.I., L. & T. and K. Raheja. Hence one may use this paper only for reference purposes. I. What is redevelopment and why it is needed? 1. Housing redevelopment refers to the process of reconstruction of residential/commercial premises by demolishing the existing structure and construction of a new building as per approvals from the Municipal Corporation. It ideally works best when a society is in dire need of extension but is starved of the necessary funds for it. Developers, on their part, are also on the lookout for properties with unused development rights where they can build a new and higher structure where the additional storey can be sold for a tidy profit. Existing members of the society receive new flats in the reconstructed building of an area equal to or more than the area of their existing flats, as per the terms of the agreement between the developer and the society in question. With redevelopment, the members get a new building, more space and monitory benefits without spending any penny from their own pocket. Developer can offer extra amenities like a gymnasium, car parking, gardens and security system. 2. Transfer of ownership under redevelopment agreements An important feature of a typical redevelopment agreement is that the land owner allows using development rights to the developer in consideration of the developer providing a specified agreed portion of the constructed area to the land owner free of cost. The land belongs and remains always with the owner. The developer constructs building on owners land and incurs cost by using material in relation to the portion to be handed over to the owner. The issue arises as to whether such a transaction will amount to taxable works contract and liable to tax? Whether it will be a Sale or Works Contract under MVAT Act? Or it will be a Works Contract or exchange or combination of both? Some types of redevelopment agreements are presumed as under i. A case where the society gives its building/premises to the builder or contractor for redevelopment. In this case the builder/contractor constructs the building and allots the flats to the members with same sq.ft of area or higher sq.ft of area of the society and sells the remaining FSI/flats.
3.
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National Conference on Co-operative Societies, Trusts, Redevelopment of Properties, Legal and Taxation Aspects ii. A case where the land lord/house owner/ SRA (Slum Redevelopment Authority) scheme in which the owner gives the old structure to the builder/contractor and the contractor re-construct the building on the same plot and gives the Flat/s with same sq.ft or higher sq.ft, or cash/cheque to the owner. A case where the society approves the contractor for the re-development of the society. In this case society gives the contract of re-development to the contractor/builder for re-development, allots the flats to its members and the society sells the other flats.
iii.
4.
Some related definitions/ terms/ explanations under various Acts for ready reference Before giving above mentioned details let me put before you some background history for warming up. Sale of Goods Act, 1930 is the base of every Sales Tax Act. Prior to the enactment, relevant sections were part and parcel of Indian Contract Act, 1872. The Sale of Goods Act was enacted by adopting some of the sections of Indian Contract Act. The major changes are in respect of consideration. In Contract Act, it may be either cash or kind for doing or for not doing something. But in the Sale of Goods Act, there is only money consideration and for delivery of goods and passing of property there in. Both Acts operate independently. Transactions which is subject to governance of Indian Contract is outside the provision of Sale of Goods Act and vice versa. There was a Government of India Act, 1935 which empowered Provincial Government of levy tax on sale of goods. Immediately after independence, we, people of India, offered to our-self Constitution of India. We also adopted all the Laws then in force including Indian Contract Act and Sale of Goods Act. i. Sale u/s 2(24) of MVAT Act . w.e.f 20.06.2006 Sale means a sale of goods made within the State for cash or deferred payment or other valuable consideration but does not include a mortgage, hypothecation , charge or pledge and the words sell, buy and purchase, with all their grammatical variations and cognate expression, shall be construed accordingly. Explanation For the purpose of this clause,a) ----b) i)----ii) the transfer of property in goods (whether as goods or in some other form) involved in the execution of a [works contract including], an agreement for carrying out for cash, deferred payment or other valuable consideration, the building, construction, manufacture, processing, fabrication, erection, installation, fitting out, improvement, modification, repair or commissioning of any movable or immovable property. iii) ------iv) ------v) --------vi) -------shall be deemed to be a sale.
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National Conference on Co-operative Societies, Trusts, Redevelopment of Properties, Legal and Taxation Aspects ii. Sale Price u/s. 2(25)of MVAT Act Sale Price means the amount of valuable consideration paid or payable to a dealer for any sale made including any sum charged for anything done by the seller in respect of the goods at the time of or before delivery thereof, other than the cost of insurance for transit or of installation, when such cost is separately charged. Dealer u/s. 2(8) of the MVAT Act Dealer means any person who, for the purposes of or consequential to his engagement in or, in connection with or incidental to or in the course of, his business buys or sells, goods in the State whether for commission, remuneration or otherwise and includes a. -----b. ---c. -----d. any society, club or other association of persons which buys goods from, or sells goods to, its members. Hence, a co-operative society or owner of slum area under SRA gives for redevelopment the land of their ownership, to a builder free of cost, in exchange of built up premises for them or for their members will not be liable to pay tax under MVAT Act, as there is no buying and selling activity amongst the society, members and builder.
iii.
iv.
Goods u/s. 2(12) of MVAT Act goods means every kind of movable property not being newspapers, actionable claims, money, stocks, shares, securities or lottery tickets and includes live stocks, growing crop, grass and trees and trees plants including the produce thereof including property in such goods attached to or forming part of the land which agreed to be severed before sale or under the contract of sale. Sale u/s. 54 of Transfer of Property Act, 1882 Sale is a transfer of ownership in exchange for a price paid or promised or part-paid and part-promised. Contract for sale: A contract for the sale of immovable property is a contract that a sale of such property shall take place on terms settled between the parties. It does not, of itself, create any interest in or charge on such property. Price u/s. 2(10) of Sale of Goods Act Price means the money consideration for a sale of goods. If goods are given without any consideration, the transaction amounts to a gift but not a sale of goods. Similarly, exchange of goods for others without any consideration amounts to a barter or exchange. Thus money is the only consideration for sale of goods.
v. vi.
vii. Contract of Sale & Agreement to sell Contract of sale u/s 4 of Sale of Goods Act
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National Conference on Co-operative Societies, Trusts, Redevelopment of Properties, Legal and Taxation Aspects A contract of sale is a contract whereby the seller transfers or agrees to transfer the property in goods to the buyer for a price. Essential elements of a contract of sale are a) b) c) d) The parties must be competent to contract. There must be mutual consent There must be transfer of property i.e. there must be transfer of general property in goods and not merely specific property The buyer must pay or promise to pay, a price in money.
Agreement to sell: The transfer of property in the goods that is to take place at a future time, or subject to some conditions, thereafter to be fulfilled, it is called an agreement to sell. An agreement to sell becomes a sale when the time elapses or the conditions are fulfilled subject to which the property in the goods is to be transferred.
viii. Distinguish between Sale and Works Contract (Contract for work & labour) i) Sale of goods does not include labour - Works Contract includes labour. ii) Sale of goods involves only movable properties- Works contract involves movable and immovable properties. iii) Tax is levied upon sale of goods - Tax is levied upon the goods excluding the labour. Usually, in our study for works contract we go through the above definitions. But for our subject proper, i.e. Redevelopment of Property we have to study the concept of exchange and compare it with sale and works contract Exchange - Section 118 of the Transfer of Property Act When two persons, mutually transfer the ownership of one thing in exchange for the ownership of another, neither thing or, both things being money only, such a transaction is called an exchange. The definition of exchange is not limited to immovable property. Exchange is, therefore, not only the exchange of lands, but also the barter of goods. If one of the items that are transferred is money, the transaction is not an exchange but a sale because the price is money, only. However, money, in one form, may be exchanged for money in another form. A sale should, always, be for a price. On the other hand, in the case of an exchange, the transfer of ownership of one thing is not completed by paying a price or a promise thereof, but, only by a transfer of another thing, in return. So, a transaction, where the consideration for the transfer of certain properties is shares in a limited company, is considered to be an exchange. [Commissioner of I-Tax vs. Motor and General Stores (P) Ltd AIR 1968 SC 200] Exchange & Sale The difference between exchange and sale is that in the former no fixed money price is placed upon, either of the properties exchanged, while in the later there is either a money consideration or equivalent thereof in property at fixed valuation.
ix.
x.
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National Conference on Co-operative Societies, Trusts, Redevelopment of Properties, Legal and Taxation Aspects xi. Sale and Barter a) Under this the property or ownership is of goods is transferred immediately to the buyer - Barter involves exchange of goods. b) Sale involves price or money as consideration for sale of goods - Barter does not involve money as consideration. c) A sale is an executed contract - This may or may not require a contract. xii. Accretion In property law, the gradual increase in land through natural processes; for example, the creation of land caused by the deposit of sediment on a shoreline of a river or ocean. The new land becomes the property of the owner of the property to which it is attached. In Gannon Dunkerley (9 STC 353) their Lordships of the Supreme Court were dealing with a building contract, which they held was one and indivisible and did not involve a sale of the material used by the contractors in the execution of the said contract as a sale of a chattel. Apart from the consideration that the contract was one and indivisible, their Lordships also pointed out another difficulty in taking the view that it involved a sale of goods and that was that the material which passed from the contractor to the owner of the building in the execution of the contract did not pass to the other party to the contract as movable property since it formed a part of the building and an accretion to the building and, therefore, immovable property. Their Lordships did not take the view in that case that every service contract was necessarily one and indivisible.
II.
Historical background of works contract as applicable to land owners, contractors, builders and developers1. Position before 46th Constitution amendment Prior to 46th Constitutional Amendment, the deemed sale in the nature of works contract was considered to be outside the scope of taxation of sale of goods. It does not mean there were no works contracts. Entry 54 of State list prior to 46th amendment reads as under 54 Taxes on sale and purchase of goods other than newspapers, subject to the provisions of entry 92A of List I i. M/s Gannon Dunkerley & Co (SC)(9STC 353)(1st Apr 1958) Supreme Court observed the ingredient of Sale at page 365: Thus, according to the law both of England & of India, in order to constitute a sale it is necessary that there should be an agreement between the parties for the purpose of transferring title of goods, which of course presupposes capacity to contract, that it must be supported by money consideration, and that as result of the transaction property must actually pass in the goods..So also if the consideration for the transfer was not money, but other valuable consideration, it may then be exchange or barter but not a sale. And if under the contract of sale, title to the goods has not passed, then there is an agreement to sell & not a completed sale. Each word of this para, has to be read very minutely which gives entire idea of this subject. Due to above judgment, the works contract remained out of levy
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National Conference on Co-operative Societies, Trusts, Redevelopment of Properties, Legal and Taxation Aspects till Constitution inserted sub clause 29A in article 366 by 46th amendment (2nd February 1983). ii. Contract of sale vis a vis contract of work. Following two decisions are against our subject proper, means in these cases the transaction is treated as Sale. But these decisions are given to understand the stretched meaning of Sale inspite of there being exchange of some part out of the total goods sold. a) Hyderabad Chemicals and Fertilizers Ltd (13STC 812) ( A.P.H.C.)(12 June 1962) The assessee-company manufacturing fertilizer mixtures agreed to supply to a sugar factory fertilizer mixture consisting of certain chemicals at a fixed price and groundnut oil-cake. It was agreed between the parties that the sugar factory should supply the assessee ground nut oil-cake at a fixed price to be used in the mixture. The question was whether the assessee was entitled to deduct from the turnover, which was the price of the mixture the sum representing the value of the groundnut oil-cake supplied by the sugar factory. Held (I) that the contract between the parties was not for work and labour, or a mixed contract of labour and materials called works contract in the Act, but a contract for the sale of the furnished fertilizer mixture de hors its ingredients. (II) that the fact that instead of receiving cash, the assessee received groundnut oil-cake of that value towards part-price of the fertilizer mixture could not make the transaction anything but a sale of the entire fertilizer mixture and therefore the assessee was not entitled to deduct from the turnover the value of the ground nut oil-cake. Chandra Bhan Gosain (14STC 766) (S.C.)(Orissa)(5th April 1963) The appellant manufacturing and supplying large quantities of bricks to a company under a contract and was received payment. There was a clause in the contract providing that land will be given free by the company. The appellant contended that the contract was only for labour or for work done and material found, and that there was really no sale of any goods on which the tax could be levied. Held, (I) that under the contract there was a transfer of property in the earth to the appellant by the company. (II) that although the contract did not use the word sale there was also a transfer of property in the bricks from the appellant to the company for consideration and, therefore, there was a sale liable to sales tax. (III)the fact that under the contract the bricks had to be manufactured according to certain specifications, and , therefore, the appellant had to bestow a certain amount of skill and labour in the manufacture of the bricks did not affect the question. The essence of the contract was the delivery of the bricks and it was a contract for the transfer of chattels qua chattels.
b)
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National Conference on Co-operative Societies, Trusts, Redevelopment of Properties, Legal and Taxation Aspects c) Article 265 of the Constitution Article 265 of Constitution of India specifically provides that No tax shall be levied or collected without the Authority of law. Thus any fee or tax levied by the State cannot be enforced unless State has authority under the Act to collect. For this purpose, the state has to issue notification under the provisions of the specific Act. In absence of such notification levy of tax or fee is illegal
2.
Position after 46th Constitution amendment The 46th amendment to the Constitution of India resolved the above judicial embargo by widening the scope of expression sale by amending definition of sale under Article 366(29A) to include in its scope the deemed sale in the nature of works contract. Article 366 (29A) tax on the sale or purchase of goods includesa) b) a tax on the transfer, otherwise than in pursuance of a contract, of property in any goods for cash, deferred payment or other valuable consideration; a tax on transfer of property in goods (whether as goods or in some other form) involved in the execution of a works contract;
c) ---------d) ---------e) ---------f) ----------; and such transfer, delivery or supply of any goods shall be deemed to be a sale of those goods by the person making the transfer, delivery or supply and a purchase of those goods by the person to whom such transfer, delivery or supply is made. i. Purshottam Premji (26 STC 38)(S.C.)(M.P.) (13 April 1970) In this case, Hon. Apex Court held that from the definition of sale of M.P. Sales Tax Act, it is clear that before a transaction can be considered as a sale; there must be a transfer of property in goods. Without such transfer, there cannot be any sale. If the property at all relevant time remains with the employer and not with the contractor, there is no question of contractor transfer in any property in it to the employer. The Apex Court also held that the primary difference between a contract for work or service and a contract sale of goods is that in the former there is in the person performing work or rendering service no property in the thing produced as a whole notwithstanding that a part or even the whole of the materials used by him may have been his property. In the case of a contract for sale, the thing produced as a whole has individual existence as the sole property of the party who produced it, at some time before delivery, and the property therein passes only under the contract relating thereto to the other party for price. Mere transfer of property in goods used in the performance of a contract is not sufficient; to constitute a sale. There must be an agreement express or implied relating to the sale of goods and completion of the agreement by passing of title in the very goods contracted to be sold. Ultimately the true effect of an accretion made pursuant to a contract has to be judged, not by an artificial rule that the accretion may be presumed to have become
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National Conference on Co-operative Societies, Trusts, Redevelopment of Properties, Legal and Taxation Aspects by virtue of affixing to a chattel, part of that chattel, but from the intention of the parties to the contract. ii. Builders Association of India (73 STC 370 dt. 31.03.1989) State Government tried to levy works contract tax on all receipts in 1986 which was challenged by Builders Association of India. Thereafter in Amended Act 1989, tax was levied on material used in the execution of works contract. It was held that It is not correct to say that the properties that are transferred to the owner in the execution of a works contract are not the goods involved in the execution of the works contract, but a conglomerate, that is the entire building that is actually constructed. The 46th amendment does no more than making it possible for the States to levy sales tax on the price of goods and materials used in works contracts as if there was a sale of such goods or materials. Hon. Court at page 386 stated that Ultimately the question whether the cost of the goods supplied by a building contractor in the course of the construction of building could be subjected to payment of sales tax was finally resolved by this Court in State of Madras v. Gannon Dunkerley. (Madras) Ltd [1958] 9 STC 353. In this case Court held that on a true interpretation the expression sale of goods meant an agreement between the parties for the sale of the very goods in which eventually property passed. In a building contract where the agreement between the parties was that the contractor should construct the building according to the specifications contained in the agreement and in consideration therefore received payment as provided therein, there was neither a contract to sell the materials used in the construction nor the property passed therein as movables. The court further held that the expression sale of goods was at the time when the Government of India Act, 1935, was enacted, a term of well-recognized legal import in the general law relating to sale of goods and in the legislative practice relating to that topic and should be interpreted in entry 48 in List II in schedule VII of the Government of India Act, 1935, as having the same meaning as in the Sale of Goods Act, 1930. The Court further held that in a building contract which was one, entire and indivisible, there was no sale of goods and it was not within the competence of the Provincial Legislature under entry 48 in the List II in schedule VII of the Government of India Act, 1935, to impose a tax on the supply of the materials used in such a contract treating it as a sale. The above decision though it was rendered on the basis of the provision in the Government of India Act, 1935, is equally applicable to the provisions found in entry 54 of List II of the Seventh Schedule of the Constitution. Hon. Court at page 396 of BAI stated that It was in order to overcome the effect of the Gannon Dunkerley decision Parliament amended article 366 by introducing sub clause (b) of clause (29-A). Sub-clause (b) of clause (29-A) states that tax on the sale or purchase of goods includes among other things a tax on the transfer of property in the goods (whether as goods or in some other form) involved in the execution of a works contract. It does not say that a tax on the sale or purchase of goods included a tax on the amount paid for the execution of a works contract. It refers to a tax on the transfer of property in goods (whether as goods or in some other form) involved in the execution of a works contract. The emphasis is on the transfer of property in goods (whether as goods or in some other form). The latter part of clauses (29-A) of article 366 of the Constitution makes the position very clear. While referring to the transfer, delivery or supply of any goods that takes place as
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National Conference on Co-operative Societies, Trusts, Redevelopment of Properties, Legal and Taxation Aspects per sub-clauses (a) to (f) of clause (29-A), the latter part of clause (29-A) says that such transfer, delivery or supply of any goods shall be deemed to be a sale of those goods be the person making the transfer, delivery or supply and a purchase of those goods by the person to whom such transfer, delivery or supply is made. Hence, a transfer of property in goods under sub-clause (b) of clause (29-A) is deemed to be a sale of the goods involved in the execution of works contract by the person making the transfer and a purchase of those by the person to whom such transfer is made. This was again reconfirmed by Hon. Apex court in Gannon Dunkerly and in Larsen and Toubro Ltd. (88 STC 204)(17th Nov 1992) Hon. Court at page 403 of B.A.I. stated that The Constitutional amendment in article 366(29-A) read with the relevant taxation-entries has enabled the State to exert its taxing-power in an important area of social and economic life of the community. In exerting this power particularly in relation to transfer of property in goods involved in the execution of works contracts in building activity, in so far as it affects the housing-projects of the under-privileged and weaker sections of society, the State might perhaps, be pushing its taxation-power to the peripheries of the social limits of that power and perhaps, even of the constitutional limits of that power in dealing with unequals. In such class of cases building activity really relates to a basic subsistential necessity. It would be wise and appropriate for the State to consider whether the requisite and appropriate classifications should not be made of such building-activity attendant with such social purposes for appropriate separate treatment. These of course are matters for legislative concern and wisdom. Once this type of levy is accepted then, it is treated as normal sale. So for levy of tax they must be two parties to the contract, there must be contract, there must be consideration and also delivery of the goods. Same principles are applicable to sec. 3, 4 & 5 of CST Act. In the definition of works contract the words whether goods or in some other form means movable or immovable. It is not appearance of goods as in the concept of resale.
iii.
K. Raheja Development Corporation(SC)(KAR)(141STC298)(5th May 2005) Battle started amongst Builders & Developers due to this judgment.
FACTS: The appellant a real estate developer entered into a development agreement with the land owner and got the plan sanction and constructed residential apartment and before construction, entered into a tripartite agreement with the intending purchaser with terms that apartment will be handed over after completion and would get undivided interest in the land also. The landowner will transfer the land directly to the society. The question by appellant developer was whether a dealer liable to pay tax in respect of construction contract as a works contractor?
HELD: Works Contract defined under Karnataka Act is very wide not restricted to works contract as commonly understood. The definition took in its ambit, any types of agreement wherein the construction of building took place. So long as the agreement was entered before the construction was complete it would be a works contract even if the developer
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National Conference on Co-operative Societies, Trusts, Redevelopment of Properties, Legal and Taxation Aspects is not the owner, but however if the agreement was entered into after the flat or unit was already constructed, there would be no Works contract. Ratio of K. Raheja for Maharashtra The situation, according to the Sales Tax authorities, has changed w.e.f. 20.06.2006 when works contracts was defined under the Maharashtra Value Added Tax Act 2002. Clause b (ii) of Explanation of Section 2(24) of the Act as mentioned above. It will be seen that the definition relating to deemed sale as works contract is similar to one under the Karnataka Act which formed the basis for the decision in K. Raheja case so that, the ratio of that case may squarely apply to cases in Maharashtra. The explanation makes it explicitly clear that transfer of property in goods involved in the execution of works contract including an agreement for carrying out the building construction is sale and accordingly liable to VAT. However, another view that can be taken is that the amended definition merely provides instances of various types of works contracts and whether a particular contract is for construction per se or for sale of flats, etc after they are duly constructed is a matter to be decided on the facts of each case. Magus Construction P. Ltd., vs. Union of India(15VST17)(Gauhati)(15 May 2008) K. Raheja decision had application where the land or interest in land is sold upfront and thereafter construction is undertaken on the land, possession whereof is retained by the Builder by way of lien on the land till construction is going on. This view gets support from the judgment of Gauhati High Court in the case of Magus Construction Pvt. Ltd wherein the judgment of K. Raheja was considered and distinguished. In large number of cases of redevelopment in Maharashtra the value shown is composite. Circular No. 12T of 2007 dt. 07.02.2007 All though meaning of works contract is provided in sec. 2(24) under MVAT Act, still the transactions involving immovable property were not brought within this definition. Hence the CST issued above mentioned circular in which the effect of amended position is clarified. The effect of M/s. Rehab Housing Pvt. Ltd, DDQ dt 28.06.2004 wherein the contract for construction of tenements along with the land is not treated as works contract, was tried to be nullified vide this circular on or after 20.06.2006. According to department, even if the price is composite price including land, still it can be subjected to Sales Tax in view of K. Raheja and amended definition. Government has granted deduction of land value as per Rule 58 (1A). MCHI & others vs. State of Maharashtra (51 VST 168) (10.04.2012) The above position created by change in definition of sale as well as cir.12T of 2007 and R. 58(1A) is challenged before Hon. B.H.C. The Court upheld levy of VAT on under construction contracts evidenced by agreements as per provisions of Maharashtra Ownership Flats Act, 1963. The main thrust of judgment is the Act by making agreement under MOFA, buyer gets some interests in the said flat/premises. The construction thereafter will therefore amount to works contract. Decision by Apex Court awaited The Law as pronounced by the Supreme Court in K. Rahejas case which has been given legislative shape by defining works contract from 20.06.2006 and also by enacting the Rule 58(1A) is however, still subject to further consideration by the Apex Court as the matter now stands referred to the Larger Bench of Supreme Court in the case of Larsen
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National Conference on Co-operative Societies, Trusts, Redevelopment of Properties, Legal and Taxation Aspects and Toubro Limited & another vs. State of Karnataka and another (17 VST 460). While referring the matter to the Larger Bench, the Apex Court has called for reconsideration of the ratio in the case of K. Raheja on the ground that it blurs the distinction between works contract and a contract for sale of chattel as a chattel. It is hoped that the decision of the Larger Bench would clarify whether the ratio in the case of K. Raheja would have universal application or was restricted to the facts of the case. In this connection, it is important to note that when the reference to the Larger Bench was brought to the attention of the Bombay High Court in the case of MCHI, the Court observed that in K. Rahejas case constitutional validity of the act was not in question but had arisen from assessment proceedings and consequently, based on the facts of that particular case and hence, giving hope that the principle need not be applied universally merely because the Agreement for Sale is entered into while the construction is being carried on by the Builder whether the construction activity is being carried on for and on behalf of the prospective Flat buyer or in the Builders individual capacity are matters to be decided on the facts of each case. III. VAT on redevelopment of property i. M/s. Davi Dass Gopal Krishnan and Others (20 STC 430)(SC)(10 Apr 1967) In this case the issue arose as to whether other valuable consideration will include consideration other then money. Hon. Supreme Court has observed as under on page 444/445: Bearing that in mind let us look at clause (ff) in section 2 of the principal Act in which the said clause was inserted. The ingredients of the definition of purchase are as follows: (i) there shall be acquisitions of goods; (ii) the acquisition shall be for cash or deferred payment or other valuable consideration; (iii) the said valuable consideration shall not be other than under a mortgage, hypothecation, charge or pledge. Clause (h) of section 2 defines sale thus: sale means any transfer of property in goods other than goods specified in Schedule C for cash or deferred payment or other valuable consideration but does not include a mortgage, hypothecation, charge or pledge. If we turn to the Sale of Goods Act, section 4 thereof defines a contract of sale of goods. It reads: A contract of sale of goods is a contract whereby the seller transfers or agrees to transfer the property in goods to the buyer for a price. The essential requisites of sale are (i) there shall be a transfer of property or agreement to transfer property by one party to another; and (ii) it shall be for consideration of money payment or promise thereof by the buyer. Now, coming to the expression price, it is no doubt defined in the Sale of Goods as money consideration. Cash or deferred payment in clause (ff) of section 2 of the Act satisfies the said definition. The expression valuable consideration has a wider connotation, but they said expression is also used in the same collocation in the definition of sale in section 2(h) of the Act. The said expression must bear the same meaning in clause (ff) and clause (h) of section 2 of the Act. It may also be noticed that in most of the sales tax acts the same three expressions are used. It has never be argued or decided that the said expression means other than monetary consideration. These consistent legislative practices cannot be ignored. The expression valuable consideration takes colour from the preceding expression cash or deferred payment. If so, it can only mean some other monetary payment in the nature of cash
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National Conference on Co-operative Societies, Trusts, Redevelopment of Properties, Legal and Taxation Aspects or deferred payment. We, therefore, hold that clause (ff) of section 2 of the Act is not void for legislative incompetence. (Underlining ours) ii. Thus other valuable consideration used in definition reproduced above will have the meaning as consideration in money terms only and not any other consideration. M/s. Radhas Printers v. State of Kerala (90 STC 201) (Kerala)(27th Aug 1992) In this judgment also applying the law laid down by Hon. Supreme Court in Devi Dass Gopal Krishnan, the Kerala High Court has held as under on page 205/206: These decisions therefore cannot be treated to hold that other valuable consideration could be goods or other property and that consideration need not be money consideration. In the decisions in Sales Tax Commissioner v. Ram Kumar Agarwal (1967) 19 STC 400, the Allahabad High Court held that other valuable consideration which occurs in section 2(h) of the U.P. Sales Tax Act, 1948, must be interpreted on the basis of the rule of ejusdem generis to mean cheques, bills of exchange or such other negotiable instruments and that they cannot cover a case where no price is paid. The Supreme Court in the decision in Devi Dass Gopal Krishnan v. State of Punjab (1967) 20 STC 430 held that the expression valuable consideration takes colour from the preceding expression cash or deferred payment. Thus to constitute sale within the meaning of the KDST Act, the same should be for consideration either in cash or deferred payment, or other valuable consideration; and other valuable consideration in the context must be interpreted to mean cheques, bills of exchanges or any such negotiable instruments. (Underlining ours) State of Andhra Pradesh v. Hotel Sri Lakshmi Bhavan, Visakhapatnam (33 STC 444)(30th Jan 1973) Other valuable consideration is elaborated in this case, their Lordship observed as under: The expression any other valuable consideration in section 2(n) must mean any monetary payment other than payment in the nature of cash or deferred payment. Payment of money by way of bank cheque, draft insurance, promissory note or any other monetary payment in the nature of cash or deferred payment, must be construed as any other valuable consideration. Kansari Udyog Sahkari Samiti H.C.M.P. (43 STC 176)(30th Aug 1978) The assessee, a co-operative society and a registered dealer under the M.P. General Sales Tax Act, 1958, manufactured utensils made of kansa (an alloy) and supplied ready-made kansa utensils to the customers for a consideration which was an equal weight of kansa in the shape of old goods and some money considered as labour charges including profit. The question was whether the transaction amounted to a sale within the meaning of section 2(n) of the Act and was, therefore, liable to sales tax? Held, that the words, other valuable consideration in section 2(n) have to be constructed as equated with money, the word money being wider than cash. Therefore, in order that a transaction may amount to a sale, the consideration has to be money. A transaction wherein the substantial consideration is the supply of an equal amount of raw material and the money part represents only the labour charges cannot be treated as amounting to a sale. The transaction in the present case was, therefore, not liable to sales tax. Unless a transaction amounts to a sale, it is not taxable under the Act, whether it be a works contract or a transaction of barter or exchange.
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National Conference on Co-operative Societies, Trusts, Redevelopment of Properties, Legal and Taxation Aspects v. Ram Kumar Agarwal (19 STC 400) (All. H.C.) (6th Sept 1966) We, are however, not concerned here with any enactment where the term sale may have a peculiar meaning for the purposes of that particular enactment. We are concerned with a rather general taxing statute which purports to deal with sales in their ordinary legal sense and which does not seem to go beyond that. The general legal conception of a sale is that of a transmutation of a property of a right from one man to another in consideration of a sum of money as opposed to barters, exchanges & gifts. (see Gill v Eagleston quoted that at page 58 in words and Phrases, vol. 38, West Publishing Company) The term money has also a legal meaning as well as a popular sense both of which bar the inclusion of bullion or metal of any kind as such in the concept of money. After all, we are not concerned with that may pass for money in exceptional conditions or under the special usages and customs of a peculiar or commercially backward or primitive society. Legally speaking, money is just what is legal tender is, or what a tradesman is legally bound to accept under the law of the country. The term money is explained in the Shorter Oxford English Dictionary as follows:In modern use applies indifferently to coin and to such promissory documents representing coin (esp. bank notes) as are currently accepted as a medium of exchange.. The term cash is narrower than money. The words deferred payment or other valuable consideration used in section 2(h) of the Act, merely enlarge the ambit of the consideration beyond cash, but they do not, in my opinion, carry it outside the scope of the term money. The words other valuable consideration are general as compared with the two preceding more specific terms cash and deferred payment. Cash and deferred payment are also considerations. Hence, all the conditions for the applicability of the ejusdem generis rule are satisfied and the expression other valuable consideration can and must be interpreted restrictively here. It seems intended to cover cheques and promissory notes or negotiable instruments which serve the purpose of money in modern commercial practice and usage and which can be included in the concept of money. For the reasons given above, I concur with the interpretation of the definition of sale in section 2(h) of the Act given by my learned brother. Hindustan Aeronautics Ltd. (55 STC 314) (S.C.)(Kar)(16th Dec. 1983) A contract of sale of goods must be distinguished from a contract for work and labour. The distinction is often a fine one. A contract of sale is a contract whose main object is the transfer of the property in, and the delivery of the possession of, a chattel as a chattel to the buyer. Where however the main object of work undertaken by the payee of the price was not the transfer of chattel qua chattel, the contract is one of work and labour. The test is whether or not the work and labour bestowed end in anything that can properly become the subject of sale; neither the ownership of the materials, nor the value of the skill and labour as compared with the value of the materials, is conclusive, although such matters may be taken into consideration in determining, in the circumstances of a particular case, whether the contract was a substance one for work and labour or one for the sale of a chattel. Judgments on exchange
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vii. CIT v. Motors & General Stores P Ltd. (66 ITR 692) [SC] The question for consideration was whether the transaction of sale or exchange?
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National Conference on Co-operative Societies, Trusts, Redevelopment of Properties, Legal and Taxation Aspects The Respondent Co. transferred to the Zamindar and Zamindarini all the assets of cinema house for a consideration of Rs. 1.20 Lakhs in the shape of preference share in a sugar co. of face value of Rs. 1.20 lakhs. The Supreme Court held that sale is transfer of property of goods or of the ownership in immovable property for money consideration but in exchange there is reciprocal transfer of interest in immovable property. A corresponding transfer of interest being denoted by the word barter. The difference between sale and exchange is this that in former the price is paid in money whilst in the latter it is paid in goods by way of barter. The presence of money consideration is an essential element in a transaction of sale. If the consideration is not money but some other valuable consideration it may be exchange or barter but not a sale.
viii. Ozone Properties P Ltd. v. Addl. CCT, Bangalore (K.H.C.) (52 VST 370)(9th Nov. 2010) Facts: Appellant a developer entered into a joint development agreement with owner of certain land and in furtherance of the agreement after completion of the project 26.45% of the built of area was to be transferred to the owners of the land in lieu of transfer of 73.55% of their undivided interest in the land to the appellant. Most of the construction work was handed over to the registered sub-contractors. Assessing authority held that 26.45% of built area handed over to the owner and an amount of 45 crores paid to the sub-contractor. In the light of the said 26.45%, it was considered as deemed sales as property of goods has passed to the owner of the land. In appeal against the assessment order, Joint Commissioner held that it was not a deemed sale. The revision authority proposed to reverse the order of appellate authority and rejected the defense raised by the appellant that there was no element of sale in the entire transactions. Hence remanded back to A.O for scrutiny of the exchange deed dated 18.12.2009 between the developer and land owner. Held: Looking to the terms of exchange deed and also other material including the large payment made to registered sub-contractor whether it amounts to sale under Article 366(29A) of the Constitution or it remains only exchange of built up area in the undivided interest in the land handed over to the developers. It is to be looked in the light of whether the construction was taken up by himself. Hence the order revision authority remanding for examination of documents to the A.O is affirmed. An alternate argument that can be made that whether VAT would be applicable or not would depend on whether there is a transfer of property in the goods (building material) while the building is being redeveloped or whether there is a clause/ contract to the contrary in the Development / Redevelopment Agreement. Although the reconstruction is undertaken by the Builder - Redeveloper after entering into the Development / Redevelopment agreement, taxability would depend on whether there is transfer of risk of ownership in the building material during the reconstruction phase/ period. If the subject matter of the agreement is for getting a fully redeveloped Flat at the end of the construction, and the risk of ownership of the building material/ semi finished construction vests with the Builder till the Flat is handed over on the agreed date of possession/repossession, there being no concurrent transfer of property in favour of the existing flat owners, no VAT would be attracted. Arguably, reliance can still be placed on DDQ in the case of Rehab Housing (No. WC2003/DDQ-11/B-276 dt. 28.06.2004) although the Commissioner vide Trade Circular 12T of 2007 dt. February 7, 2007 has indicated his intention not to follow the DDQ given earlier after the amendment made on 20.06.2006 on the definition of Sale. M/s. Kirloskar Copeland Ltd. (S.A. No. 428 of 2009 dt. 18.04.2011) In this recent case our own Tribunal, after discussing eleven judgments cited by appellant and six judgments cited by Revenue, came to the conclusion that In a transaction of cross
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National Conference on Co-operative Societies, Trusts, Redevelopment of Properties, Legal and Taxation Aspects transfer of property in defective compressor and repaired compressor off the shelf from the sales office of the company, there is no consensual agreement of sale supported by price or money consideration. As such, there is no sale of repaired compressor. So there is no sale of taxable event for levy of sales tax, on specified amount, which is a price of labour charges or repair charges. Judgment cited by appellant a. b. c. d. e. f. g. h. i. j. k. Gannon Dunkerley & Co (Madras) Ltd (9 STC 353) (S.C.) Devi Dass Gopal Krishnan and others (20 STC 430)(S.C.) Hotel Shri Laxmi Bhavan, Visakhapatnam (33 STC 444) Vishnu Agencies (Pvt) Ltd (42 STC 31) (S.C.) Premier Electro Mechanical Fabricators (SS STC 371) Kansari Udyag Shakari Samiti (43 STC 176) Ram Kumar Agarwal (19 STC 40) Vijaya Aluminium Industries (103 STC 508) M. Jai Hind (111 STC 374) PA Raju Chettiyar (6 STC 131) Vishweshwardass Gokuldass (13 STC 113)
Judgments relied upon by revenue a. b. c. d. e. f. x. Dhampur Sugar Mills (147 STC 57)(S.C.) Chandra Bhan Gosai (14 STC 766) (S.C.) Sabarmati Reti Udyog Sahakari Mandali Ltd (38 STC 203) (S.C.) V.p. Vadivel Achari (23 STC273) (Mad) C. Mohammedali (31 VST 427) (Ker) Mohd. Ekram Khan and Sons (136 STC 515) (S.C.)
Trade Circular for ADM Relief 14T of 2012 dated 6.08.2012 The circular really intends not to give any relief on account of time schedule fix. It is only a matter of formality. It is impossible to comply the conditions. The FAQs is without application of mind and without supporting of judgments and also unsigned hence no legal effect. Therefore, one can take benefit by showing the same to the authorities. It would be of interesting to note the answer to FAQ 25 pursuant to issuance of Trade Circular 14T of 2012 dt. 06.08.2012: Q25 If Builder constructs the flat on the land which is owned by the land owner and out of the constructed flats some flats are given to the landowner and other flats is sold by Builder to prospective buyer. Land owner sells the flats afterwards to buyers. In such instances, what would be the point of taxation? Whether land owner is liable to pay VAT n sales of flats which were handed over to him by the builder?
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National Conference on Co-operative Societies, Trusts, Redevelopment of Properties, Legal and Taxation Aspects Ans. Builder is liable to pay tax only in respect of sale of flats to prospective buyers. The flats which are given to landowners will not be taxable. The landowner when subsequently sales the flats will not be liable to pay tax as he is not a dealer. IV. Conclusion : In some types of presumed development agreements at serial no. 3 above conclusions can be drawn as under. i. When the society gives its building/premises to the builder or contractor for re-development, and the builder/contractor constructs the society and allots the flats to the members with same sq.ft of area or higher sq.ft of area of the society, nobody is liable under MVAT Act but when builder sells the other FSI/flats, to that extent it will be his works contract. Where the land lord/house owner/ SRA scheme in which the owner gives the old structure to the builder/contractor and the contractor re-constructs the building on the same plot and gives the Flat/s with same sq.ft or higher sq.ft, or cash/cheque to the owner, nobody is liable under MVAT Act.
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iii. Where the society approves the contractor for the re-development of the society, and the society gives the contract of re-development to the contractor/builder and allots the flats to its members and the society sells the other flats, contractor/builder will be liable as a regular works contractor but society cannot be covered under MVAT Act. But any other view is quite possible depending on changing situations and terms on agreement. I thank The I.C.A.I. for giving me the opportunity to study the topic in depth.
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Shri Aditya Prakash Rao Shri Aditya Prakash Rao joined Amarchand Mangaldas in June 2008 and works with the Public Policy & Governmental Affairs team. At the Firm he advises the clients on corporate affairs strategy and public policy matters in India, primarily pertaining to legal issues in defense sector, nuclear energy, education, information communications technology, media & entertainment law, data protection, apart from general corporate & investment advice in various sectors. Shri Rao has been part of the Firms advisory groups to government ministries and departments at the Federal level and has drafted legislations for such government agencies. These include Ministry of Information Technology, Ministry of Science and Technology, Ministry of Industry and Commerce, Ministry of Finance, Government of India. Shri Rao is a part of the charities advisory group at the Firm and has been intricately involved in imparting advice to high-impact, livelihood generation based, national and international level social welfare organizations. He is also currently serving on the India board of Sesame Workshop and the Wadhwani Foundation. Select Experience Lead contact Lex Mundi Pro-Bono Foundation. Lead contact and advisor Ashoka Advocates Mr. Rao is responsible in assisting variety of Ashoka fellows over the years and has also conducted legal roundtables in various cities for Ashoka fellows as an outreach and advocacy mechanism covering a broad spectrum of issues such as Organizational Structuring, Foreign Contribution Regulation, General Contracting, Intellectual Property, Taxation and the like. Rendered structural advisory to Sustainable Innovations MIT Lemelson Award winner for 2010. Mr. Mukerji led the team which catered to the unique requirements of the project that mandated the drawing up of a structure with the ability to raise equity/debt investments from social investors as well as donations/grants for its operations, with overall compliance of the existing legal strictures applicable to not-for profit space in India. Advisor to Grameen Foundation, USA for their Growth Guarantees program. Assisted numerous domestic/multinational clients in their Corporate Social Responsibility deployment programs in India. Advisor to Latitude Global Volunteering for their India operations. Advised to Endeavor Global on their compliance and restructuring of entities in India. Advisor to the United States - India Business Council on various legal, policy and political issues on doing business in India. Member of the working groups on Finance, Media & Entertainment, Infrastructure and aviation, Information Communications Technology.
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Property transactions by trusts (Acquisition of properties, transfer of properties, development of properties, permission of charity commissioner, change reports, documentation, auditors responsibility, stamp duty n registration wrt trust properties)
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Shri Santosh Kumar is an architect and valuer having 46 years of his practice. He is a fellow member of the Indian Institute of Architects and Institution of Valuers (India). He is member of the Property Advisory Committee to advise Administrator of Specified Undertaking of the Unit Trust of India. He is on the Panel of Valuers of Bombay High Court and Mumbai Debts Recovery Tribunal. Mr. Santosh Kumar has contributed substantially to the proposal of Property Tax on Capital Value System, which Is recently implemented by the Mumbai Municipal Corporation. Shri Santosh Kumar was Hon. executive editor of the Journal of the Indian Institute of Architects from 1969 to 1986. He was also editor of Architects India Journal from 1980 to 1996. He was actively associated with the drafting of Architects Bill which became the Architects Act in 1972. He has contributed several articles on valuation and Stamp duty which is published in various Journals and news papers of India. Mr. Santosh Kumar jointly with Mr. Sunit Gupta has written Stamp Duty Ready Reckoner and Market Value of Flats / Properties in Mumbai and Thane, for more than 15 years, which is useful not only for stamp duty payment but also for valuation in court and bank mortgage. His book on valuation as on 1-4-81 is referred for valuation under Section 50C for the capital gains tax. Shri Santosh Kumar has lectured in various public forums like WIRC-ICAI, MCHI, Bombay First etc, and his prestigious clients for valuation are Reserve Bank of India, UTI, NABARD, IDBI, RCF, National Fertilizers Ltd. and Indian Oil Corporation etc.
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Stamp Duty and Registration Aspects in Co-operative Housing Society

Shri Santosh Kumar Co-author of the Stamp Duty Ready Reckoner and Market Value of Properties in Mumbai In early days virtually there was no stamp duty on purchase of flat in a Co-operative housing society. Sale and purchase was as simple as purchasing home appliances. With the result many people invested in flats even before the foundation was laid and sold the same as and when desired profit was offered. Due to this builders were selling all their flats even before the starting of their projects. They required no finance to complete the building because it was a self financing enterprise. They had to arrange only the land component. This invited the attention of Hon. revenue minister of the Government of Maharashtra and slowly and steadily it became the second highest source of revenue today, next only to VAT. Today I will share with you my experience, as how the stamp duty is charged on some of the documents which are of vital importance to you. Stamp Duty and registration fees on conveyance in favour of a Co-operative Housing Society. Stamp Duty and registration fees on deemed conveyance in favour of a Co-operative Housing Society. Difference between conveyance and deemed conveyance. Stamp Duty on re-development agreement with builder. Stamp Duty on re-development agreement with individual members. Stamp Duty on self development projects. Stamp Duty on company owned property. Stamp Duty on tenanted properties. Stamp Duty on Leave and License agreement. Stamp Duty on exchange of flats. Stamp Duty on gift deed. Stamp Duty on family settlement. Stamp Duty on release deed. Stamp Duty on power of attorney. Rate of Registration fees.
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National Conference on Co-operative Societies, Trusts, Redevelopment of Properties, Legal and Taxation Aspects Name : DILIP JAGDISH PENDSE Designation : Dy. General Manager (Legal & Recovery)
Worked as Asst. Gen. Manager (Branch Banking) from June 2010 to March 2013 and looked after 43 Branches, with The Shamrao Vithal Co-op. Bank Ltd. (Multi State scheduled Co-op. Bank, having 142 Branches, Deposits around Rs. 9,,000 cr., Advances around Rs. 6,000 crs., Gross NPA @ around 3% & Net NPA @ less than 1%). Before that, worked as Chief Financial Officer (CFO) from July 2007 to June 2010 with same Bank. Address : 10 / 22, Shri Mohan CHS Ltd. Govind Nagar, Borivali (west), Mumbai 400 092.
Date of birth/Age : December 15, 1964 / Age 48. Marital status : Married
Communications : 022 6699 9794 (Office) & 98690 61133 (Mobile) Educational qualifications Degree / Course C. A. L. L. B. (Gen.) B. Com. H. S. C. S. S. C. Year of Passing 1992 1987 1985 1982 1980 Institution Institute of Chartered Accountants of India University Of Bombay University of Bombay Pune Board Pune Board
Previous 3 positions held Employer The Nasik Merchants Co-op. Bank Ltd. Period Nov. 2005 to June 2007 Position Held Chief Exec. Officer General Manager Manager - Compliance, Finance & Accounts
Maharashtra State Financial Corporation June 2000 to Oct. 2005 (MSFC, a Financial Institution) 20th Century Finance Corporation Ltd. Dec. 1994 to May 2000 & TCFC Finance Ltd., a BSE Listed Co.)
CA Dilip Pendse is regular faculty & is delivering lectures at various platforms including at WIRC, ICAI. He is frequently invited by various Urban Co-op. Banks for lectures. He is member of Risk Management Committee formed by Reserve Bank of India, formed for Urban Coop. Banks. Training Attended various Training Courses organised by College of RBI, Pune & SIDBI with respect to topics relating to OSS, Operations, Business Development, & proposed Basel II Norms pertaining to Risk Management etc.
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Shri Shailesh Gandhi is a first generation entrepreneur and a Distinguished Alumnus awardee of IIT Bombay. He sold his business to become a RTI activist. Shailesh was part of the RTI movement which was involved in drafting the RTI Act. He used RTI and also trained many citizens to use it. The only RTI activist to have been chosen as a Central Information Commissioner, he disposed a record of over 20000 cases in 3 years and 9 months, and ensured that most cases were decided in less than 90 days. He gave many landmark decisions on RTI, apart from organizing the first digital file less Commission. He is now at his his home in Mumbai to further and deepen RTI to empower citizens to take effective participatory charge of their democracy. He has been awarded the Nani Palkhiwala Civil Liberties award.
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Right to Information w.r.t. governance of co-op. societies and charitable trusts and in the process of redevelopment ( Legal and procedural aspects)
Shri Shailesh Gandhi COOPERATIVES A cooperative is an autonomous association of persons united voluntarily to meet their common economic, social and cultural needs and aspirations through a jointly owned and democratically controlled enterprise. Cooperatives as business enterprise possess some basic interests such as ownership and control but these interests are directly vested in the hands of the user. Therefore, they follow certain broad values other than those associated purely with profit making. Need for profitability is balanced by the needs of the members and the wider interest of the community. The values universally recognized as cornerstones of cooperative behaviour are self-help, democracy, equality, equity and solidarity. Voluntary and open membership, democratic control, economic participation, autonomy, training And information and concern for community are the overarching features by which the Cooperatives put their values into practice. Government of India announced a National Policy on Co-operatives in 2002. The ultimate objective of the National Policy is to provide support for promotion and development of cooperatives as autonomous, independent and democratic organisations so that they can play their due role in the socioeconomic development of the country. The Policy further aims at reduction of regional imbalances and strengthening of cooperative education, training and human resource development for professionalisation of cooperative management. It recognizes the distinct identity of cooperatives and seeks to support their values and principles by catalysing States to provide them an appropriate administrative and legislative environment. RIGHT TO INFORMATION ACT AND COOPERATIVES Information plays an important role in shaping the life of every individual. We need one or the other information in every aspect of our life. In a democratic set-up it assumes greater importance as elected representatives govern the country and citizens who elect them and also pay taxes have every right to know how they are governed and how their money is spent. Information, therefore, is the life-blood that sustains political, social and business decisions. Earlier, the Government and public authorities use to control the information and it was not shared with people. But today with globalization, achievements in information technology and the important role played by media and social activists people have become more enlightened and want transparency in the functioning of public authorities. Article 19(a) of the Indian Constitution includes the right to freedom of speech and expression which indirectly increases the participation of Indian citizens in the functioning of the Government and simultaneously allows them to seek information from the Government and the concerned public authorities. Similarly, it is stated that in the introduction of the Right to Information Act, 2005 (RTA) that democracy requires an informed citizenry and there shall be transparency of functioning so as to withhold corruption and to hold the Government and their instrumentalities accountable to the
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National Conference on Co-operative Societies, Trusts, Redevelopment of Properties, Legal and Taxation Aspects governed. Definition of information Information is derived from a Latin word formation and forma which means giving shape to something. The Encyclopedia Britannica defines information as facts and opinion provided and received during the course of daily life; one obtains information directly from other living beings; from mass media, from electronic data banks, and from all sorts of observable phenomena in the surrounding environment. It further states that information organized according to some logical relationships is referred to as a body of knowledge, to be acquired by systematic exposure or study. As per RTA-2005 information means any material in any form, including records, documents, memos, e-mails, opinions, advices, press releases, circulars, orders, logbooks, contracts, reports, papers, samples, models, data material held in any electronic form and information relating to any private body which can be accessed by a public authority under any other law for the time being in force. The Assam Right to Information Act, 2001 states that information means and includes information relating to any matter in respect of the affairs of the administration or decisions of the State Government or a Public Authority but does not include any such information the publication of which has been prohibited by any law for the time being in force or by any notification issued by the State Government from time to time under this Act. The Goa Right to Information Act, 1997 states that information means any material or information relating to affairs of the State or any local or other authorities constituted under any enactment passed by the Legislative Assembly or a Company, Corporation, Trust, firm, Society or a Cooperative Society, or any organization funded or controlled by the Government or executing any public work or service on behalf of or as authorized by the Government. The J&K Right to Information Act, 2004 defines it as any document or information relating to the affairs of the State or a public body. The Karnataka Right to Information Act, 2000 defines it as information relating to any matter in respect of the affairs of the administration or decisions of a public authority. The Rajasthan Right to Information Act, 2000 defines information as any material or information relating to the affairs of the State or a public body. In simple words information means the knowledge about the affairs relating to the State or its authorities. Right to information means to have access to knowledge or facts which is held by or is under the control of any public authority and includes the right to: (i) Inspect works, documents and records, (ii) Take notes, extracts or certified copies of documents or records,
(iii) Take certified samples of material (iv) Obtain information in the form of diskettes, floppies, tapes, video cassettes or in any other electronic mode or through printouts. Importance of RTA The right to information is a fundamental right flowing from freedom of speech and expression guaranteed under Article 19(a) of the Constitution. The RTA has, therefore, set-out a practical regime to right to information for citizens to have access to information under the control of public authorities. This has been done to promote transparency and accountability in the working of every public authority. The Right to Information Act is, therefore, very important for strengthening democracy ensuring transparency and accountability in the actions of public authorities and it enhances the quality of life of people and their participation in governance. Enactment of RTA-2005 In order to promote openness, transparency and accountability in the administration of the public authorities and enhance the quality of life of citizens and their participation in the governance and strengthened their involvement in the decision making, the Government of India enacted the Freedom of Information Act, 2002. The Act could not be brought into force because of
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National Conference on Co-operative Societies, Trusts, Redevelopment of Properties, Legal and Taxation Aspects various reasons. The National Common Minimum Programme of the present Government committed to make the Information Act more progressive, participatory and meaningful repealed the Freedom of Information Act, 2002 and replaced it by a new legislation Right to Information Act, 2005 by including various suggestions of the National Advisory Council. The emphasis on enacting the new legislation was to provide an effective framework for effectuating the right to information recognized and implied under Article 19 of the Constitution of India. The Right to Information Bill, 2005 was passed by the Lok Sabha on 11th May, 2005 and by the Rajya Sabha on 12th May, 2005 and it received the Presidential assent on 15th June, 2005 following which it came on the statute Book as Right to Information Act, 2005 (22 of 2005). The main aim of the Act is to introduce discipline in various functionaries in the Government administration. The Act provides practical regime to right to information to citizens to secure and access to information under the control of public authorities, in order to promote transparency and accountability in the working of every public authority. Before Central Right to Information Act, some of the States like Assam (2002), Delhi (2001), Goa (1997), J&K (2004), Karnataka (2002), Madhya Pradesh (2003), Maharashtra (2002), Rajasthan (2002), Tamil Nadu (1997) and U.P. (Code of Practice on Access to Information, Government of U.P. 2002) had enacted their own right to information Act. Right to Information Act and Cooperatives In India Cooperation is a State subject and cooperatives are registered under their respective State Cooperative Societies Acts except the multi-state cooperative societies and national cooperative federations which are registered under the Multi-State Cooperative Societies Act, 2002. The question that arises is whether the cooperatives are covered under the RTA of the concerned State in which they are registered or not. This is important and pertinent to know as it will substantially affect the working of cooperatives. Only the Madhya Pradesh Jankari Ki Swatantrata Adhiniyam 2002 (No. 3 of 2003) defines public body means all officers of the State Government (ii) all local authorities and statutory authorities constituted under any Act of the State Legislature for the time being in force and all companies, corporations and cooperative societies in which not less than fifty one percent of the paid-up share capital is held by the State Government.......... 2(b) This means only the cooperative societies which have 51% of the share capital contributed by the State Government are covered under the above Act. Let us see what Information Acts of different States say in this regard. The Assam Right to Information Act says that a cooperative society or any other society or a trust or any other organization or institution established under any law for the time being in force by the State Government and directly controlled or funded by it. The Goa Right to Information Act, 1997 says information means any material or information relating to affairs of the state or any local or other authorities constituted under any enactment passed by the Legislative Assembly of Goa for the time being in force or a Statutory Authority or a Company, Corporation, Trust, Firm, Society or a cooperative society, or any other organization funded or controlled by the Governmentor executing any public work or service on behalf of or as authorized by the Government. The J&K Right to Information Act says a public body shall include a society or a cooperative society or any other organization established under any law for the time being in force, by the Government and directly controlled or funded by it; 2(f)(iv). The Karnataka Right to Information Act, 2000 defines publicauthority as all local authorities, all authorities constituted by or under any Act of the State Legislature for the time being in force, a company, Corporation, trust, society, any statutory or other authority, Cooperative Society or any other organization or body funded, owned or controlled by the State Government 2(c)(iii). The Maharashtra Right to Information Act, 2000 says informationincludes a copy of any document relating to the affairs of the State or any local or other authorities constituted under any Act for the time being in force or a statutory authority or a company, corporation or a cooperative society or any organization, owned, or controlled by the Government. 2(3). The Rajasthan Right to Information Act, 2000 says public body shall include a society or a cooperative society or any other organization established under any law for the
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National Conference on Co-operative Societies, Trusts, Redevelopment of Properties, Legal and Taxation Aspects time being in force, by the State Government and directly controlled or funded by it. 2(v)(d). The Tamil Nadu Right to Information Act, 1997 says information includes copy of any document relating to the affairs of the State or any local or other authorities constituted under any Act for the time being in force or a statutory authority or a company, corporation or a cooperative society or any organization owned or controlled by the Government. 2(3). The Central RTA, 2005 defines public authority as any authority of body or institution of self-government established or constituted(a) by or under the Constitution
(b) by any other law made by Parliament (c) by any other law made by State Legislature
(d) by notification issued or order made by the appropriate Government, and includes any 5 (i) (ii) body owned, controlled or substantially financed; non-Government organization substantially financed, directly or indirectly by funds provided by the appropriate Government; 2(h) As cooperatives are democratic, self-help organizations controlled by their members, members contribute equally to the society and democratically control the capital and actively participate in setting the policies and decision making in the cooperative, there is an in-built mechanism under the provisions of Cooperative Laws to protect the rights of its members. Therefore, the cooperatives in which there is less than 51% equity participation of the Government or which are not receiving substantial Government grant should not come under the purview of Right to Information Act of State or Centre. Shri Suresh Pachouri, Honble Minister of State for Personnel, Public Grievances and Pension, Government of India in moving the motion for consideration of the Bill said ..................the scope of this Bill extends to all the authorities and bodies under the constitution or any other law and inter alia includes all authorities under the Central Government, State Governments and local bodies. The non-Governmental organizations substantially funded directly or indirectly, by the public funds also come within the ambit of this Bill.
Secondly, the 5th Principle of Cooperation which says cooperatives provide education, training and information for their members, elected representatives, managers, and employees so that they contribute effectively to the development of their cooperatives. They inform the general public particularly young people and opinion leaders about the nature and benefits of cooperation. Each and every cooperative follows cooperative principles in its true spirits and shares the information about its functioning to their members. The Government of India is also considering constitutional amendments to ensure democratic, autonomous and professional functioning of the cooperatives. Thirdly, most of the Cooperative Societies Acts cover right to information where members or creditors can seek any information from their cooperatives by depositing a small amount fixed under the Act. For example, according to the Section 32 and Rule 30 of Maharashtra Cooperative Societies Act 1960 and Rules 1961 some rights have been given to members of cooperative societies to get some information. They are as follows:- every member of a society shall be entitled to inspect free of cost at the Societys office during office hours, or any time fixed for the purpose by the society, a copy of the Act, the Rules and bye-laws, the last audited annual balance sheet, the profit and loss account, a list of the members of the Committee, a register of members, the minutes of general meetings, minutes of committee meetings and those portions of the books and records in which his transactions with the society have been recorded. A society can furnish to a member on request in writing and on payment of such fees as may be prescribed therefore, a copy of any of the documents mentioned in the foregoing sub-section within one month from the date of payment of such fees. Similarly under the newly enacted Delhi Cooperative Societies Act, 2003 members or creditors can seek any information from the societies.
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National Conference on Co-operative Societies, Trusts, Redevelopment of Properties, Legal and Taxation Aspects ART-100 6 However, it is being observed that some elements are coming forward to seek information from the Cooperative Department regarding cooperative societies without establishing any cause of action by depositing small amount fixed under the Act. As an example, a member seeks information i.e. copies of all resolutions of General Body and Managing Committee for the last 10 years or audit report since the society is registered. He has no cause of action for seeking this information but only to harass the management of the societies. Defeated members in the election or their supporters adopt this technique and thus misuse the Information Act. Under the provisions of the Income Tax Rules, 1962 as well as the Companies Act, 1956, Books of Account are required to be maintained/preserved for a period of 6 years and 8 years respectively. Suggestions for Consideration (i) In the above background, there is a need to modify the present States and Central Information Acts in order to regulate the public as well as Government Departments and public institutions by making provisions that person seeking information must establish cause of action before Public Grievances Commission only after which the information would be supplied to such person. (ii) Moreover, information for not more than three years old should be supplied under the Act. Cooperative societies are managed by honorary elected persons and they are short of staff due to financial restraints. Hence it is necessary to protect cooperative institutions from the vested interest of some individuals.
(iii) Cooperatives being member controlled democratic organizations have laws protecting the rights of its members. The cooperatives in which there is less than 51% equity participation of the Government or which are not receiving substantial Government grant should not come under the purview of Right to Information Act. (iv) The National Cooperative Union of India should convene a National Seminar on the subject to discuss various provisions of different States and Federal Acts which adversely affects the working of cooperatives. The success of the RTA movement depends on the will of the politicians, positive attitude of bureaucrats and enlightened masses to use it only for good governance and not to mould the Act and misuse it for their vested interests or to harass somebody. There are certain grey areas which need to be looked for, especially regarding cooperatives and rights and duties of their members. Co-operatives make up for one-sixth of Maharashtras economy; they are also abodes of chronic corruption. No wonder, many are yet to digest the fact that co-operatives have now come under the RTI Act and so public disclosures of their functioning is mandatory Vijay Kumbhar, a leading RTI (Right to Information) activist from Pune, has been researching on the aspect of co-operatives coming under the RTI Act after the enactment of the 97th amendment to the Constitution of India in March 2012. Now, co-operative societies have not only become a part of Article 19 of the Constitution of India making them one of the fundamental rights of a citizen, but have now also been given the status of local self-government in Part IX of the Constitution. This makes them accountable under the RTI Act. However, many a vested interest is trying to hoodwink this fact. A tete-a-tete with Kumbhar.
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National Conference on Co-operative Societies, Trusts, Redevelopment of Properties, Legal and Taxation Aspects With the enactment of the 97th amendment to the Constitution of India and its inclusion in Article 19 of the Constitution, formation of cooperative societies has become one of the fundamental rights of an Indian citizen. Besides, they have been given the status of local self-government like rural and urban municipal bodies in Part 9 of the Constitution. Cooperative societies have thus come under the ambit of the Right to Information Act. As per Section 2 (h) of the RTI Act, public authority means any authority or body or institution of selfgovernment established or constituted (a) by or under the Constitution; (b) by any other law made by Parliament; (c) by any other law made by the State Legislature; (d) by notification issued or order made by the appropriate government, and now as per Section 2 (h) (a) of RTI Act, any cooperative society has become an authority or body or institution of selfgovernment established or constituted by or under the Constitution and hence it comes under the ambit of the RTI Act. Article 19 of the Constitution of India protects certain fundamental rights of the citizens. All citizens have the right to freedom of speech and expression; to assemble peacefully and without arms; to form associations or unions; to move freely throughout the territory of India; to reside and settle in any part of the territory of India; and to practice any profession, or to carry on any occupation, trade or business. Now forming a cooperative society is also a fundamental right. (Moreover, as per Article 43B of Part IV it is now the duty of the states to promote voluntary formation, autonomous functioning, democratic control and professional management of cooperative societies to encourage economic activities of cooperatives which in turn would facilitate progress of rural India.) Part IX of the Constitution comprise local self-governments; Part IX pertains to Panchayats; Part IX B is about municipalities and now with the insertion of Part IX C, co-operative societies have acquired the status of local self-governments. Correspondingly, cooperative societies have come under the RTI Act. Cooperative societies normally include co-operative banks, credit societies, sugar factories, handloompower loom factories, distilleries, milk producing societies, water supply societies and so on. Henceforth, all such institutions will have to appoint Public Information Officers, Appellate Authorities and comply with all the provisions of the RTI Act. This is the most revolutionary event in the history of our country in the recent past. Normally there are three sectors of industries; public, private and cooperative. The first one is wholly owned by a state or the central government and the governments have complete control over its investments and management and it is accountable to the governments as well as to the public. Although the private sector abides by the laws, rules and regulations of the governments it is not answerable or accountable to the governments or the public for the losses/profits or management. It is accountable only to its owners or shareholders as per the law of the land. The cooperative sector was a blend of the public and private sectors. So far, it was enjoying the facilities available to the public sector such as loans, share capital from the state, etc but was not accountable to the state or the public. With the Part IX inclusion in the 97th amendment, the scenario has changed and the cooperative sector is now accountable to the state and the public. Several information commissions and courts had given contradictory verdicts on this matter. Cooperative societies were out of the ambit of the RTI Act because it was not an authority or body or an institution of self-government established or constituted by or under the Constitution. Hence, attempts to bring a cooperative society under the RTI Act, claiming it to be an institute, a body owned, controlled or
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National Conference on Co-operative Societies, Trusts, Redevelopment of Properties, Legal and Taxation Aspects substantially financed by notification issued or order made by the appropriate government failed. In addition, authorities of these institutes always took the stand that they did not come under the RTI act. Now, they cannot escape as it has become the fundamental right of a citizen. In reality, considerable part of the countrys economy is occupied by the cooperative sector. It is said that about 1/6th of Maharashtras economy comprises co-operative societies. A major part of Maharashtra politics is also influenced by the cooperative sector. The scale of illegalities, scams and corruption in this sector is also high. The cooperative sector including co-operative banks and credit co-operative societies block substantial government funds running into hundreds of crores. As of 2012, the unaccounted for amount is close to Rs 15,000 crore. The statistics of the department of cooperative societies of Maharashtra in 2009-10 show that there were 2,18,320 cooperative societies in Maharashtra and the total membership of these societies was 5.52 crore. One estimate of the number of societies is at about 2,30,000 with a membership of about 6.5 crore. For the entire country, this number could go up to 6.5 lakh societies with 30 crore members. A giant sector such as this was uncontrolled and unaccountable till now. One can hope that this sector will move in a positive direction after the 97th amendment to the constitution. The highlights of the Maharashtra Cooperative Societies Act and Rules after amendments are: (i) Incorporation of cooperative societies on the principles of voluntary formation, democratic member control, member economic participation and autonomous functions; (ii) Conduct of election of a cooperative society by an independent electoral authority; (iii) A fixed term of five years for the office bearers of the cooperative society; (iv) Supersession of the board of a cooperative society for a period of not exceeding six months; (v) Independent professional audit of the cooperative societies; (vi) Convening of the general body meeting of every cooperative society within a period of six months of the close of the financial year; (vii) Access to every member of the society to the books, information and the accounts of the cooperative society; (viii) Filing of the returns by every cooperative society within six months of the close of every financial year; (ix) Free, fair, impartial and timely elections of cooperative societies by independent body; (x) Audit of the cooperative societies to be carried by the auditors from the government approved panel of auditors or firms; (xi) Maximum number of 21 directors to be applicable to all cooperative societies irrespective of their size with two seats reserved for women; and (xii) Co-opted members not to be eligible to be elected as office-bearers of the board. Also there are provisions of penalty for consistent defaults, acting against the interest of the institution, deadlock in the board of directors, not ordering elections within specified time, corruption, irregularities in duty, deliberately giving false information, disobeying orders of authorities, etc.
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National Conference on Co-operative Societies, Trusts, Redevelopment of Properties, Legal and Taxation Aspects The recent news about co-operatives coming under the Right To Information (RTI) Act saw many excited activist and individuals. Till now, Maharashtra is the only state to have ratified the 97th Constitutional Amendment that came about in March 2012. Orissa is learnt to have notified the amendment while Gujarat has rejected it. After the amendment, a one-year period was given to states to amend as well as repeal existing law in line with the new Constitutional provisions. Co-operative societies include co-operative banks, credit societies, sugar factories, handloom-power loom factories, distilleries, milk producing societies (like Amul), water supply societies and so on.. Till last year co-operative societies did not fall under RTI. But, the latest amendment, many say, brings it under the purview of the same. How? As per Section 2(h) of the RTI Act, any public body or institution established under the Constitution (Article 19) becomes the fundamental right of any citizen and hence comes under the RTI. So do co-operatives, says Mumbai-based RTI activist Shailesh Gandhi. However, it is not as simple as it comes across to be. Pune-based non-government organisation Sajag Nagrik Manchs president and RTI activist, Vivek Velankar says that this matter is laced with controversy. There is no clarity on who this amendment, and hence RTI, applies to and who it does not apply to. Therefore, a citizen may or may not get response to his RTI application from co-operatives. Either the body will not respond at all or it can deny saying it does not fall under RTIs purview. You cannot pull up a co-operative under RTI as on today, he warns. Velankar says Maharashtra state has accepted only the Constitutional Amendment, which if extended can get co-operatives under RTI. This is not written in as many words. As a result, many can refute it. However, co-operatives say that societies can be formed with 10-20 people. In that case, even under the RTI, who should be fined, all 20 of them? Examples of private companies are given as these are formed under Companies Act but that does not necessarily come under RTI. Given that the amendment was done and accepted only over the past year, many opine that only new co-operatives should come under RTI and not the existing ones. Though, this is not a new Co-operative Act but an amendment to it as per that of the Constitution. Hence, every co-operative society no matter how old or new can come under the RTI Act. The Gujarat High Court has struck down allowing co-operative societies to come under the RTI. And if this matter goes to the Supreme Court, which many feel it will, there could be some clarity. And the decision taken there of including or not including co-operative under RTI may be final for all states. Till more clarity emerges there is no binding for such authorities. Thats why Gandhi says if this comes, it would be beneficial for citizens. Such societies are also known to be abodes of chronic corruption. Surendera M. Bhanot coordinator of Chandigarh-based RTI Federation says it will become easy for co-operatives members once RTI is applicable as many management is known to siphon money or misappropriate funds. Till now, members cannot get information about co-operatives, their accounts, functioning, very easily. Then, you cannot even know if these bodies are working right. After this, you can question your housing society if you have any kind of doubt, any co-operative bank and even companies like Amul. And if you are proved right then you can drag the co-operative to court on the basis of response to your RTI application, he said. The 97th amendment to the Constitution is intended to rejuvenate co-operative societies through more autonomy, professional management, prevention of interference and transparency in functioning. It also makes floating of a cooperative society a fundamental right of citizens.
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National Conference on Co-operative Societies, Trusts, Redevelopment of Properties, Legal and Taxation Aspects A year after the amendment, there is a debate in Maharashtra where the cooperative movement is very strong, about applicability of RTI to make cooperatives more transparent. The office of the Cooperative Commissioner is yet to receive any clear guidelines on applicability of RTI to cooperative societies. There is a clamour from various sections of society for speedy inclusion of the sector under RTI. Roughly 1/6th of the countrys economy is controlled by the cooperative sector, including cooperative banks, credit societies and farmers cooperatives. For want of proper record-keeping, the current status of the cooperative sectors is hazy, with figures from Maharashtra showing 2,18,320 cooperative societies with a total membership of 5.42 crore. Activists said cooperatives in the state have always been a hotbed of political control and politicking. Making a strong case for bringing cooperative bodies under the RTI, activist Vijay Kumbhar said as per the RTI Act, a body constituted by or under the Constitution can be called a public authority. With the amendment, the right to form cooperatives has come under fundamental rights and thus it qualifies as a body constituted under the Constitution and the RTI would be applicable to them, he argued. Kumbhar said cooperatives have the status of local self governments, listed under Part IX of the Constitution. (Cooperatives are listed under Part IX B). So, these societies would come under RTI as all local self government bodies are within the ambit of RTI, he said. Prahlad Kachre, director of Yashwantrao Chavan Academy of Development Administrations RTI cell, however, said inclusion of cooperative bodies under RTI should be decided on merit. Cooperative societies are not technically formed by the government. They are registered by respective authorities and I do not know if they qualify for RTI, he said. HC: Co-operative societies are public authorities, bound to give info under RTI A division bench of the Punjab and Haryana High Court on Friday dismissed an appeal filed by a sugar mill co-operative society, which had refused to furnish information demanded under the Right to Information (RTI) Act. A division bench comprising Chief Justice Mukul Mudgal and Justice Ajay Tewari dismissed the appeal filed by the mill holding that co-operative societies are public authorities and are bound to furnish information under the RTI Act. The mill, Karnal Co-operative Sugar Mills Limited, had refused to give certain information under the RTI as demanded by a resident of Haryana. Following this a petition was filed before the State Information Commission, Haryana, which directed the mill to furnish information holding that it was a public authority under the RTI Act, 2005. The co-operative moved the High Court, but its appeal was dismissed by Justice Kanwaljit Singh Ahluwalia in May. It then moved an appeal against an order of the single judge. Arguing before a division bench, counsel for the co-operative took the stand that the mill is neither a body owned, controlled or substantially financed by the government nor it is a non-government organisation substantially financed, directly or indirectly by funds provided by the appropriate government. Regarding funding, Justice Ahluwalia had held the mill had not divulged any details about share-holding of the government or any other finances which may have been provided by the government. The bench also noticed that having itself appointed a public information officer, the mill admitted it was a public authority.
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National Conference on Co-operative Societies, Trusts, Redevelopment of Properties, Legal and Taxation Aspects Holding that this case is distinguishable for the reason that the mill is managed by a managing director who is a civil service officer, the Bench dismissed its appeal. The mill has divulged no information regarding the extent of financial help/investment/equity participation made by the government in the mill. It is evident that this information if furnished may have gone against the stand taken by the mill. In the circumstances, no fault can be found with the judgment of the single judge and consequently it is dismissed, the order reads.
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Shri Manohar Bhalchandra Gajare Educational Qualification: B.A.(Hons), Pune University 1971 & Master of Labour Welfare, (M.L.W.), Bombay University 1973 Experience: Posts Held in the Office of Commissioner of Labour, Maharashtra o o o o o o Assistant Commissioner of Labour from 21 August 1974 to 1 January 1984 Deputy Commissioner of Labour from 2 January 1984 to 2 April 1993 Additional Commissioner of Labour from 3 April 1993 to 28 January 2001 Joint Labour Commissioner from 29 January 2001 to 30 April 2007 Retired from Government Service from 30 April 2007 Deputed by Government of India in 1983 to represent India and participate in a training programme on Industrial Relations held at the International Training Institute, Sydney, Australia for 12 weeks.
Handled numerous Industrial Relations situations situations. Guest Lecturer/ Visiting Faculty: o o o Maharashtra Institute of Labour Studies. Bombay University. Janakidevi Bajaj Institute of Management, S.N.D.T. University, Mumbai Tata Institute of Social Sciences Mumbai
Participated in various Seminars/ Workshops on various topics on Industrial Relations, Enforcement of Labour Laws. Represented Govt. of Maharashtra in National Conferences i.e. Standing Labour Committee, Indian Labour Conference etc. Arranged and participated in In House Training for Officers of the Labour Commissionarate. Active Participation and contribution to Study Circleof the Labour Commissionarate. Conducted various sessions of Education, Confidence Building and Guidance for the Officers of the Labour Commissionarate.
Special Reference: Government of Maharashtra Intended to Repeal The Bombay Industrial Relations Act, 1946 and for this purpose also constituted a Committee headed by the Labour Minister.
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National Conference on Co-operative Societies, Trusts, Redevelopment of Properties, Legal and Taxation Aspects Active participation in the proceedings of this committee, including preparation of Draft Bill for presentation in the Maharashtra Legislative Assembly. Active participation in the proceedings of the Joint Select Committee of the Members of Maharashtra Legislature when the Bill was referred to it. Active participation in the proceedings of the committee constituted by the Maharashtra Government, under the Chairmanship Of the Former Chief Secretary Shri K.B. Shrinivasan for the Review of Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, 1975
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Labour Laws Each Employer Should Know

Shri Manohar Gajare
7/31/2013
LABOUR LAWS EACH EMPLOYER SHOULD KNOW
Presentation By M. B. Gajare Joint Commissioner of Labour (Retired)
Laws regulating Industrial Relations: 1. Industrial Disputes Act - 1947. 2. Industrial Employment (Standing Orders) Act, 1946. 3. Trade Unions Act, 1926. 4. Bombay Industrial Relation Act 1946. 5. MRTU & PULP Act, 1972.
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Social Security Legislation 1. Employees Compensation Act, 1923. 2. E.S.I. Act, 1948. 3. Employees Provident Fund Act, 1948. 4. Maternity Benefit Act, 1961. 5. Payment of Gratuity Act 1971.
Laws regulating working conditions:

1. 2. 3. 4. The Factories Act, 1948. The Bombay Shops & Establishment Act, 1948. The Beedi and Cigar Workers (Conditions of Employment) Act, 1966. The Buildings and other Construction Workers (regulation of employment and conditions of service) Act, 1996
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Laws regulating working conditions:

5. 6. The Cine-Workers and Cinema Theatre Workers (Regulation of Employment) Act, 1981 The inter-state migrant workmen (regulation of employment and conditions of service) act, 1979 7. 8. The Motor Transport Workers Act 1961 The Sales Promotion Employees (Conditions of Service) Act,1976
Laws regulating working conditions: 9. The dock workers (regulation of employment) act, 1948 10.Working Journalists and Other Newspaper Employees] (Conditions of Service) and Miscellaneous Provisions Act, 1955. 11.The Plantation Labour Act, 1951 12.The Mines Act, 1952 13.The Merchant Shipping Act 1958
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Laws dealing with wages:
1. Payment of Wages Act, 1936. 2. Minimum Wages Act, 1948. 3. Payment of Bonus Act, 1965.
Laws related to Equality and Empowerment of Women 1. The Maternity Benefit Act, 1961 2. The Equal Remuneration Act,1976
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Laws related to Deprived and Disadvantaged Sections of the Society
1. The Bonded Labour System Abolition) Act,1976 2. The Child Labour (Prohibition & Regulation) Act, 1986
Laws related to Employment & Training
1. The Employment Exchange (Compulsory Notification of Vacancies) Act, 1959 2. The Apprentices Act,1961
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Miscellaneous
Labour Laws (Exemption from Furnishing Returns and Maintaining Registers by certain Establishments) Act, 1988.
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CAV JUDGEMNT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD WRIT PETITION (PIL) NO. 166 of 2012
FOR APPROVAL AND SIGNATURE: HONOURABLE THE CHIEF JUSTICE MR. BHASKAR BHATTACHARYA and HONOURABLE MR.JUSTICE J.B.PARDIWALA
================================================== ================== Whether Reporters of Local Papers may be allowed to see 1 the judgment ? 2 To be referred to the Reporter or not ?` Whether their Lordships wish to see the fair copy of the judgment ?
Whether this case involves a substantial question of law as 4 to the interpretation of the constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ?
========================================== =============== RAJENDRA N SHAH Versus UNION OF INDIA & ANR.

================================================================ Appearance: MR KI SHAH with MR VISHWAS K SHAH with MR MASOOM K SHAH, ADVOCATE for the Applicant. MR PS CHAMPANERI, ASST SOLICITOR GENERAL for the Opponent No. 1 MR PK JANI, GOVERNMENT PLEADER for the Opponent No. 2 ================================================================
CORAM: HONOURABLE THE CHIEF JUSTICE
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MR. BHASKAR BHATTACHARYA and HONOURABLE MR.JUSTICE J.B.PARDIWALA Date : 22/04/2013
CAV JUDGEMNT (PER : HONOURABLE THE CHIEF JUSTICE MR. BHASKAR BHATTACHARYA)
1.
By this Public Interest Litigation, the writ-petitioner has prayed
for quashing of the Constitution [97th amendment] Act, 2011 introducing part IXB, as ultra vires the Constitution of India.
2.
The case made out by the writ-petitioner is that the
Constitution [97th amendment] Act, 2011 was passed by the Lok Sabha on 22nd December 2011 and the same was passed by the Rajya Sabha on 28th December 2011. The President of India bestowed assent to that amendment on 12th January 2012 and the said notification was published in the gazette of India of 13th January 2012 and the amendment came into force on 15th February 2012.
2.1
According to the petitioner, the power under Article 368 of the
Constitution of India itself is the basic structure of the Constitution of India and the fact that by the impugned constitutional amendment, the procedure prescribed in the article 368(2) of the Constitution, which recognizes the federal structure of the Constitution as one of
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the basic structures, has not been followed, is violative of the Constitution. The petitioner contends that the subject-matter Co-
operative Societies does not fall in the 7th Schedule Entry 45 of List I of the Constitution and those are specifically excluded from entry no. 43 of List 1. Therefore, according to the petitioner, the State legislature is the only competent authority in law to enact the laws for the co-operative societies and on that ground, the proposed amendment should be set aside as violative of the Constitution of India as the consent of the majority of the State Legislatures was not received before presenting the Bill proposing the amendment to the President of India.
2.2
According to the petitioner, it is settled law that a constitutional
authority cannot do something indirectly which it is not permitted to do directly and if there is a constitutional provision inhibiting the constitutional authority from doing an act, such provision cannot be allowed to be defeated by adopting a subterfuge. By the impugned constitutional amendment, according to the petitioner, the
Parliament, a creature of the Constitution, and not vice-a-versa, has violated the basic structure of the Constitution by not complying with the requirements of Article 368 (2) of the Constitution.
3.
This Court issued notices upon the parties including the learned
Attorney General of India, and in response to the notice, Mr. Champaneri, the learned Assistant Solicitor General of India, has
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appeared. The submissions of the Union of India may be summarized thus:
(A).
The only limitation on the Parliament in exercise of the constituent power to amend the Constitution in the matters enumerated in clauses (a), (b), (c), (d), and (e) of the proviso to sub-Article (2) of Article 368 is that, such amendment shall also require to be ratified by the Legislatures of not less than one half of the States by the resolution to that effect passed by those Legislatures before the bill making provision for such amendment is presented to the President for his assent.
(B).
Sub-Article (1) of Article 368 has been inserted by the Constitution (24th amendment) Act, 1971 and the original Article 368 has been re-numbered as clause (2) of Article 368 whereas the words specified in parts A & B of the First Schedule from the proviso were omitted by the Constitution [97th Amendment] Act, 1956.
(C).
Sub-Article (3) provides that nothing in Article 13 shall apply to any amendment made under this Article. This clause is inserted by the Constitution (24th amendment) Act, 1971. Sub-Article (4) and Sub-Article (5) of Article 368 which had been inserted by the Constitution (42nd amendment) Act, 1976 have been declared to be invalid by the Constitution Bench of the
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Supreme Court of India in the case of MINERVA MILLS V. UNION OF INDIA, reported in AIR 1980 SC 1789 on the ground that these clauses which remove all limitation upon the power of the Parliament to amend the Constitution and precluded a judicial review of the Constitution Amendment Act, on any ground, sought to destroy an essential feature or basic structure of the Constitution.
(D).
The Constitution lays down different modes of amendment of its various provisions, which are as under:
(i).
A very large number of provisions are open to alteration by the Union Parliament, by simple majority like the matters referred to in Articles 2 4, 169 and 240. (a). Creation of new States or reconstitution of existing States. (b). Creation or abolition of upper chambers in the States. (c). Administration of scheduled areas and Scheduled Tribes (Part VIII of the 5th Schedule and Part XXI of the 6th Schedule.
(ii).
If, however, a matter is not covered by this Article, like cessation of territory to a foreign power, that can be effected only by enacting an Amendment Act under Article 368.
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(iii).
In the case of few matters relating to the federal structure of the Constitution, a special mode is prescribed, viz. that the Bill for amendment must be passed by two-third majority of the members of each House present and voting (such majority being more than 50% of the total membership of each House) and then ratified by the Legislatures by one-half of the States. Those matters are:
(a). (b).
The manner of election of President, Extent of Executive Powers of the Union and the States,
(c ). (d).
The Supreme Court and the High Courts, Distribution of Legislative powers between the Union and the States,
(e). (f).
Representation of States in Parliament, and, The provisions of Articles 368 itself.
(E).
Article 3 68 does not prescribe the form in which the amendments may be made and the arrangement may, therefore, add a provision to the Constitution without altering its existing text in view of the decision rendered by the Supreme Court in the case of SHANKARIPRASAD vs. UNION OF INDIA reported in AIR 1951 SC 458.
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(F).
In
view
of
the
aforesaid
decision
in
the
case
of
Shankariprasad [supra], the decision prevailing was that no part of our Constitution is unamendable and that the Parliament may, by passing a Constitution Amendment Act, in compliance with the requirement of Article 368, amend any provision of the Constitution including the fundamental rights of Article 368 itself. However, in the case of Golaknath reported in AIR
1967 SC 1643, the majority of six Judges of a Special Bench of 11 Judges overruled the previous decision of the Supreme Court in the case of Shankariprasad and took a view that though there is no express provision from the ambit of the Article 368, the fundamental rights included in Part-III of the Constitution cannot, by their very nature, be subject to the process of amendment provided for in Article 368 and that if any of such rights is to be amended, a new Constituent Assembly must be convened for making a new Constitution or radically changing it.
(G).
The majority decision on Golaknaths case was superseded by the Constitution (24th amendment) Act, 1971, by inserting clause (4) in Article 13 and clause (1) in Article 368 as a result of which an amendment of the Constitution, based in accordance with the Article 368, may not be a law within the meaning of Article 13 and the validity of the Constitution Amendment Act shall not be open to question on the ground
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that it takes away or affects a fundamental right. amendment has been held to be valid.
This
(H).
The decision of Golaknaths case has been overruled by the latter Full Bench of the Supreme Court in the case of Keshavnanad v. State of Kerala reported in AIR 1973 SC 1461.
(I).
Clauses (4) and (5) are inserted in Article 368 by the 42 nd Amendment Act, 1976 and the insertion of the said clauses by 42nd Amendment Act, 1976 provides that:
(a).
There is no limitation express or implied, upon the amendment power under Article 3 68 (1) which is a constituent power, and,
(b). A Constitution Amending Act would not, therefore, be subject to judicial review on any ground.
The said amendment, in turn, came to be superseded by the decision of a Constitution Bench of the Supreme Court in the case of MINERVA MILLS [supra]. The said clauses (4) and (5) of Article 368 has been invalidated by the Supreme Court in the said case on the ground that these provisions introduced by the 42nd amendment Act, 1976, sought to exclude judicial review, which was one of the basic features of the Indian
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Constitution, as held in the Kesavanands case and so long as this decision stands, all the Constitution Amendment Acts shall be open to review by the Supreme Court to see whether it affected any of the basic features of the Constitution
substantively or the procedural safeguards included in other clauses of Article 368.
(J).
Thus, the power to amend Constitution is vested in the Parliament and while exercising the powers under Article 368, the Parliament would not be subject to the limitations which curb its Legislative powers to make laws under Articles 245-246 because the amending power conferred by Article 368 is constituent power as held by the Apex Court in the case of SASANK vs. UNION OF INDIA reported in AIR 1981 SC 522.
(K).
By the amendment, by insertion of Chapter IXB, Article 19(1) (c) has been amended and now the co-operative societies have also been included in Part-III of the Constitution in Article 19(1) (c) and therefore, there is an addition in the fundamental rights so far as addition of fundamental rights guaranteed under 19(1) (c) has been extended to the Co-Operative Societies.
(L).
Therefore, Article 368 (2) proviso has to be read in its strict sense and it is apparent that the amendment under challenge is not changing any of the matters enumerated in clauses (a) to
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(e) of the provision.
(M). The Parliament has exercised its constituent powers, which is distinct from its legislative power and by the 97th amendment, the Parliament has not legislated on the subject, but in its constituent power has amended the Constitution by addition of guarantee of the fundamental rights in favour of the CoOperative Societies. By this amendment, the Parliament has not attempted to change the basic features of the Constitution. The Principles of Federalism are also not altered. Therefore, the challenge to the 97th amendment in Constitution is
misconceived and has no merits, and therefore, the writ-petition deserves to be dismissed.
4.
The State Government, although has not filed any affidavit, Mr.
Jani, the learned Government Pleader appearing on behalf of the State, has supported the contentions of Mr. Champaneri, and has prayed for rejection of the writ-application.
5.
Therefore, the question that falls for determination before us is
whether the impugned amendment violates any of the provisions of the Constitution of India.
6.
In order to appreciate the aforesaid contention, it will be
profitable to refer to part IXB of the Constitution of India containing
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Articles 243ZH to 243ZT, which are quoted below:
243ZG. Bar to interference by courts in electoral matters.Notwithstanding Constitution, (a) the validity of any law relating to the delimitation of constituencies or the allotment of seats to such anything in this
constituencies, made or purporting to be made under article 243ZA shall not be called in question in any court; (b) no election to any Municipality shall be called in question except by an election petition presented to such authority and in such manner as is provided for by or under any law made by the Legislature of a State.
243ZH. Definitions.--In this Part, unless the context otherwise requires,-[a] authorised person means a person referred to as such in article 243ZQ; [b] board means the board of directors or the governing body of a co-operative society, by whatever name called, to which the direction and control of the management of the affairs of a society is entrusted to; [c] co-operative society means a society registered or deemed to be registered under under any law relating to co-operative societies for the time being in force in any State; [d] multi-State co-operative society means a society with objects not confined to one State and registered or deemed to be registered under any law for the time being in force relating to such cooperatives;
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[e]
office bearer means a President, Vice-President, Chairperson, Vice-Chairperson, Secretary or
Treasurer of a co-operative society and includes any other person to be elected by the board of any co-operative society; [f] Registrar means the Central Registrar appointed by the Central Government in relation to the multiState co-operative societies and the Registrar for co-operative societies appointed by the State Government under the law made by the Legislature of a State in relation to co-operative societies; [g] State Act means any law made by the Legislature of a State; [h] State level co-operative society means a cooperative society having its area of operation extending to the whole of a State and defined as such in any law made by the Legislature of a State.
243ZI. Incorporation of co-operative societies.-Subject to the provisions of this Part, the Legislature of a State may, by law, make provisions with respect to the incorporation, regulation and winding-up of co-operative societies based on the principles of voluntary formation, democratic member-control, member-economic
participation and autonomous functioning.
243ZJ. Number and term of members of board and its office bearers.-- [1] The board shall consist of such number of directors as may be provided by the Legislature of a State, by law:
Provided that the maximum number of directors of a co-opeative society shall not exceed twenty-one:
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Provided further that the Legislature of a State shall, by law, provide for the reservation of one seat for the Scheduled Castes or the Scheduled Tribes and two seats for women on board of every co-operative society consisting of individuals as members and having
members from such class or category of persons. [2] The term of office of elected members of the
board and its office bearers shall be five years from the date of election and the term of office bearers shall be coterminous with the term of the board: Provided that the board may fill a casual vacancy on the board by nomination out of the same class of members in respect of which the casual vacancy has arisen, if the term of office of the board is less than half of its original term. [3] The Legislature of a State shall, by law, make
provisions for co-option of persons to be members of the board having experience in the field of banking,
management, finance or specialisation in any other field relating to the objects and activities undertaken by the co-operative society, as members of the board of such society: Provided that the number of such co-opted
members shall not exceed two in addition to twenty-one directors specified in the first proviso to clause[1]: Provided further that such co-opted members shall not have the right to vote in any election of the cooperative society in their capacity as such member or to be eligible to be elected as office bearers of the board: Provided also that the functional directors of a cooperative society shall also be the members of the board and such members shall be excluded for the purpose of counting the total number of directors specified in the
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first proviso to clause[1].
243ZK.
Election
of
members
of
board.--[1]
Notwithstanding anything contained in any law made by the Legislature of a State, the election of a board shall be conducted before the expiry of the term of the board so as to ensure that the newly elected members of the board assume office immediately on the expiry of the term of the office of members of the outgoing board. [2] The superintendence, direction and
control of the preparation of electoral rolls for, and the conduct of, all elections to a co-operative society shall vest in such an authority or body, as may be provided by the Legislature of a State, by law: Provided that the Legislature of a State may, by
law, provide for the procedure and guidelines for the conduct of such election.
243ZL. and
Supersession and suspension of board management.-[1] Notwithstanding
interim
anything contained in any law for the time being in force, no board shall be superseded or kept under suspension for a period exceeding six months: Provided that the board may be superseded or kept under suspension in case-[i] [ii] of its persistent default; of negligence in the performance of its duties; or [iii] the board has committed any act prejudicial to the interests of the co-operative society or its members; or [iv] there is a stalement in the constitution or functions of the board; or
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[v] the authority or body as provided by the Legislature of a State, by law, under
clause[2] of article 243ZK, has failed to conduct elections in accordance with the provisions of the State Act.
Provided further that the board of any such cooperative society shall not be superseded or kept under suspension where there is no Government shareholding or loan or financial assistance or any guarantee by the Government: Provided also that in case of a co-operative society carrying on the business of banking, the provisions of the Banking Regulation Act, 1949 [10 of 1949] shall also apply: Provided also that in case of a co-operative society, other than a multi-State cooperative society, carrying on the business of banking, the provisions of this clause shall have the effect as if for the words six months, the words one year had been substituted. [2] In case of supersession of a board, the
administrator appointed to manage the affairs of such cooperative society shall arrange for conduct of elections within the period specified in clause [1] and handover the management to the elected board. [3] provisions The Legislature of a State may, by law, make for the conditions of service of the
administrator.
243ZM.
Audit
of
accounts
of
co-operative
societies.-- [1] The Legislature of a State may, by law, make provisions with respect to the maintenance of accounts by the co-operative societies and the auditing of
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such accounts at least once in each financial year. [2] The Legislature of a State shall, by law, lay
down the minimum qualifications and experience of auditors and auditing firms that shall be eligible for auditing accounts of the co-operative societies. [3] Every co-operative society shall cause to be
audited by an auditor or auditing firms referred to in clause [2] appointed by the general body of the cooperative society: Provided that such auditors or auditing firms shall be appointed from a panel approved by a State Government or any authority authorised by the State Government in this behalf. [4] The accounts of every co-operative society
shall be audited within six months of the close of the financial year to which such accounts relate. [5] The audit report of the accounts of an apex
co-operative society, as may be defined by the State Act, shall be laid before the State Legislature in the manner as may be provided by the State Legislature, by law.
243ZN.
Convening of general body meetings.--
The Legislature of a State may, by law, make provisions that the annual general body meeting of every cooperative society shall be convened within a period of six months of close of the financial year to transact the business as may be provided in such law.
243ZO.
Right of a member to get information.--
[1] The Legislature of a State may, by law, provide for access to every member of a co-operative society to the books, information and accounts of the co-operative society kept in regular transaction of its business with
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such member. [2] The Legislature of a State may, by law, make
provisions to ensure the participation of members in the management of the co-operative society providing
minimum requirement of attending meetings by the members and utilising the minimum level of services as may be provided in such law. [3] The Legislature of a State may, by law, training for its
provide for co-operative education and members.
243ZP .
Returns.-- Every co-operative society shall
file returns, within six months of the close of every financial year, to the authority designated by the State Government including the following matters, namely:-
[a] [b] [c]
annual report of its activities; its audited statements of accounts; plan for surplus disposal as approved by the general body of the co-operative society;
[d]
list of amendments to the bye-laws of the cooperative society, if any;
[e]
declaration regarding date of holding of its general body meeting and conduct of
elections when due; and [f] any other in information pursuance required of any by of the the
Registrar
provisions of the State Act.
243ZQ.
Offences and penalties.--[1]
The
Legislature of a State may, by law, make provisions for the offences relating to the co-operative societies and penalties for such offences.
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[2]
A law made by the Legislature of a State
under clause [1] shall include the commission of the following act or omission as offences, namely:-[a] a co-operative society or an officer or
member thereof wilfully makes a false return or furnishes false information, or any person willfully not furnishes any information
required from him by a person authorised in this behalf under the provisions of the State Act; [b] any person wilfully or without any reasonable excuse disobeys any summons, requisition or lawful written order issued under the
provisions of the State Act; [c] any employer who, without sufficient cause, fails to pay to a co-operative society amount deducted by him from its employee within a period of fourteen days from the date on which such deduction is made; [d] any officer or custodian who wilfully 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 an authorised person; and [e] whoever, before, during or after the election of members of the board or office bearers, adopts any corrupt practice.
243ZR.
Application to multi-State co-operative
societies.--The provisions of this Part shall apply to the multi-State co-operative societies subject to the
modification that any reference to Legislature of a
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State, State Act or State Government shall be construed as a reference to Parliament, Central Act or the Central Government respectively.
243ZS.
Application to Union territories.-- The
provisions of this Part shall apply to the Union territories and shall, in their application to a Union territory, having no Legislative Assembly as if the references to the Legislature of a State were a reference to the
administrator thereof appointed under article 239 and, in relation to a Union territory having a Legislative
Assembly, to that Legislative Assembly: Provided that the President may, by notification in the Official Gazette, direct that the provisions of this Part shall not apply to any Union territory or part thereof as he may specify in the notification.
243ZT.
Continuance
of
existing
laws.--
Notwithstanding anything in this Part, any provision of any law relating to co-operative societies in force in a State immediately before the commencement of the Constitution [Ninety-seventh Amendment] Act, 2011, which is inconsistent with the provisions of this Part, shall continue to be in force until amended or repealed by a competent Legislature or other competent authority or until the expiration of one year from such
commencement, whichever is less.
xxx 6.1
xxx
xxx
The enabling provision for amendment of the Constitution being
Article 368 is also quoted below:
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368.
Power
of
Parliament
to
amend
the
Constitution and procedure therefor. (1). Notwithstanding anything in this Constitution,
Parliament may in exercise of its constituent power amend by way of addition, variation or repeal any provision of this Constitution in accordance with the procedure laid down in this article. (2). An amendment of this Constitution may be initiated
only by the introduction of a Bill for the purpose in either House of Parliament, and when the Bill is passed in each House by a majority of the total membership of that House and by a majority of not less than two-thirds of the members of that House present and voting, it shall be presented to the President who shall give his assent to the Bill and thereupon the Constitution shall stand amended in accordance with the terms of the Bill: Provided that if such amendment seeks to make any change in (a) article 54, article 55, article 73, article 162 or article 241, or (b) Chapter IV of Part V, Chapter V of Part VI, or Chapter I of Part XI, or (c) any of the Lists in the Seventh Schedule, or (d) the representation of States in Parliament, or (e) the provisions of this article, the amendment shall also require to be ratified by the Legislatures of not less than one-half of the States by resolutions to that effect passed by those Legislatures before the Bill making provision for such amendment is presented to the President for assent. (3). Nothing in article 13 shall apply to any amendment
made under this article.
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(4).
No amendment of this Constitution (including the
provisions of Part III) made or purporting to have been made under this article whether before or after the commencement of section 55 of the Constitution (Fortysecond Amendment) Act, 1976 shall be called in question in any court on any ground. (5). For the removal of doubts, it is hereby declared
that there shall be no limitation whatever on the constituent power of Parliament to amend by way of addition, variation or repeal the provisions of this Constitution under this article.
7.
After hearing the learned counsel for the parties and after going
through the provisions quoted above and also the other provisions of the Constitution of India, it appears that only the State Legislature is authorized to enact law relating to Co-Operative Societies as would appear from the fact that it is placed at item No. 32 in List II-STATE LIST in the Seventh Schedule of the Constitution.
8.
We do not dispute for a moment that by amending the
provisions of the Constitution of India, the Parliament can bring the said item from List-II of the 7th Schedule to List I UNION LIST or List III CONCURRENT LIST and in such circumstances, the Parliament will also have right to legislate law relating to Co-Operative Societies. However, in order to bring such amendment for shifting an item from List-II of the 7th Schedule to List I UNION LIST or List III CONCURRENT LIST of the 7th Schedule, such amendment is required to be passed in each House by a majority of the total membership of
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that House and by a majority of not less than two-thirds of the members of that House present and voting the amendment and such amendment shall also be required to be ratified by the Legislatures of not less than one-half of the States by resolutions to that effect passed by those Legislatures before the Bill making provision for such amendment is presented to the President for assent.
9.
In the case before us, admittedly the formality indicated in
Article 368 (2) of the Constitution for taking ratification has not been complied with before presenting it to the President for assent. The
Central Government, in its affidavit has stated that in the conference of the Ministers of the State, the Ministers approved such amendment and at the same time, there being no amendment of the List II of the 7th Schedule, Article 368(2) cannot have any application.
10.
Mr. Champaneri, the learned Assistant Solicitor General of India,
and Mr. Jani, the learned Government Pleader appearing for the State of Gujarat, have laboriously contended before us that by the amendment impugned, the power of the State Legislature to enact law relating to Co-Operative Societies has not been taken away, and thus, the provisions of Article 368(2) are not applicable.
11.
It appears from the provisions contained in Article 243.ZG to
Article 243ZT introduced by way of the impugned amendment that though there is no amendment of List-II of the Constitution by taking
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aid of Article 368(2) of the Constitution, by incorporating Chapter IXB starting from Article 243.ZG and ending with Article 243ZT, various restrictions have been imposed upon the State Legislatures while enacting law relating to Co-Operative Societies which was earlier unfettered prior to the incorporation of Chapter IXB. For instance, in Article 243ZI, it is said that the Legislature of a State may, by law, make provisions with respect to the incorporation, regulation and winding-up of co-operative societies based on the principles of voluntary formation, democratic member-control, member-economic participation and autonomous functioning but such law must be subject to the provisions of Part IXB. In Article 243ZJ, a definite
restriction has been imposed upon the State Legislatures regarding fixation of maximum number of Directors of a Co-Operative Society which shall not exceed twenty-one. Further, the State Legislatures
have been asked to provide for reservation of one seat for the Scheduled Castes or the Scheduled Tribes and two seats for women on board of every co-operative society consisting of individuals as members and having members from such class or category of persons. Similarly, in sub-Article [2] of Article 243ZJ, the duration of the term of office of the elected members of the board and its office bearers has been fixed to be five years and in sub-Article (3) thereof, a further direction has been given upon State Legislatures in the matter of enacting law relating to Co-Operative Societies regarding co-option of the member in the board of director and further provisions regarding the rights of such co-opted members have also
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been made. Similarly in Article 243ZK, a further condition has been imposed that the election of a board shall be conducted before the expiry of the term of the board so as to ensure that the newly elected members of the board assume office immediately on the expiry of the term of the office of members of the outgoing board. In Article
243ZL, a further condition has been imposed that no board shall be suspended or kept under suspension for a period exceeding six months and has also provided various conditions under which a Board may be superseded or kept under suspension. In Article 243ZM, it is mandatorily prescribed that the account of every society should be audited within six months from the close of the financial year to which the accounts relate. Article 243ZP casts a duty upon the society to file return within the period fixed there in and there is no scope of ignoring the same. Article 243ZQ prescribes the acts which would be the offences relating to the co-operative societies and the State Legislature cannot deviate from those mandates.
12.
If this Part IXB was not incorporated, the State Legislatures
would have the absolute right to enact law on the above subjects according to the decision of such Legislatures whereas after the amendment, no option is given to the State Legislature to deviate from or ignore those provisions. Thus, by incorporation of Part IXB, various restrictions have been imposed relating to laws of CoOperative Societies which have constrained the jurisdiction of the State Legislatures to enact any law relating to Co-operative Societies
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on those aspects. In other words, in spite of the fact that the law relating to Co-Operative Societies is still in the List II of the 7th Schedule, without bringing the subject of Co-Operative Societies either into List I or List III, by way of this amendment, the Parliament has controlled the said power without complying with the provisions of Article 368 (2) of the Constitution by taking ratification of the majority of the State Legislatures. The object achieved by the
amendment by way of incorporation of Part IXB could be easily achieved by bringing the subject of Co-Operative Societies in LIST 1 UNION LIST or LIST III-CONCURRENT LIST but in that case, there would have been the necessity of such amendment being required to be passed in each House by a majority of the total membership of that House and by a majority of not less than two-thirds of the members of that House present and voting the amendment and such amendment being required to be ratified by the Legislatures of not less than onehalf of the States by resolutions to that effect passed by those Legislatures before the Bill making provision for such amendment is presented to the President for assent. By way of the impugned
amendment, instead of taking consent of the majority of the State Legislatures, by merely taking consent of the Ministers of the State, the purpose has been sought to be achieved.
13.
In other words, what could not be achieved except by
complying with the provisions of Article 368 (2) of the Constitution, the selfsame purpose has been sought to be achieved by the
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amendment impugned in this writ-application without complying with the provisions of Article 368 (2) of the Constitution.
14.
In the case of Builders Association of India & others
etc.etc. v. Union of India and others etc.etc., reported in AIR 1989 SC 1371, a Constitutional Bench [five judges] of the Supreme Court was considering whether the Constitution [46th Amendment] Act, 1982 was passed after proper ratification as required under Article 368[2] and whether the State was bound to follow Article 286 and Central Sales Tax Act while levying tax under Article 366. In the said case, in Schedule VII List II Entry No. 54, the scope was expanded. The plenary power of the State government was
expanded by interfering with its exclusive power under Article 246 by the said amendment. The Supreme Court, for the purpose of considering the question inquired whether ratification process of Article 368[2] was complied with and thereafter, upheld the validity. In this connection, we may profitably record the following observation of the Supreme Court appearing in para-29 at page 1386:
The Attorney-General has also produced before us the file containing the resolutions passed by the Legislatures of the 12 States referred to in the Memorandum, set out above. We are satisfied that there has been due compliance of the provisions contained in the proviso to Article 368[2] of the Constitution. We, therefore, reject the first contention. Before proceeding further, we should observe that there would have been no occasion for an argument of this type being urged in Court if at
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the commencement of the Act it had been stated that the Bill in question had been presented to the President for his assent after it had been duly ratified by the required number of Legislatures of States. We hope that this suggestion will be followed by the Central Secretariat hereafter since we found that even the Attorney-General was not quite sure till the case was taken up for hearing that the Bill which had become the 46th Amendment had been duly ratified by the required number of States.
14.1 By relying upon the aforesaid decision, Mr. Shah impressed upon us that whenever even the case of expansion of scope of a particular entry in the list is taken up for consideration, it is the duty of the Constitution Court to see that the constitutional procedures for ratification in Article 368[2] are complied with and according to him, in the case before us, the scope of Entry No. 32 of List II having been restricted by interfering with its exclusive power under Article 246 and ratification procedure prescribed in Article 368[2] not having been complied with, 97th Amendment is unconstitutional. We find that Mr. Shah is substantially correct in his submission.
15.
In the case of Kihoto Holohan v. Zachillhu and others,
reported in 1992 Supp [2] Supreme Court Cases 651, a fivejudge-bench of the Supreme Court was considering whether Schedule X introduced by Constitution [52nd Amendment] Act, 1985 was constitutionally valid or not, inasmuch as para-7 of the Schedule X took away the powers of judicial review. It appears from the said
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judgment that one of the questions raised before the Supreme Court was, having regard to the legislative history and evolution of the
principles underlying the Tenth Schedule, Paragraph 7 thereof in terms and in effect, brought about a change in the operation and effect of Articles 136, 226 and 227 of the Constitution of India and, therefore, the Bill introducing the amendment attracted the proviso to Article 368[2] of the Constitution and would require to be ratified by the Legislature of the States before the Bill is presented for Presidential assent. Ultimately, in para-62 of the judgment the Supreme Court made the following observations:
62. In the present case, though the amendment does not bring in any change directly in the language of Articles 136, 226 and 227 of the Constitution, however, in effect paragraph 7 curtails the operation of those articles respecting matters falling under the Tenth Schedule. There is a change in the effect in Articles 136, 226 and 227 within the meaning of clause [b] of the proviso to Article 368[2]. Paragraph 7, therefore, attracts the proviso and ratification was necessary. Accordingly, on Point [B], we hold:
That having regard to the background and evolution of the principles underlying the Constitution [Fifty-second Amendment] Act, 1985, insofar as it seeks to introduce the Tenth Schedule in the Constitution of India, the provisions of Paragraph 7 of the Tenth Schedule of the Constitution in terms and in effect bring about a change in the operation and effect of Articles 136, 226 and 227 of the Constitution of India and, therefore, the
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amendment would require to be ratified in accordance with the proviso to sub-article [2] of Article 368 of the Constitution of India.
15.1 By relying upon the aforesaid decision, Mr. Shah rightly submitted before us that although in the said case, in effect, there was no change in the language of the articles mentioned in Clauses [a] to [e], even then, ratification envisaged under Article 368[2] proviso was required to be complied with.
16.
In the case of S.R. Bommai and others v. Union of India
and others, reported in [1994] 3 SCC 1, a nine-judge-bench of the Supreme Court was considering whether the presidential
proclamation under Article 356 of the Constitution was subject to judicial review and if the answer was in affirmative, then, to what extent.
16.1 It appears that six different judgments were delivered. Pandian, J. was of the view that it is subject to review but in rare cases. Ahmadi, J. was of the view that only on the limited ground of mala fide and vires, the same can be subject to judicial review. On the other hand, Verma and Dayal, JJ were of the view that such interference should be very narrow. Sawant and Singh, JJ, however, held that the entire judicial review was applicable. Ramaswamy J, on the other hand, restricted His Lordships observations that on legal mala fide and high irrationality, it can be reviewed and traditional
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parameters and proportionality of judicial review was not applicable. Reddy and Agarwal, JJ were of the view that it is entirely subject to judicial review.
16.2 By relying upon the above decision, Mr. Shah, in our opinion, was justified in contending that we should interfere in these cases as the basic structure of federalism which was the subject matter in the case of S.R. Bommai (supra), was ignored.
17.
In the case of M. Nagaraj and others, v. Union of India and
others, reported in [2006] 8 SCC 212, challenge was whether Constitution [85th Amendment] Act, 2011 inserting Article 16[4A] was constitutionally valid. It appears that the Supreme Court upheld the constitutional validity on the ground that it complied with Width Test and the Test of Identity. By relying upon the said decision, Mr. Shah, in our opinion, was right in submitting that constitutional amendment is to be tested on its width and one has to examine the identity.
18.
In the case of I.R. Coelho [dead] by L.Rs. v. State of T.N.,
reported in [2007] 2 SCC 1, a nine-judge-bench of the Supreme Court, returned its unanimous verdict through Sabharwal, CJI. In the said case, the question was whether the Laws placed under Schedule IX inserted by Article 31B were immuned from the judicial review. Sabharwal, CJI, answered the question by holding that it is not immuned and was subject to judicial review. The observations made
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in para-151 at page 111 are quoted below:
151. In conclusion, we hold that: [i] A law that abrogates or abridges rights guaranteed by
Part III of the Constitution may violate the basic structure doctrine or it may not. If former is the consequence of the law, whether by amendment of any article of Part III or by an insertion in the Ninth Schedule, such law will have to be invalidated in exercise of judicial review power of the Court. The validity or invalidity would be tested on the principles laid down in this judgment. [ii] The majority judgment in Kesavananda Bharati case read
with Indira Gandhi case requires the validity of each new constitutional amendment to be judged on its own merits. The actual effect and impact of the law on the rights guaranteed under Part III has to be taken into account for determining whether or not it destroys basic structure. The impact test would determine the validity of the challenge. [iii] All amendments to the Constitution made on or after 24-
4-1973 by which the Ninth Schedule is amended by inclusion of various laws therein shall have to be tested on the touchstone of the basic or essential features of the Constitution as reflected in Article 21 read with Article 14, Article 19, and the principles underlying them. To put it differently even though an Act is put in the Ninth Schedule by a constitutional amendment, its provisions would be open to attack on the ground that they destroy or damage the basic structure if the fundamental right or rights taken away or abrogated pertains or pertain to the basic structure. [iv] Justification for conferring protection, not blanket
protection, on the laws included in the Ninth Schedule by constitutional amendments shall be a matter of constitutional
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adjudication by examining the nature and extent of infraction of a fundamental right by a statute, sought to be
constitutionally protected, and on the touchstone of the basic structure doctrine as reflected in Article 21 read with Article 14 and Article 19 by application of the rights test and the
essence of the right test taking the synoptic view of the articles in Part III as held in Indira Gandhi case. Applying the above tests to the Ninth Schedule laws, if the infraction affects the basic structure then such law[s] will not get the protection of the Ninth Schedule. This is our answer to the question referred to us vide order dated 14-9-1999 in I.R. Coelho v. State of T.N. [v] If the validity of any Ninth Schedule law was
already been upheld by this Court, it would not be open to challenge such law again on the principles declared by this judgment. However, if a law held to be violative of any rights in Part III is subsequently incorporated in the Ninth Schedule after 24-4-1973, such a violation/infraction shall be open to
challenge on the ground that it destroys or damages the basic structure as indicated in Article 21 read with Article 14, Article 19 and the principles underlying thereunder. [vi] Action taken and transaction finalized as a result of the
impugned Acts shall not be open to challenge.
18.1 By relying upon the said decision, Mr. Shah, in our view, was right in submitting that the contention of Mr. Champaneri or Mr. Jani that we cannot look into the question whether formalities of ratification have been complied with or not or whether basic structure of the Constitution has been hit is not tenable.
19.
Mr. Shah also placed strong reliance upon the decision of the
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Supreme Court in the case of D.C. Wadhwa v. State of Bihar, reported in [1987] 1 SCC 625. In the said decision, the question was whether by promulgating the ordinances from time to time on a massive scale in a routine manner under Article 213 by Governor and without replacing them by Act of Legislature, the constitutional provisions were infringed. In this connection, Mr. Shah strongly placed reliance upon para-7 at page 393 of the said decision, wherein, it was observed by Bhagawati, CJI that a constitutional authority cannot do indirectly what it is not permitted to directly. If there is a constitutional provision inhibiting the constitutional authority from doing an act, His Lordship proceeded, such provision cannot be allowed to be defeated by adoption of any subterfuge and that it would be clearly a fraud on the constitutional provision.
19.1 By relying upon the said decision, Mr. Shah strenuously contended that the object of the amendment before us is to by taking
overcome the provision contained in Article 368[2]
ratification of majority of the State Legislatures and thus, we should strike down the said provision.
20.
We also find substance in the contentions of Mr. Shah that by
the amendment impugned in this writ-application, one of the basic structures of the Constitution, viz. the principles of federalism has been affected. There is no dispute that federalism is one of the basic structure of our Constitution. Once the subject of Co-Operative
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Societies is in the List II of the 7th Schedule, by depriving the State Legislatures of their free exercise of right to enact on the said subject and by curtailment of their right over the subject matter to abide by the newly enacted provision of the Constitution without following the requirement of ratification as provided in Article 368(2), the doctrine of federalism which is one of the basic features of the Constitution has been infringed.
21.
At this stage, we may profitably refer to the following
observations of the nine-bench-decision of the Supreme Court in the case of I.R. Coelho [dead] by L.Rs. v. State of T.N. (supra):-
By addition of the words 'constituent power' in Article 368, the amending body, namely, Parliament does not become the original Constituent Assembly. It remains a Parliament under a controlled Constitution. Even after the words
'constituent power' are inserted in Article 368, the limitations of doctrine of basic structure would continue to apply to the Parliament. It is on this premise that clauses 4 and 5 inserted in Article 368 by 42nd Amendment were struck down in Minerva Mills case.
22.
Thus, the amendment is violating the basic structure of the
Constitution so long as the subject of Co-Operative Societies is in the List II of the 7th Schedule and at the same time, the provisions of Article 368(2) has not been complied with. The Constitution has not permitted curtailment of the power of the State Legislatures over the
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subject mentioned in List II without taking recourse to Article 368 (2).
23.
We now propose to deal with the decisions cited by Mr. of India,
Champaneri, the learned Assistant Solicitor General appearing for the Union of India.
24.
In the case of Sasanka vs. Union of India reported in AIR the question that had arisen before a five-judge-
1981 SC 522,
bench of the Supreme Court was whether the provisions of Chapter IIB of the West Bengal Land Reforms -Act, 1955 (Act X of 1956) inserted by the West Bengal Land Reforms (Amendment) Act, 1971 (President's Act III of 1971), and replaced by the West Bengal Land Reforms (Amendment) Act, 1972 (Act XII of l972) with retrospective effect from February 12, 1971, which provide for a fixation of ceiling on agricultural holdings and for matters ancillary thereto, were violative of the second provision to Art. 31A (1) of the Constitution. In that context, the Supreme Court in paragraph 35 of the judgment made the following observations upon which Mr. Champaneri has placed strong reliance:
35.
As regards the submission that Parliament cannot in
exercise of its constituent power under Art. 368 validate a State law, it seems to us that the entire submission proceeds on a misconception arising from failure to distinguish between a law made in exercise of the legislative power and the law made in exercise of the constituent power. When Art. 31-B was
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introduced in the Constitution by the Constitution (First Amendment) Act 1951, it validated retrospectively 13 Acts specified in the Ninth Schedule, which, but for this provision, were liable to be impugned under Art. 13 (2).Article 31-B conferred constitutional immunity to such laws (all being enactments of State Legislatures) and Parliament alone could have done so by inserting the said Article in the Constitution in exercise of its constituent power under Art. 368. In substance and reality it was a constitutional device employed to protect State laws from becoming void under Art. 13 (2). It will appear clear that the language in Art. 31-B is virtually lifted from Art. 13 (1), and (2), while Art. 13 (2) invalidates legislation, which takes away or abridges the rights conferred by Part III, Art. 31B extends protective umbrella to such legislation if it is included in Ninth Schedule and, therefore, the Courts will have no power to go into the constitutionality of the enactment as included in the Ninth Schedule except on the ground of want of legislative competence. (Emphasis supplied by us).
24.1 As it appears from the portion highlighted by us, the question involved in that matter regarding the validity of the State Laws included in the Ninth Schedule cannot have any application to the facts of the present case. Regarding constituent power under Article 368, we have already relied upon the observations of the nine-benchjudgment of the Supreme Court in the case of I.R. Coelho [dead] by L.Rs. v. State of T.N. (supra) holding that by addition of the words 'constituent power' in Article 368, the amending body, namely, Parliament does not become the original Constituent Assembly. We,
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thus, find that the above decision relied upon by Mr. Champaneri does not help his client in any way.
25.
Mr. Champaneri also relied upon paragraphs 108 to 122
of the judgment of the Supreme Court in the case of Ashoka Kumar Thakur v. Union of India reported in (2008) 6 SCC 1. In those paragraphs, the Supreme Court dealt with the question whether the 93rd amendment of the Constitution was against the basic structure of the Constitution or not. By the Constitution [93rd amendment] Act, 2005, clause (5) was added to Article 15 of the Constitution which is an enabling provisions which states that nothing in Article 15 or in sub-clause (g) of Clause (I) of Article 19 shall prevent the State from making any special provision, by law, for the advancement of any socially and educationally backward classes of citizens or for the Scheduled Castes or the Scheduled Tribes insofar as such special provisions relate to their admission to the educational institutions including private educational institutions, whether aided or unaided by the State. In such a case it was held by the Supreme Court that the said amendment does not violate the basic structure of the Constitution so far as it relates to aided educational institutions. The Supreme Court further held that the question whether reservation could be made for SCs, STs or SEBCs in private educational institutions on the basis of the Constitution [93rd amendment] or whether reservation could be given in such institutions or whether any such legislation would be violative of Article 19(1)(g) or Article 14
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of the Constitution or whether the said amendment which enables the State Legislatures or Parliament to make such legislation are all questions to be decided in a properly constituted lis between the affected parties and others who support such legislation.
25.1 As pointed out above, in dealing with a case where the Supreme Court was faced with the question of reservation for SEBCs in central educational institutions, the contention that an amendment that inserted a fundamental right is violative of the basic structure of the Constitution was found to be untenable. We fail to appreciate how the decision is relevant for our purpose where the question is without taking recourse to the specific provision of Article 368(2) requiring ratifications of the majority State Legislatures whether the power of the State Legislature in enacting law relating to Co-operative Societies can be curtailed by the Parliament. We have already pointed out that a constitutional authority cannot do indirectly what it is not permitted to do directly.
26.
Thus, the decisions cited by Mr. Champaneri do not help his
client.
27.
We, therefore, allow this Public Interest Litigation by declaring
that the Constitution [97th amendment] Act, 2011 inserting part IXB containing Articles 243ZH to 243ZT is ultra vires the Constitution of India for not taking recourse to Article 368(2) of the Constitution
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providing for ratification by the majority of the State Legislatures. This order, however, will not affect other parts of the Constitution [97 th amendment] Act, 2011. In the facts and circumstances, there will be no order as to costs.
(BHASKAR BHATTACHARYA, CJ.)
(J.B.PARDIWALA, J.)
mathew
FURTHER ORDER: After this judgment was pronounced, Mr. Champaneri, the learned Assistant Solicitor General of India appearing on behalf of the Union of India prays for stay of operation of our judgment.
In view of what has been stated above, we find no reason to stay our judgment. The prayer is refused. However, certified copy be given by 24th April 2013, if applied for.
(BHASKAR BHATTACHARYA, CJ.)
(J.B.PARDIWALA, J.)
mathew
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1 TO BE INTRODUCED IN LOK SABHA National Conference on Co-operative Societies, Trusts, Redevelopment of Properties, Legal and Taxation Aspects
Bill No. 123 of 2010
THE MULTI-STATE CO-OPERATIVE SOCIETIES (AMENDMENT) BILL, 2010

A
BILL to amend the Multi-State Co-operative Societies Act, 2002. BE it enacted by Parliament in the Sixty-first Year of the Republic of India as follows: 1. (1) This Act may be called the Multi-State Co-operative Societies (Amendment) Act, 2010.
5 Short title and commencement.
(2) It shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint and different dates may be appointed for different provisions of this Act and any reference in any such provision to the commencement of this Act shall be construed as a reference to the coming into force of that provision. 2. In the Multi-State Co-operative Societies Act, 2002 (hereinafter referred to as the principal Act), in section 5, in sub-section (1), (i) in clause (a), the word "and" occurring at the end shall be omitted; (ii) in clause (b), for the words "co-operative principles", the words "co-operative principles; and" shall be substituted;
Amendment of section 5.
39 of 2002.
10
192
2 (iii) after clause (b), the following clause shall be inserted, namely: "(c) it gives an undertaking that, after its registration as multi-State co-operative society under this Act, it shall make available its products and services to its members: Provided that the multi-State co-operative societies which have already been registered shall also comply with the provisions of this clause. ".
3. In section 7 of the principal Act, (a) in sub-section ( 2), the following proviso shall be inserted, namely: "Provided that the Central Registrar may, for reasons to be recorded in writing, extend the said period of four months to five months."; (b) in sub-section ( 3), (i) for the words "a period of four months from the date of receipt of application for registration", the words, brackets and figure "a period specified for disposal of application under sub-section (2)" shall be substituted; (ii) in the second proviso, for the words "a period of four months" the words "the period" shall be substituted.
10
15
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 electronic-mail address)" shall be substituted. 5. In section 11 of the principal Act, in sub-section (7), the following proviso shall be inserted, namely: "Provided that the Central Registrar may Register the amendments with such modifications as may be necessary to bring them in conformity with the provisions of this Act.".
20
25
6. In section 17 of the principal Act, (a) in sub-section (1), after clause (c), the following clause shall be inserted, namely: "(d) decide, with the approval of the Central Registrar, to wind up or convert itself into any other legal entity and to transfer its assets and liabilities in whole or in part to such legal entity."; (b) in sub-section (3), after the word "amalgamation" the words " or winding up or conversion" shall be inserted; (c) in sub-section (7), (a) after the words "formed by division", the words "or winding up or conversion into any other legal entity" shall be inserted; (b) after the words "and the bye-laws thereof", the words "or permit winding up of the society or conversion of it into any other legal entity, as the case may be" shall be inserted; (d) after sub-section (9), the following sub-sections, shall be inserted, namely: "(10) The provisions of this section and section 18 shall, as far as may be, apply to a multi-State co-operative society which decides to wind up or convert into any other legal entity as they apply in the case of amalgamation of a co-operative bank with any other co-operative bank. (11) The Central Government may for the reasons to be recorded in writing, notwithstanding anything contained in this Act, issue such directions on such matters relating to winding up or conversion into any other legal entity, as it may deem fit.".
35 30
40
45
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3 7. In section 21 of the principal Act, (a) in sub-section (1), after the words "or to a co-operative society", the words "or to any other legal entity" shall be inserted; (b) in sub-section (3),
5 Amendment of section 21.
(i) after the words "or two or more co-operative societies" the words "or converts itself into any other legal entity" shall be inserted; (ii) after the words "registration of the new societies", the words "or its conversion into any new legal entity" shall be inserted; (c) after sub-section (4), the following sub-section shall be inserted, namely: "(5) The Central Registrar may cancel the registration of a multi-State co-operative society, if he has reasons to believe that, (a) the registration was obtained by misrepresentation of facts, submission of false or misleading information, suppression of material facts or fraud; or
10
15
(b) the number of members or the number of societies or the number of persons as the case may be, have been, at any time reduced below the number of members or societies or persons as specified in sub-section (2) of section 6: Provided that no registration shall be cancelled without providing an opportunity of being heard to the multi-State co-operative society.". 8. In section 22 of the principal Act, in sub-section ( 5), for clause (c), the following clause shall be substituted, namely: "(c) The co-operative society shall cease to be as such under the law relating to co-operative societies in force in the State, from the date of registration of amendment of its bye-laws under sub-section (3) by the Central Registrar and the Registrar of Co-operative Societies referred to in clause (b) shall make an order to this effect, within a period of one month from the receipt of the copy of certificate under clause (b).". 9. In section 25 of the principal Act, in sub-section ( 4) ,
Amendment of section 25. Amendment of section 22.
20
25
30
(a) for the words "four months" at both the places where they occur, the words "six months" shall be substituted; (b) for the words "refusing admission to the applicant" the words "accepting admission to the applicant" shall be substituted; (c) after the proviso, the following proviso shall be inserted, namely: "Provided further that the administrator or administrators, as the case may be, appointed under this Act to manage the affairs of a multi-State co-operative society shall not admit any new member to such society without the prior approval of the Central Registrar.". 10. In section 28 of the principal Act, for the words "unless he has made the payment to the society in respect of membership, or" the words "unless he has made payment in respect of all dues to the society including the payment in respect of membership or availed such minimum level of services or" shall be substituted. 11. In section 29 of the principal Act,- (a) in clause (d), for the words "such society", the words "such society; or" shall be substituted;
35
40
45
(b) after clause (d), the following clause shall be inserted, namely:
194
4 "(e) he fails to avail the products and services made available by such multi-State co-operative society as specified in the bye-laws.".
12. In section 30 of the principal Act, in sub-section (2), for the words "for a period of one year from the date of such expulsion", the words "for a period which shall not exceed three years but shall not be less than one year, from the date of such expulsion, as may be specified in the bye-laws" shall be substituted. 13. In section 32 of the principal Act, after the proviso the following proviso and Explanation shall be inserted, namely: Provided further that unless the bye-laws provide otherwise, a member may exercise his vote at a meeting by electronic form in such manner as may be prescribed. Explanation. For the purposes of this section, "electronic form" with reference to information means any information generated, sent, received, or stored in media, magnetic, optical, computer memory, micro film, computer generated micro fiche or similar device.'.
10
14. In section 35 of the principal Act, (a) in sub-section (1), the following proviso shall be inserted, namely: "Provided that the multi-State co-operative society may refund full or part of the share capital held by the Government who shall accept such redemption."; (b) in sub-section (2), for the words "on the face value of the shares" the words " on the face value or book value of shares, whichever is higher" shall be substituted; (c) after sub-section (2), the following Explanation shall be inserted, namely: 'Explanation. For the purposes of this sub-section, "book value" means the value of the shares as shown in the books of account taking into account the total share capital, free reserves and surpluses.'.
15
20
25
15. In section 38 of the principal Act, in sub-section (3), after the proviso the following proviso shall be inserted, namely: "Provided further that such administrator shall not represent the co-operative society or other multi-State co-operative society in such meetings beyond a period of six months.".
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16. In section 41 of the principal Act, (a) in sub-section (3), for the second and third provisos the following provisos shall be substituted, namely: "Provided further that the board may co-opt two directors, in addition to twenty-one directors specified in the first proviso, having experience in the field of banking, management and finance or having specialisation in any field relating to the objects and activities undertaken by such multi-State co-operative society: Provided also that so co-opted directors shall not have power to vote in the election of the office bearers or represent the multi-State co-operative society in any other multi-State co-operative society: Provided also that a person who has lost in election to the board shall not be co-opted as director in the board on casual vacancy or otherwise: Provided also that one seat shall be reserved for the Scheduled Castes or the Scheduled Tribes and two seats for women in the board of a multi-State co-operative society consisting of individuals as members and having members from such class or category of persons:
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5 Provided also that the functional directors in a national co-operative society, who are officers of such society (other than the chief executive of the rank of director or above), shall also be the members of the board in accordance with its bye-laws and such members shall be excluded for the purpose of counting the total number of directors in the first proviso."; (b) after sub-section (3), the following sub-sections shall be inserted, namely: (4) Every member of a board of multi-State co-operative society who, whether directly or indirectly, is concerned or interested in a contract or arrangement or proposed contract or arrangement, entered into or to be entered into, by or on behalf of such society shall disclose the nature of his concern or interest and that of his relatives at a meeting of the board. Explanation. For the purposes of this clause, the term "relative" with reference to an individual means the spouse, brother, sister and all lineal ascendants and descendants of such individual related to him either by marriage or adoption. (5) No director of a multi-State co-operative society shall, as a director, be present in the discussion of, or vote on, any contract or arrangement entered into, or to be entered into, by or on behalf of such society, if he is directly or indirectly concerned or interested in the contract or arrangement.
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(6) The board of a multi-State co-operative society shall be collectively responsible to the general body of the society.. 17. After section 41 of the principal Act, the following section shall be inserted, namely:
Insertion of new section 41A. Constitution of interim board.
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41A. (1) If the Central Registrar at any time, is of the opinion that a multi-State co-operative society has become sick, it may, by order, declare such society as a sick co-operative society. (2) Where a multi-State co-operative society is declared sick under sub-section (1), the Central Government may, on the recommendation of Central Registrar, constitute an interim board for a maximum period of five years consisting of experts in the field of co-operation, management, finance, accountancy and in other areas relating to such multi-State co-operative society for the purpose of preparing and implementing a scheme for rehabilitation or revival of such multi-State co-operative society. (3) The board of directors of such multi-State co-operative society, after constitution of interim board, shall not function and discharge its functions as such:
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Provided that the board of directors shall cease to exist on the completion of its term. (4) The Central Registrar, if at any time during which the interim board has been constituted, is of the opinion that the society has become viable, it may dissolve such interim board and thereafter the board of directors existing before constitution of interim board shall function as per provisions of this Act. Explanation. For the purpose of this section "sick co-operative society" means a multi-State co-operative society being a society registered under the provisions of this Act which has at the end of any financial year accumulated losses equal to or exceeding total of its paid-up capital, free reserves and surpluses and has also suffered cash losses in such financial year and the financial year immediately preceding such financial year..
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18. In section 43 of the principal Act, in sub-section (2), (a) in clause (c), for the words "general meeting", the words "general meeting; or" shall be substituted; (b) after clause (c), the following clauses shall be inserted, namely: "(d) to make contribution to the co-operative education fund referred to in clause (b) of sub-section (1) of section 63 or Co-operative Rehabilitation and Reconstruction Fund established under section 63A; or (e) to file the statutory returns within the time specified under section 120.".
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19. In section 45 of the principal Act, (a) for sub-section (1), the following sub-section shall be substituted, namely:
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"(1) The Central Government may, by notification, appoint an Authority to be known as the Co-operative Election Authority for conduct of elections for such societies as may be prescribed and the superintendence, direction and control of preparation of electoral rolls for, and the conduct of election of such 1 5 multi-State co-operative societies shall be vested in returning officer as may be appointed by the Election Authority and the returning officer shall discharge such function under the control of the Election Authority in such manner as may be prescribed: Provided that where such Authority has not been appointed in respect of 2 0 a multi-State co-operative society, the elections to the boards of such society shall be conducted by the existing board of such society.; (b) in sub-section (5), after the proviso the following provisos shall be inserted, namely: "Provided further that the term of office bearers shall be co-terminus with the term of board of directors: Provided also that only elected or nominated members of the board shall be eligible to be elected as chairman or vice-chairman or president or vicepresident of the board: Provided also that the board may fill a causal vacancy of the members of the board by nomination out of the same class of members in respect of which the casual vacancy has arisen, if the term of office of the board is less than half of its original term."; (c) in sub-section (6), the following proviso and Explanation shall be inserted, namely: "Provided that the Central Registrar may, for the reasons to be recorded in writing, extend said period of ninety days up to one year. Explanation. For the purpose of this proviso, the period of one year specified therein shall be reckoned from the date on which the election became due and any period for which such elections were stayed by any tribunal or 4 0 court shall be excluded."; (d) for sub-section ( 7), the following sub-sections shall be substituted, namely: "(7) No person shall be eligible to be elected as a member of the board or office bearer of a multi-State co-operative society unless he is an active member 4 5 of the general body of that society.
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7 Explanation. For the purpose of this sub-section "active member" shall mean any member availing such minimum level of services or products of the society as may be specified in the bye-laws of the society.
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(7A) A member of the board or office bearer of a multi-State co-operative society shall cease to be such member or office bearer if he ceases to be a member of general body of that society."; (e) in sub-section (8), after the words "by the Central Registrar" the words "or the Election Authority" shall be inserted.
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20. In section 49 of the principal Act, in sub-section (2), for clause (m), the following Amendment of section 49. clauses shall be substituted, namely: "(m) to elect president and vice-president of the multi-State co-operative society from amongst the elected or nominated members of the board in accordance with the bye-laws of the multi-State co-operative society; and
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(n) to take such other measures or to do such other acts as may be prescribed or required under this Act or the bye-laws or as may be delegated by the general body.". 21. In section 50 of the principal Act, (a) in sub-section (1), the following proviso shall be inserted, namely: "Provided that where the chairperson or president of a multi-State cooperative society fails to fix a date of the meeting of the board, the Chief Executive shall, on receipt of requisition from one-fourth of the directors, convene the meeting of the board."; (b) in sub-section (3), after the words "meeting of the board", the words "the vice-chairperson and in the absence of both," shall be inserted;
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(c) after sub-section (3), the following sub-section shall be inserted, namely: "(4) The quorum for a meeting of the board of directors of a multi-State co-operative society shall be one-third of its total strength and the participation of the directors by video-conferencing or by other electronic means shall also be counted for the purpose of quorum under this sub-section.".
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22. In section 52 of the principal Act, in clause (j), for the words "thirty days", the Amendment of section 52. words "forty-five days" shall be substituted. 23. In section 53 of the principal Act, for sub-section (1), the following sub-sections Amendment of section 53. shall be substituted, namely:
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"( 1) The board may constitute an Executive Committee, and such other committees or sub-committees as may be specified in the bye-laws of the multi-State co-operative society. (1A) The board shall constitute an audit and ethics committee in accordance with bye-laws which shall meet once in three months.".
24. After section 63 of the principal Act, the following section shall be inserted, Insertion of new section namely: 40 63A. '63A. (1) The Central Government shall establish a fund to be called the Co- Establishment operative Rehabilitation and Reconstruction Fund (hereafter in this section referred of Cooperative to as the "Fund " .
Rehabilitation and Reconstruction Fund.
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8 (2) There shall be credited to the Fund the following amounts, namely: (a) a multi-State co-operative society registered under this Act shall credit 0.005% to 0.1% of its turnover, subject to a maximum of Rs. 3.00 crores per year, as may be prescribed; (b) grants and donations given to the Fund by the Central Government, State Government and other National and International agencies approved by the Government from time to time for making contribution to this Fund; (c) the interest or other income received out of the investment made from the Fund. (3) The Fund shall be utilised for rehabilitation and strengthening of sick cooperative societies referred to in section 41A. (4) The Central Government shall by notification in the Official Gazette, specify an authority or committee, with such members as the Central Government may appoint, to administer the Fund, and maintain separate accounts and other relevant records in relation to the Fund in such form as may be prescribed in consultation with the Comptroller and Auditor-General of India. (5) It shall be competent for the authority or committee appointed under subsection (4) to spend moneys out of the Fund for carrying out the objects for which the Fund has been established.
Amendment of section 67. 10 5
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25. In section 67 of the principal Act, (a) in sub-section (1), after the second proviso, the following proviso shall be inserted, namely: "Provided also that the multi-State co-operative society doing the banking business shall be governed by directions issued by Reserve Bank of India in this behalf."; (b) in sub-section (3), (a) for the words twenty-five per cent. of its paid-up share capital the words its paid-up share capital, free reserves and surpluses shall be substituted; (b) the following proviso shall be inserted, namely: Provided that the multi-State co-operative society doing the banking business shall be governed by directions issued by the Reserve Bank of India or any other authority competent to do so under any law for the time being in force in this behalf..
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26. In section 70 of the principal Act, in sub-section (7), in clause (a), for the proviso the following proviso shall be substituted, namely: "Provided that where such vacancy is caused by the resignation or death of an auditor, the vacancy shall be filled by the board out of the panel of auditors approved by the Central Registrar.".
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27. In section 73 of the principal Act, after sub-section (5), the following sub-section shall be inserted, namely: "(6) The Central Government may, by notification, lay down auditing and accounting standards to be adopted by multi-State co-operative societies or class of multi-State co-operative societies: Provided that multi-State co-operative societies doing the banking business shall adopt accounting and auditing standards if any laid down by Reserve Bank of India in this behalf:
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9 Provided further that until such auditing standards are laid down, auditing standards specified by the Institute of Chartered Accountants of India shall be deemed to be the auditing and accounting standards.". 28. In section 77 of the principal Act,5
(a) in sub-section (1), the proviso shall be omitted; (b) after sub-section (1), the following sub-section shall be inserted, namely: "(1A) The Central Government may order for a special audit of a multiState co-operative society where the Central Government or a State Government holds any share capital or shares in such multi-State co-operative society.".
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29. In section 78 of the principal Act, for sub-section (1), the following sub-sections Amendment of section 78. shall be substituted, namely: "(1) Where on a scrutiny of any document filed by a multi-State co-operative society or otherwise, the Central Registrar is of the opinion that any further information or explanation or any further documents relating to the multi-State co-operative society is necessary, he may, by a written notice, require the multi-State co-operative society (i) to furnish in writing such information or explanation; or (ii) to produce such documents, within such reasonable time, as may be specified in the notice. (1A) If the Central Registrar is satisfied on the basis of information available with or furnished to him or on a representation made to him by any person 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 on matters specified in the order within such time as he may specify therein, and hold such inquiry as he deems fit: Provided that the Central Government may, if it is satisfied that circumstances so warrant, direct, the Central Registrar or an inspector appointed by it for the purpose, to hold an inquiry under this sub-section.
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(1B) The Central Registrar may, on a request from a federal co-operative to which a multi-State co-operative society is affiliated or a creditor or not less than onethird of the members of the board or not less than one-fifth of the total number of members of a multi-State co-operative society, hold an inquiry or direct some person authorised by him by order in writing in this behalf to hold an inquiry into the constitution, working and financial condition of a multi-State co-operative society: Provided that no inquiry under this sub-section shall be held unless a notice of not less than fifteen days has been given to the multi-State co-operative society.". 30. In section 84 of the principal Act, (a) in sub-section ( 1), for the words "such dispute shall be referred to arbitration", the words "such dispute shall be referred to the Central Registrar" shall be substituted; (b) after sub-section (1), the following sub-section shall be inserted, namely: "(1A) The Central Registrar may, on receipt of the reference of dispute under sub-section (1),
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(a) decide the dispute himself; or (b) transfer it for decision to such person and upon such terms and conditions as may be specified,
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10 and the order passed under this sub-section shall be final and binding on the multi-State co-operative societies and other concerned parties and shall not be called in question in any court: Provided that the Central Registrar may, at any time after transferring the dispute under clause (b) and after recording the reason for doing so withdraw the dispute so transferred and decide the dispute himself. Explanation. For the removal of doubts, it is clarified that power to decide dispute under this section includes the power to pass interim order; (c) in sub-section (3), (a) for the word "arbitration", the words "Central Registrar" shall be 1 0 substituted; (b) for the word arbitrator, the words, brackets, letters and figures "Central Registrar or person authorised by him under clause (b) of sub-section (1A)" shall be substituted; (d) sub- sections (4) and (5) shall be omitted.
Amendment of section 94. 15 5
31. In section 94 of the principal Act, (a) in the opening paragraph, after the words and figures "section 83 or" the words and figures "section 84 or" shall be inserted; (b) after clause (c), the following clause shall be inserted, namely: "(d) where the decision or order provides for recovery on account of the 2 0 default in contribution to the co-operative education fund referred to in clause (b) of sub-section ( 1) of section 63 or Co-operative Rehabilitation and Reconstruction Fund established under section 63A, the Central Registrar shall issue the certificate of recovery and forward it to any other authority for execution according to the law for the time being in force for the recovery as arrears of 2 5 land revenue.".
32. In section 103 of the principal Act, after sub-section (1), the following provisos shall be inserted, namely : "Provided that the said multi-State co-operative society shall submit an application for registration and such information to obtain the certificate of registration 3 0 from the Central Registrar as provided in this Act: Provided further that in case all the successor States take necessary steps to divide or reorganise the said multi-State co-operative society into State co-operative Societies to confine their objects, services and the members to respective States within such period as may be prescribed, such society shall not be deemed to be a 3 5 multi-State co-operative society under the provisions of this Act and the Central Registrar may cancel the registration of such multi-State co-operative society by an order in writing.".
33. In section 104 of the principal Act, (a) in sub-section (1), (i) after the words "making a false return", the words "or failing to file returns" shall be inserted; (ii) for the words "two thousand rupees" the words "five thousand rupees" shall be substituted; (iii) for the words "extend to ten thousand rupees", the words "extend to 4 5 fifty thousand rupees" shall be substituted;
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11 (b) in sub-section (2), for the words "five thousand rupees", the words "ten thousand rupees" shall be substituted; (c) in sub-section (3),
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(i) after the word and figures "section 89", the words and figures "or to a person required to file return under section 120" shall be inserted; (ii) for the words "two thousand rupees", the words "five thousand rupees" shall be substituted; (iii) for the words "five thousand rupees", the words "ten thousand rupees" shall be substituted.
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34. Section 106 of the principal Act shall be numbered as sub-section (1) thereof and Amendment after sub-section ( 1), so numbered the following sub-section shall be inserted, namely: of section
106.
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"( 2) Every multi-State co-operative society shall appoint a Co-operative Information Officer to provide, on application made to him and on payment of such fee as may be prescribed, information about the affairs and management of the society, within thirty days from the date of receipt of application. (3) Every multi-State co-operative society shall also appoint a Chief Information Officer who shall hear and dispose of any complaint regarding the non-supply of information by the Co-operative Information Officer within the time specified in subsection (2).
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(4) Any person, aggrieved by the order of the Chief Information Officer, may file an appeal before the Central Registrar whose decision thereon shall be final: Provided that the Central Registrar may impose penalty on the officers responsible for non-furnishing of information to the amount of two hundred and fifty rupees for each day of delay above the specified period.
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(5) The manner of appeal, the time within which such appeal may be filed and the procedure of appeal shall be such as may be prescribed.. 35. In section 108 of the principal Act, in sub-section (1), in clause (i), after the words Amendment "Central Registrar", the words "or any person authorised by him in this behalf" shall be of section 108. inserted.
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36. After section 120 of the principal Act, the following section shall be inserted, Insertion of new section namely:
120A.
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"120A. (1) Notwithstanding anything to the contrary contained in this Act, and Filing of without prejudice to the provisions contained in the Information Technology Act, applications, 2000, the Central Government may, from such date as may be prescribed, require that- documents,
inspections,
(a) such applications, balance sheet, return, or any other particulars or etc. in electronic document as may be required to be filed or delivered under this Act or rules form. made thereunder, shall be filed in the electronic form and authenticated in such manner as may be prescribed; (b) such document, notice, any communication or intimation, as may be required to be served or delivered under this Act, shall be served or delivered under this Act in the electronic form and authenticated in such manner as may be prescribed; (c) such applications, balance sheets, returns, registers, bye-laws or any other particulars or documents and returns filed under this Act or rules made thereunder shall be maintained by the Central Registrar in the electronic form and registered or authenticated, as the case may be, in such manner as may be prescribed;
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12 (d) such inspection of the bye-laws, balance sheets, returns or any other particulars or documents maintained in the electronic form, as is otherwise available for inspection under this Act or rules made thereunder, may be made by any person through the electronic form in such manner as may be prescribed; (e) such fees, charges or other sums payable under this Act or rules made 5 thereunder shall be paid through the electronic form and in such manner as may be prescribed. (2) The Central Registrar shall register change of registered office, amendment of bye-laws, issue certificate of registration, register such document, issue such certificate, record notice, receive such communication as may be required to be 1 0 registered or issued or recorded or received, as the case may be, under this Act or rules made thereunder or perform duties or discharge functions or exercise powers under this Act or rules made thereunder or do any act which is by this Act directed to be performed or discharged or exercised or done by the Central Registrar in the electronic form in such manner as may be prescribed. 15 (3) The Central Government may also provide that the electronic form for the purpose in this section shall be exclusive or alternative or in addition to the physical form in such manner as may be prescribed. Explanation. For the removal of doubts, it is hereby clarified that the rules made under this section shall not relate to imposition of fines or other pecuniary 2 0 penalties or demand or payment of fees or contravention of any of the provisions of this Act or punishment therefor. (4) The Central Government may, by notification, frame a scheme to carry out the provisions of sub-section (1) through the electronic form..
37. In section 124 of the principal Act, in sub-section (2), (a) after clause (g), the following clause shall be inserted, namely: "(ga) the manner of exercising vote in electronic form under the proviso to section 32"; (b) after clause (j), the following clauses shall be inserted, namely:
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"(ja) the co-operative societies for which the election shall be conducted; 3 0 (jb) the functions to be discharged and the manner in which those are to be discharged by the returning officer"; (c) after clause ( m), the following clause shall be inserted, namely: "(ma) other measures or acts under clause ( n) of sub-section (2) of section 49"; (d) after clause (r), the following clauses shall be inserted, namely: "(ra) the turnover under clause (a) of sub-section (2) of section 63A; (rb) the form in which the accounts or other relevant records shall be maintained under sub-section (4) of section 63A"; (e) after clause (w), the following clauses shall be inserted, namely: "(wa) period within which the multi-State Co-operative society shall devide or reorganise under the proviso to sub-section (1) of section 103; (wb) the fee under sub-section ( 2) of section 106; (wc) the manner, time and procedure of appeal under sub-section (5) of section 106;";
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National Conference on Co-operative Societies, Trusts, Redevelopment of Properties, Legal and Taxation Aspects 13 (f) after clause (x), the following clauses shall be inserted, namely: "(xa) the documents, notice, etc., required to be filed or delivered, or served in electronic form under sub-section (1) of section 120A; (xb) the manner of electronic form under sub-section (2) of section 120A;".
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STATEMENT OF OBJECTS AND REASONS The Multi-State Co-operative Societies Act, 2002 repealing the earlier law, that is, the Multi-State Co-operative Societies Act, 1984 was enacted with a view to consolidating the provisions relating to the Multi-State Co-operative Societies registered with objects not confined to one State and serving the interests of members in more than one State, to facilitate the voluntary formation and democratic functioning of co-operatives as peoples institutions based on self-help and mutual aid and to enable them to promote their economic and social betterment and to provide functional autonomy. The Multi-State Co-operative Societies Act, 2002 came in force with effect from the 19th August, 2002. 2. With the passage of time and developments in the co-operative movement in the country, certain difficulties have been experienced by the Multi-State Co-operative Societies in the implementation of the Multi-State Co-operative Societies Act, 2002. Conference of the State Co-operative Ministers was held on the 7th December, 2004 to, inter alia, ascertain the difficulties experienced by the Multi-State Co-operative Societies. In pursuance of the resolution passed in the said conference, a High Powered Committee or Co-operatives was constituted under the Chairmanship of Shri S.G. Patil. 3. In view of the recommendations made in the Report of aforesaid High Powered Committee and suggestions received from the co-operative sector and other stake holders and considering the importance of Multi-State Co-operative Societies in the national economy and the experience gained during the last eight years of implementation of the Multi-State Co-operative Societies Act, 2002, it has been felt that the said Act should be amended to keep the legislation in tune with the changing economic policies and to facilitate the MultiState Co-operative Societies to take advantage of the new and emerging opportunities and to keep pace with other economic entities and facilitate raising of resources by the MultiState Co-operative Societies more efficiently and effectively by making appropriate provisions for promoting their functional autonomy. 4. The Bill proposes to amend the Multi-State Co-operative Societies Act, 2002, inter alia, to (a) make the management of these co-operative societies more responsible to the members and accountable by making provision for ( i) constitution of Interim Board, (ii) accounting standards, (iii) constitution of Audit and Ethics Committee; (iv) calling for information or explanation by the Central Registrar of the Multi-State Co-operative Societies, (v) Special Audit; (b) strengthen the provision relating to election of the members of the Board of the Multi-State Co-operative Societies; (c) make provisions for broad based representation in the Board of the MultiState Co-operative Societies by providing reservation for the Scheduled Castes, the Scheduled Tribes and women; (d) take certain measures which would facilitate the building of self-reliant, democratic and professionally efficient co-operative institutions; (e) bringing transparency in the functioning of the Multi-State Co-operative Societies by making provision for appointment of Co-operative Information Officer, Chief Information Officer for providing information about the affairs and management of the Multi-State Co-operative Societies and also make provision for appeal. 14
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National Conference on Co-operative Societies, Trusts, Redevelopment of Properties, Legal and Taxation Aspects 15 5. The Notes on clauses appended to the Bill explain the provisions of the Bill in detail. 6. The Bill seeks to achieve the above objectives.
NEW DELHI; the 22nd October, 2010.
SHARAD PAWAR
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Notes on clauses Clause 2.This clause seeks to amend section 5 of the Multi-State Co-operative Societies Act, 2002 relating to the Multi-State Co-operative Societies which may be registered. It is proposed to amend sub-section (1) of the aforesaid section, inter alia, to impose an obligation upon the Multi-State Co-operative Societies to give an undertaking to the effect that it shall make available its products and services to its members, after its registration as multi-State co-operative society under the Multi-State Co-operative Societies Act, 2002. Clause 3.This clause seeks to amend section 7 of the Multi-State Co-operative Societies Act, 2002 relating to registration of the Multi-State Co-operative Societies. It is proposed to amend the aforesaid section to extend the period for disposal of application for registration from four months to five months after recording reasons therefor. Clause 4. This clause seeks to amend section 10 of the Multi-State Co-operative Societies Act, 2002 relating to bye-laws of the Multi-State Co-operative Societies. It is proposed to amend sub-section (2) of the aforesaid section to include electronicmail address in the address of the society. Clause 5.This clause seeks to amend section 11 of the Multi-State Co-operative Societies Act, 2002 relating to amendment of bye-laws of the Multi-State Co-operative Societies. It is proposed to amend sub-section ( 7) of the aforesaid section to provide for registration of amendments with such modifications as may be necessary to bring them in conformity with the provisions of the Act. Clause 6.This clause seeks to amend section 17 of the Multi-State Co-operative Societies Act, 2002 relating to amalgamation or transfer of assets and liabilities or division of Multi-State Co-operative Societies. It is proposed to amend the aforesaid section, inter alia, to enable the Society to decide, with the approval of the Central Registrar, to wind up or convert itself into any other legal entity and to transfer its assets and liabilities in whole or in part to such legal entity. Clause 7.This clause seeks to amend section 21 of the Multi-State Co-operative Societies Act, 2002 relating to cancellation of registration certificate of Multi-State Co-operative Societies. It is proposed to amend the aforesaid section, inter alia, providing for cancellation of registration if such registration has been obtained by misrepresentation of facts, submission of false or misleading information, suppression of material facts or fraud; or the number of members or the number of societies or the number of persons as the case may be, which have been at any time reduced below the number of members or societies or persons as specified in sub-section (2) of section 6 of the principal Act. Clause 8. This clause seeks to amend section 22 of the Multi-State Co-operative Societies Act, 2002 relating to conversion of a co-operative society into a Multi-State Co-operative Society. It is proposed to amend sub-section (5) of the aforesaid section to provide that the co-operative society shall cease to be as such under the law relating to co-operative societies in force in the State, from the date of registration of amendment of its bye-laws by the Central Registrar and the Registrar of co-operative societies of the State shall make an order to this effect, within a period of one month from the receipt of the copy of registration certificate. 16
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17 Clause 9.This clause seeks to amend section 25 of the Multi-State Co-operative Societies Act, 2002 relating to persons who may become members of the Multi-State Co-operative Societies. It is Proposed to amend sub-section (4) of the aforesaid section to extend the period for disposal of application for admission as a member of the society from four to six months and providing for that the administrator or administrators, as the case may be, appointed under this Act to manage the affairs of a multi-State co-operative society shall not admit any new member to such society without the prior approval of the Central Registrar. Clause 10.This clause seeks to amend section 28 of the Multi-State Co-operative Societies Act, 2002 relating to exercising the rights by members. It is proposed to amend the aforesaid section to provide that the member shall not exercise his rights unless he has made payment in respect of all dues to the society including the payment in respect of membership or availed minimum level of services as may be specified in the bye-laws. Clause 11.This clause seeks to amend section 29 of the Multi-State Co-operative Societies Act, 2002 relating to disqualifications for being member of a Multi-State Co-operative Society. It is proposed to amend the aforesaid section to provide that failure to avail the product and services made available by the society as specified in its bye-laws may render a person ineligible for being a member of the society. Clause 12.This clause seeks to amend section 30 of the Multi-State Co-operative Societies Act, 2002 relating to expulsion of members. It is proposed to amend sub-section (2) of the aforesaid section to extend the time period from one to three years as may be specified in the bye-laws from the date of expulsion of the member for being eligible for re-admission as member. Clause 13.This clause seeks to amend section 32 of the Multi-State Co-operative Societies Act, 2002 relating to manner of exercising vote. It is proposed to provide that the member may also exercise his vote at a meeting through electronic form. Clause 14. This clause seeks to amend section 35 of the Multi-State Co-operative Societies Act, 2002 relating to redemption of shares in Multi-State Co-operative Society. It is proposed to amend sub-section (1) and sub-section (2) of the aforesaid section to provide that the society may refund full or part of the share capital held by the Government who shall accept such redemption on the face value or book value of shares, whichever is higher. Clause 15.This clause seeks to amend section 38 of the Multi-State Co-operative Societies Act, 2002 relating to constitution, powers and functions of general body. It is proposed to amend sub-section (3) of the aforesaid section with a view to provide that the administrator shall not represent the co-operative society or other multiState co-operative society beyond a period of six months. Clause 16.This clause seeks to amend section 41 of the Multi-State Co-operative Societies Act, 2002 relating to board of directors of Multi-State Co-operative Societies. It is proposed to amend sub-section (3) and insert sub-sections (4), (5) and (6) in the aforesaid section to specify the field of expertise for the co-opted directors and to provide reservation of seat for the Scheduled Castes and the Scheduled Tribes and women in the board of the society. It is also proposed to provide that the director shall disclose the nature of his concern or interest and of that of his relatives at the meeting of the board of the society and he shall not be present in the discussion of or vote on any contract or arrangement in which he is concerned or interested.
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18 Clause 17.This clause seeks to insert section 41A after section 41 of the MultiState Co-operative Societies Act, 2002. It is proposed to insert the aforesaid section to provide for the constitution of interim board for rehabilitation or revival of sick society. Clause 18.This clause seeks to amend section 43 of the Multi-State Co-operative Societies Act, 2002 relating to disqualification for being a member of the board of MultiState Co-operative Society. It is proposed to amend sub-section (2) of the aforesaid section with a view, inter alia, to provide that default by members in making contribution to the Co-operative Education Fund or Co-operative Rehabilitation and Reconstruction Fund and filing the statutory returns within the specified time shall render them ineligible for being elected as members of the board. Clause 19.This clause seeks to amend section 45 of the Multi-State Co-operative Societies Act, 2002 relating to elections of members of the board of Multi-State Co-operative Societies. It is proposed to amend the aforesaid section to provide, inter alia, that the Central Government shall appoint Co-operative Election Authority for conduct of elections in the society. It also seeks to provide that the term of office bearers shall be co-terminus with the term of board of directors and only elected or nominated members of the board shall be eligible to be elected as Chairman or Vice-Chairman or President or Vice- President of the board. It further seeks to provide that the board may fill a causal vacancy of the members of the board by nomination out of the same class of members in respect of which the casual vacancy has arisen, if the term of office of the board is less than half of its original term. It also seeks to provide for extension of period for conduct of election by the Central Registrar from ninety days up to one year. It also seeks to stipulate that no person shall be eligible to be elected as a member of the board or office bearer of a multi-State co-operative society unless he is an active member of the general body of that society. Clause 20.This clause seeks to amend section 49 of the Multi-State Co-operative Societies Act, 2002 relating to powers and functions of the board of Multi-State Co-operative Society. It is proposed to amend sub-section (2) of the aforesaid section with a view to empower the board to elect President and Vice-President of the society from amongst the elected or nominated members of the board. Clause 21.This clause seeks to amend section 50 of the Multi-State Co-operative Societies Act, 2002 relating to meetings of the board of Multi-State Co-operative Society. It is proposed to amend the aforesaid section to provide for convening of meeting of the board by the chief executive on receipt of requisition from one-fourth of the directors. It also provides for quorum of the meeting of the board of directors and participation of the directors through video conferencing or through other electronic means to be counted for the purpose of quorum. Clause 22.This clause seeks to amend section 52 of the Multi-State Co-operative Societies Act, 2002 relating to powers and functions of the Chief Executive. It is proposed to amend the aforesaid section with a view to extend the period for presentation of the draft, annual report and financial statement for the approval of board from thirty to forty-five days. Clause 23.This clause seeks to amend section 53 of the Multi-State Co-operative Societies Act, 2002 relating to the committees of the board of Multi-State Co-operative Society.
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19 It is proposed to amend sub-section (1) and insert sub-section (1A) in the aforesaid section with a view to empower the board to constitute executive committee and other committees or sub-committees. It also seeks to provide that the board shall constitute an audit and ethics committee. Clause 24.This clause seeks to insert section 63A after section 63 of the MultiState Co-operative Societies Act, 2002. It is proposed to insert the aforesaid section with a view to provide for establishment of Co-operative Rehabilitation and Reconstruction Fund. Clause 25.This clause seeks to amend section 67 of the Multi-State Co-operative Societies Act, 2002 relating to restrictions on borrowing by the Multi-State Co-operative Society. It is proposed to amend the aforesaid section to provide that the multi-State cooperative society doing banking business shall be governed by the directions issued by Reserve Bank of India. It also seeks to remove the existing restriction on borrowings by the society to the extent of only twenty-five per cent. of its paid-up share capital and proposes to allow the society to raise resources to the extent of its paid-up share capital, free reserves and surpluses. Clause 26.This clause seeks to amend section 70 of the Multi-State Co-operative Societies Act, 2002 relating to appointment and remuneration of auditors. It is proposed to amend sub-section (7) of the aforesaid section to empower the board to fill up the vacancy of auditor caused by the resignation or death of auditor from out of the panel of auditors approved by the Central Registrar. Clause 27.This clause seeks to amend section 73 of the Multi-State Co-operative Societies Act, 2002 relating to powers and duties of auditors. It is proposed to insert sub-section (6) to the aforesaid section to provide for laying down of auditing and accounting standards by the Central Government. Clause 28.This clause seeks to amend section 77 of the Multi-State Co-operative Societies Act, 2002 relating to the power of the Central Government to direct special audit in certain cases. It is proposed to amend sub-section (1) and insert sub-section (1A) in the aforesaid section to empower the Central Government to order for special audit where Central or State Government holds share capital or shares. Clause 29.This clause seeks to amend section 78 relating to inquiry by the Central Registrar. It is proposed to amend sub-section (1) and insert sub-sections (1A) and ( 1B) in the aforesaid section to empower the Central Registrar to call from the society any information or explanation and documents. It also provides for holding of enquiry by the Central Registrar if it is found that the business of the society is being carried on for a fraudulent or unlawful purpose. Clause 30.This clause seeks to amend section 84 of the Multi-State Co-operative Societies Act, 2002 relating to reference of disputes. It is proposed to amend the aforesaid section, inter alia, to provide that any of dispute shall be referred to the Central Registrar instead of arbitrator and that the Central Registrar on receipt of the reference of dispute may decide the dispute himself or transfer it for decision to such person and upon such terms and conditions as may be specified. Clause 31.This clause seeks to amend section 94 of the Multi-State Co-operative Societies Act, 2002 relating to execution of decisions etc.
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20 It is proposed to amend the aforesaid section to provide that in case of default, the contribution to the co-operative education fund shall be recovered as land revenue. Clause 32.This clause seeks to amend section 103 of the Multi-State Co-operative Societies Act, 2002 relating to co-operative societies functioning immediately before reorganisation of States. It is proposed to amend sub-section (1) of the aforesaid section to provide for cancellation of registration by Central Registrar of the deemed multi-State co-operative society if all the successor States take necessary steps to divide or reorganise the said multi-State co-operative society into State co-operative societies. Clause 33.This clause seeks to amend section 104 of the Multi-State Co-operative Societies Act, 2002 relating to offences and penalties. It is proposed to amend the aforesaid section to increase the amount of penalty for the specified offences. Clause 34.This clause seeks to amend section 106 of the Multi-State Co-operative Societies Act, 2002 relating to copies of bye laws etc. to be made open to inspection. It is proposed to insert sub-section (2) to the aforesaid section to provide for appointment of Co-operative Information Officer, Chief Information Officer for providing information about the affairs and management of the society and also make a provision for appeal. Clause 35.This clause seeks to amend section 108 of the Multi-State Co-operative Societies Act, 2002 relating to inspection of books of accounts, etc. of Multi-State Cooperative Societies. It is proposed to amend sub-section (1) of the aforesaid section to provide for inspection of books of accounts, etc. of the society by Central Registrar or any person authorised by him on his behalf. Clause 36.This clause seeks to insert section 120A after section 120 of the MultiState Co-operative Societies Act, 2002. It is proposed to insert the aforesaid section to provide for filing of applications, documents, etc. in electronic form. Clause 37.This clause seeks to amend section 124 of the Multi-State Co-operative Societies Act, 2002 relating to the power of the Central Government to make rules. It is proposed to amend sub-section (2) of the aforesaid section to include certain specified matters under the provision of power to make rules.
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MEMORANDUM REGARDING DELEGATED LEGISLATION Clause 13 of the Bill empowers the Central Government to make rules to provide for the manner of exercising vote in electronic form. 2. Clause 19 of the Bill empowers the Central Government to make rules for specifying (a) the co-operative societies for which the elections shall be conducted by the Cooperative Election Authority; ( b) the function to be discharged and the manner in which those are to be discharged by the returning officer appointed by the Election Authority. 3. Clause 24 of the Bill empowers the Central Government to make rules to provide for (a) the percentage of turnover of a multi-State co-operative society to be credited to the Co-operative Rehabilitation and Reconstruction Fund; and ( b ) the form for maintenance of separate account and other relevant records in relation to the Fund in consultation with the Comptroller and Auditor General of India. 4. Clause 32 of the Bill empowers the Central Government to specify the period within which all the successor States shall take necessary steps to divide or re-organise the multi-State co-operative societies into State co-operative societies to confine their objects, services and the members to respective States. 5. Clause 34 of the Bill empowers the Central Government to make rules to specify (a) the fee for obtaining information from the Co-operative Information Officer about the affairs and management of the society; and (b) the manner, time for filing and procedure of appeal. 6. Clause 36 of the Bill empowers the Central Government to make rules ( a) to specify a date and the manner of authentication of application and other documents to be filed or delivered in electronic form, (b) for the manner of authentication of the document and notice, etc. served or delivered in the electronic form, (c) the manner for registration or authentication of applications, balance sheet, etc. maintained by the Central Registrar in electronic form, ( d) the manner of inspection of bye-laws, balance sheet, etc. to be made through the electronic form, (e) the manner of payment of fees, charges or other sums through the electronic form, ( f ) the manner of performing duties or discharging functions or exercising powers or doing any other act to be performed or discharged or exercised or done by the Central Registrar in the electronic form, and (g) the manner to provide the electronic form to be exclusive or alternative or in addition to the physical form. 7. The matters in respect of which rules may be made under the aforesaid provisions are matters of procedure and administrative detail and it is not practical to provide for them in the Bill itself. The rules made under this Bill are also required to be laid before Parliament. The delegation of legislative power is, therefore, of a normal character.
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ANNEXURE EXTRACTS FROM THE MULTI-STATE CO-OPERATIVE SOCIETIES ACT, 2002 (39 OF 2002) *
Multi-State co-operative societies which may be registered.
5. (1) No multi-State co-operative society shall be registered under this Act, unless, (a) its main objects are to serve the interests of members in more than one State; and (b) its bye-laws provide for social and economic betterment of its members through self-help and mutual aid in accordance with the co-operative principles. * * * * * * * * * *
Registration.
7. (1)
(2) The application for registration shall be disposed of by the Central Registrar within a period of four months from the date of receipt thereof by him. (3) Where the Central Registrar refuses to register a multi-State co-operative society, he shall communicate, within a period of four months from the date of receipt of the application for registration, the order of refusal together with the reasons therefor to the applicant or applicants, as the case may be: Provided that no order of refusal shall be made unless the applicants have been given a reasonable opportunity of being heard: Provided further that if the application for registration is not disposed of within a period of four months specified in sub-section (2) or the Central Registrar fails to communicate the order of refusal within that 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. *
Bye-laws of multi-State cooperative societies.
* * *
* *
* *
* *
10. ( 1 )
(2) In particular, and without prejudice to the generality of the foregoing power, such bye-laws may provide for all or any of the following matters, namely: (a) the name, address and area of operation of the society; * * * * * * * * * *
Amendment of bye-laws of a multi-State co-operative society.
11. ( 1 )
(7) If, on receipt of application under sub-section (5), the Central Registrar is satisfied that the proposed amendment (a) is not contrary to the provisions of this Act or of the rules; (b) does not conflict with co-operative principles; and (c) will promote the economic interests of the members of the multi-State cooperative society, he may register the amendment within a period of three months from the date of receipt thereof by him. * * * * * 17. (1) A multi-State co-operative society may, by a resolution passed by a majority of not less than two-thirds of the members, present and voting at a general meeting of he society held for the purpose, * * * * * 22
Amalgamation or transfer of assets and liabilities, or division of multi-State co-operative societies.
213
23 (3) The resolution of a multi-State co-operative society under sub-section (1) or subsection (2) shall contain all particulars of the transfer or division or amalgamation, as the case may be. * * * * * (7) On receipt of an application for the registration of new societies formed by division in accordance with the resolution passed under sub-section (1) or of a new society formed by amalgamation in accordance with the resolution passed under sub-section (2), the Central Registrar, on being satisfied that the resolution has become effective under sub-section (6) shall, unless for reasons to be recorded in writing he thinks fit to refuse so to do, register the new society or societies, as the case may be, and the bye-laws thereof. * * * * * 21. (1) Where the whole of the assets and liabilities of a multi-State co-operative society are transferred to another multi-State co-operative society or to a co-operative society in accordance with the provisions of section 17, the registration of the first-mentioned multiState co-operative society shall stand cancelled and the socity shall be deemed to have been dissolved and shall cease to exist as a corporate body. * * * * * (3) Where a multi-State co-operative society divides itself into two or more multi-State co-operative socieites or two or more-co-operative societies in accordance with the provisions of section 17, the registration of that society shall stand cancelled on the registration of the new socieites, and that society shall be deemed to have been dissolved and shall cease to exist as a corporate body. * 22. ( 1 ) (5) (a) * * * * * * * * * * * * * *
Cancellation of registration certificate of multi-State co-operative societies in certain cases.
(c) The Registrar of Co-operative Societies referred to in clause (b) shall thereupon make an order directing that the society had, as from the date of registration by the Central Registrar, ceased to be a society under the law relating to co-operative societies in force in that State. * * * CHAPTER IV MEMBERS OF MULTI-STATE CO-OPERATIVE SOCIETIES AND THEIR DUTIES, RIGHTS AND LIABILITIES 25. ( 1 ) * * * * * (4) Every application for admission as a member of a multi-State co-operative society shall be disposed of by such society within a period of four months from the date of receipt of the application, and the decision of such society on the application shall be communicated to the applicant within fifteen days from the date of such decision: Provided that if the application is not disposed of within the period aforesaid, or the decision is not communicated within a period of fifteen days of the expiry of the aforesaid period of four months, the multi-State co-operative society shall be deemed to have made a decision, on the date of expiry of such period, refusing admission to the applicant. * * * * * 28. No member of a multi-State co-operative society shall exercise the rights of a member, unless he has made the payment to the society in respect of membership, or has acquired such interest in the society, as may be specified in the bye-laws. 29. No person shall be eligible for being a member of a multi-State co-operative society if * * * * * * *
Conversion of a co-operative society into a multi-State co-operative society.
Persons who may become members.
Members not to exercise rights till due payment made. Disqualification for member of a multi-State co-operative society.
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24 (d) he has made any default in payment of any amount to be paid to the multiState co-operative society under the bye-laws of such society.
Expulsion of members.
30. ( 1 )
(2) No member of the multi-State co-operative society who has been expelled under sub-section (1) , shall be eligible for re-admission as a member of that society, for a period of one year, from the date of such expulsion. * * * * * 32. Every member of a multi-State co-operative society shall exercise his vote in person and no member shall be permitted to vote by proxy: Provided that a multi-State co-operative society or a co-operative society or any other institution which is a member of any other multi-State co-operative society may, subject to the provisions of sub-section (3) of section 38 and the rules, appoint its representative to vote on its behalf in the affairs of such multi-State co-operative society. * * * * * 35. (1) Shares held in a multi-State co-operative society by any of the authorities referred to in clauses (c) to (g) of sub-section (1) of section 25 shall be redeemable in accordance with the bye-laws of such multi-State co-operative society and in a case where the bye-laws do not contain any provision in this regard, in such manner as may be agreed upon between the multi-State co-operative society and such authority. (2) The redemption of shares referred to in sub-section (1) shall be on the face value of the shares. * * * CHAPTER V DIRECTION AND MANAGEMENT OF MULTI-STATE CO-OPERATIVE SOCIETIES * *
Manner of exercising vote.
Redemption of shares.
Constitution, powers and functions of general body.
38. ( 1 )
(3) Where in any meeting of the general body or the board of a multi-State co-operative society, a co-operative society or another multi-State co-operative society is to be represented, such co-operative society or other multi-State co-operative society shall be represented in such meeting only through the Chairperson or the president or the Chief Executive or a member of the board of such co-operative society or other multi-State co-operative society, as the case may be, if such member is so authorised by the board and where there is no board of such co-operative society or other multi-State co-operative society, for whatever reasons, through the administrator, by whatever name called, of such co-operative society or other multi-State co-operative society: Provided that where the bye-laws of a multi-State co-operative society provide for representation of other institutions in any meeting of general body or the board of such multi-State co-operative society, such institutions shall be represented through its nominee. * * * * * * * * * * 41. ( 1 ) laws: Provided that the maximum number of directors in no case shall exceed twenty-one: Provided further that the board may co-opt two directors in addition to twenty-one directors specified in the first proviso:
Board of Directors.
(3) The board shall consist of such number of directors as may be specified in the bye-
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25 Provided also that the functional directors in the national co-operative societies shall also be the members of the board and such members shall be excluded for the purpose of counting the total number of directors specified in the first proviso. * 43. ( 1 ) * * * * * * * * *
Disqualifications for being a member of board.
(2) A person shall not be eligible for being elected as member of board of a multi-State co-operative society for a period of five years if the board of such multi-State co-operative society fails * * * * * (c) to prepare the financial statement and present the same in the annual general meeting. * * * * *
45. (1) The conduct of elections to the board of a multi-State co-operative society shall Elections of members of be the responsibility of the existing board. board. * * * * * (5) The term of office of the elected members of the board shall be such, not exceeding five years from the date of elections, as may be specified in the bye-laws of a multi-State co-operative society: Provided that elected members shall continue to hold office till their successors are elected or nominated under the provisions of this Act or the rules or bye-laws and assume charge of their office. (6) Where the board fails to conduct election of the members of board, the Central Registrar shall hold the election within a period of ninety days from the date when such election became due. (7) No person shall be eligible to be elected as a member of the board of a multi-State co-operative society unless he is a member of the general body of that society. (8) The expenses for holding election by the Central Registrar shall be borne by the multi-State co-operative society. * 49. ( 1 ) * * * * * * * * *
Powers and functions of board.
(2) Without prejudice to the generality of the foregoing powers, such powers shall include the power * * * * * (m) to take such other measures or to do such other acts as may be prescribed or required under this Act or the bye-laws or as may be delegated by the general body.
50. (1) The Chief Executive shall convene the meetings of the board at the instance of Meeting of board. the chairperson or president of the multi-State co-operative society. * * * * *
Powers and functions of Chief Executive.
52. The Chief Executive shall under the general superintendence, direction and control of the board, exercise the powers and discharge the functions specified below, namely: * * * * * (j) present the draft annual report and financial statements for the approval of the board within thirty days of closure of the financial year; * * * * * 53. (1) The board may, subject to such conditions as may be prescribed, constitute an Executive Committee and other committees or sub-committees as may be considered necessary:
Committees of board.
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26 Provided that other committees or sub-committees, other than the Executive Committee shall not exceed three. *
Restrictions on borrowing.
67. (1) A multi-State co-operative society may receive deposits, raise loans and receive grants from external sources to such extent and under such conditions as may be specified in the bye-laws: Provided that the total amount of deposits and loans received during any financial year shall not exceed ten times of the sum of subscribed share capital and accumulated reserves: Provided further that while calculating the total sum of subscribed share capital and accumulated reserves, the accumulated losses shall be deducted. * * * * * (3) A multi-State co-operative society may issue non-convertible debentures or other instruments subject to the provisions of any law for the time being in force to raise resources for the fulfilment of its objects to the extent of twenty-five per cent. of its paid-up share capital. * * * CHAPTER VIII AUDIT, INQUIRY, INSPECTION AND SURCHARGE * *
Appointment and remuneration of auditors.
70. ( 1 )
(7) (a) The multi-State co-operative society may fill any casual vacancy in the office of an auditor; but while any such vacancy continues, the remaining auditor or auditors, if any, may act: Provided that where such vacancy is caused by the resignation of an auditor, the vacancy shall only be filled by the multi-State co-operative society in general meeting. * * * * * 77. (1) Where the Central Government is of the opinion (a) that the affairs of any multi-State co-operative society are not being managed in accordance with self-help and mutual aid and co-operative principles or prudent commercial practices; or with sound business principles; or (b) that any multi-State co-operative society is being managed in a manner likely to cause serious injury or damage to the interests of the trade, industry or business to which it pertains; or (c) that the financial position of any multi-State co-operative society is such as to endanger its solvency, the Central Government may at any time by order direct that a special audit of the multi-State co-operative society's accounts for such period or periods as may be specified in the order, shall be conducted and may by the same or a different order appoint either a chartered accountant as defined in clause (b) of sub-section (1) of section 2 of the Chartered Accountants Act, 1949 or the multi-State co-operative society's auditor himself to conduct with special audit: Provided that the Central Government shall not order for special audit of a multi-State co-operative society's accounts if that Government or the State Government either by itself or both hold less than fifty-one per cent. of the paid-up share capital or of the shares in such multi-State co-operative society. * * * * *
Power of Central Government to direct special audit in certain cases.
38 of 1949
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27 78. (1) The Central Registrar may, on a request from a federal co-operative to which a multi-State co-operative society is affiliated or a creditor or not less than one-third of the members of the board or not less than one-fifth of the total number of members of a multiState co-operative society hold an inquiry or direct some person authorised by him by order in writing in this behalf to hold an inquiry into the constitution, working and financial condition of a multi-State co-operative society: Provided that no inquiry under this sub-section shall be held unless a notice of not less than fifteen days has been given to the multi-State co-operative society. * * * CHAPTER IX SETTLEMENT
OF DISPUTES
Inquiry by Central Registrar.
14 of 1947
84. (1) Notwithstanding anything contained in any other law for the time being in force, if any dispute other than a dispute regarding disciplinary action taken by a multi-State co-operative society against its paid employee or an industrial dispute as defined in clause (k) of section 2 of the Industrial Disputes Act, 1947] touching the constitution, management or business of a multi-State co-operative society arises (a) among members, past members and persons claiming through members, past members and deceased members, or (b) between a member, past members and persons claiming through a member, past member or deceased member and the multi-State co-operative society, its board or any officer, agent or employee of the multi-State co-operative society or liquidator, past or present, or (c) between the multi-State co-operative society or its board and any past board, any officer, agent or employee, or any past officer, past agent or past employee, heirs or legal representatives of any deceased officer, deceased agent or deceased employee of the multi-State co-operative society, or (d) between the multi-State co-operative society and any other multi-State co-operative society, between a multi-State co-operative society and liquidator of another multi-State co-operative society or between the liquidator of one multiState co-operative society and the liquidator of another multi-State co-operative society, such dispute shall be referred to arbitration. * * * * *
Reference of disputes.
(3) If any question arises whether a dispute referred to arbitration under this section is or is not a dispute touching the constitution, management or business of a multi-State cooperative society, the decision thereon of the arbitrator shall be final and shall not be called in question in any court. (4) Where a dispute has been referred to arbitration under sub-section (1), the same shall be settled or decided by the arbitrator to be appointed by the Central Registrar. (5) Save as otherwise provided under this Act, the provisions of the Arbitration and Conciliation Act, 1996 shall apply to all arbitration under this Act as if the proceedings for arbitration were referred for settlement or decision under the provisions of the Arbitration and Conciliation Act, 1996. * * * * * * CHAPTER XI EXECUTION OF DECREES, ORDERS AND DECISIONS 94. Every decision or order made under section 39 or section 40 or section 83 or section 99 or section 101 shall, if not carried out, * * * * *
Execution of decisions, etc.
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28 CHAPTER XIII SOCIETIES WHICH
Co-operative societies functioning immediately before reorganisation of States.
BECOME MULTI -S TATE CO - OPERATIVE SOCIETIES CONSEQUENT ON REORGANISATION OF
STATES
37 of 1956
103. (1) Where, by virtue of the provisions of Part II of the State Reorganisation Act, 1956 or any other enactment relating to reorganisation of States, any co-operative society which immediately before the day on which the reorganisation takes place, had its objects confined to one State becomes, as from that day, a multi-State co-operative society, it shall be deemed to be a multi-State co-operative society registered under the corresponding provisions of this Act and the bye-laws of such society shall, insofar as they are not inconsistent with the provisions of this Act, continue to be in force until altered or rescinded. * * * CHAPTER XIV OFFENCES
AND PENALTIES
*
26 of 1996
Offences and penalties.
104. (1) A multi-State co-operative society or an officer or member thereof wilfully making a false return or furnishing false information, or any person wilfully or without any reasonable excuse disobeying any summons, requisition or lawful written order issued under the provisions of this Act, or wilfully not furnishing any information required from him by a person authorised in this behalf under the provisions of this Act, shall be punishable with fine which shall not be less than two thousand rupees and which may extend to ten thousand rupees. (2) Any employer who, without sufficient cause, fails to pay to a multi-State cooperative society the amount deducted by him under section 60 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 wilfully fails to hand over custody of books, accounts, documents, records, cash, security and other property belonging to a multi-State co-operative society of which he is an officer or custodian, to a person entitled under section 54, or section 70, or section 78, or section 79, or section 89 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. * * * * * * 106. Every multi-State co-operative society shall keep a copy of the rules and its byelaws and also a list of its members, open to inspection free or charge at all reasonable times, at the registered address of the society. 108. (1) The book of account and other books and papers of every multi-State cooperative society shall be open to inspection during business hours (i) by the Central Registrar, or (ii) by such officer of the Government as may be authorised by the Central Government in this behalf: Provided that such inpection may be made without giving any previous notice to that society or any officer thereof; * * * * *
Copies of bye-laws, etc., to be open to inspection. Inspection of books of account, etc. of multi-State co-operative society.
Power to make rules.
124. ( 1 )
(2) In particular, and without prejudice to the generality of the foregoing power, such rules may provide for all or any of the following matters, namely : * * * * *
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BILL to amend the Multi-State Co-operative Societies Act, 2002.
(Shri Sharad Pawar, Minister of Agriculture, Consumer Affairs, Food and Public Distribution)
GMGIPMRND4951LS(S3)02-11-2010.
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Salient Features of the Constitution (Ninety Seventh Amendment) Act, 2011

By Dr. Amit Kumar Agrawal Secretary, Committee for Co-Operatives & NPO Sectors, ICAI
The Constitution (Ninety Seventh Amendment) Act, 2011 enacted by the Parliament of India to amend the Constitution of India, received Presidential Assent on 12th January 2012 with the objective to enhance public faith in Cooperatives and insulate from avoidable political and bureaucratic interference.
In part IV of a new Article 43B inserted, which Says:

The state shall Endeavour to promote Voluntary formation autonomous functioning, democratic control and professional management of the co-operative societies. The Central Government has asked state government to amend its respective state act in line with The Constitution (Ninety Seventh Amendment) Act, 2011. The salient features of the Act are Accounts & Audit (Article 243ZM) a) Maintenance of accounts of Co-operative Societies. b) Auditing of accounts once in each financial year within six months of the close of the financial year to which such accounts relate. c) Lay down the minimum qualification and experience of auditors auditing firms which shall be eligible for auditing accounts d) Auditor shall be appointed by the general body of the Cooperative Society from a panel approved by the State Government or an authority authorized by State Government. e) The audit report of an apex Co-operative Society defined by the state act, which shall be laid before the State Legislature in the prescribed manner which may be provided by the State Act. Filing of Return (Article 243ZP) a) Every Co-operative Society shall have to file return within six months of close of financial year to the designated authority. b) The return should include the following matters i. Annual Report of its activities ii. Audited statement of accounts iii. Plan for surplus disposal as approved by the general body of the co-operative society iv. List of amendments to the bye laws of the co-operative society
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Declaration regarding holding of general body meeting and conduct of elections when due vi. Any other information required by the Registrar in pursuance of any of the provisions of the State Act. Co-option of members (Article 243ZJ (3)) a) The State shall make amendments in their respective co-operative acts to co-opt maximum two persons as members of the board in addition to twenty one directors specified in the act. b) The co-opted members should have experience in the field of banking, management, finance or specialization in any other field relating to the objects and activities of the co-operative societies. c) They should have no right to vote in any elections of the co-operative society in their capacity. d) They are not eligible to be elected as office bearers of the Board.
v.
New opportunities for the members of the ICAI As per article 243ZJ (3), there is a provision which shall be inserted in the State Cooperative Act, a member of ICAI can be appointed as a co-opted member having experience in the field of banking, management, finance or specialization in any other field relating to the objects and activities of the co-operative societies. A per article 243ZP (a) & (b), Every Co-operative Society shall have to file return within six months of close of financial year to the designated authority which shall contain annual report and audited statement of accounts which shall explore new professional opportunities for members of ICAI.
Points for Attention As per article 243ZM(2), state shall amend its act about minimum qualification and experience of auditor and auditing firms that shall be eligible for auditing accounts for co-operative societies. A per article 243ZM(3), Auditor shall be appointed by the general body of the Cooperative Society The audit report of an apex Co-operative Society defined by the state act, which shall be laid before the State Legislature in the prescribed manner which may be provided by the State Act.
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National Conference on Co-operative Societies, Trusts, Redevelopment of Properties, Legal and Taxation Aspects The Multi State Cooperative Societies (Amendment) Bill, 2010 - [Bill Summary] The Multi State Cooperative Societies (Amendment) Bill, 2010 was introduced in the Lok Sabha on November 15, 2010 by the Minister of Agriculture, Consumer Affairs, Food and Public Distribution, Shri Sharad Pawar. The Bill was referred to the Standing Committee on Agriculture (Chairperson: Shri Basudeb Acharia), which is scheduled to submit its report within few months. The Bill amends the Multi State Cooperative Societies Act, 2002, which regulates multi-state cooperative societies i.e. cooperatives which serves the interest of members in more than one state. This includes federal cooperative societies whose membership is available only to a cooperative society or a multi-state cooperative society and 21 national cooperative societies specified. The central government may appoint a Central Registrar of Cooperative Societies. A multi-state cooperative society may be registered if its main object is to serve the interest of members in multiple states, its bye-laws provide for social and economic betterment of its members in accordance with the cooperative principles. The key amendments to the Act pertain to time limit for disposal of application for registration, distribution of shares, constitution of interim board, holding of elections, constitution of fund and dispute settlement. Disposal of registration: The Act states that the Central Registrar has to dispose off an application for registration within four months. The Bill adds that the time may be extended to five months after giving reasons in writing. According to the Act an application shall be refused within four months. If it is not disposed within that period, the application shall be deemed to have been refused. The Bill increased the time period to five months and adds that if an application is not disposed off within the time period, it shall be deemed to have been accepted as a member. Distribution of shares: The Act states that the shares of a cooperative society are redeemable by a member according to the provisions of the bye-laws. The redemption of shares shall on face value of shares. The Bill adds the proviso that the cooperative society may refund the share capital held by the government. The redemption of shares shall be on face value or book value of shares, whichever is higher. Constitution of interim board: The Bill allows the Central Registrar to declare any multi-state cooperative society as sick. The central government may, on the recommendation of the Registrar appoint an interim board for a maximum of five years. The Central Registrar can also declare a cooperative to be viable within the five years. The board of directors before the cooperative was declared sick shall be reinstated. Elections: The Act states that elections shall be conducted by the existing board. The Bill amends this to state that the central government may appoint a Cooperative Election Authority to conduct elections in cooperative societies to be prescribed. Constitution of Fund: The Bill states that the central government shall set up the Cooperative Rehabilitation and Reconstruction Fund. A cooperative society shall credit 0.005% to 0.1% of its turnover to the fund, provided it does not exceed Rs 3crores per year. Dispute settlement: Under the Act, all disputes shall be referred to arbitration under the Arbitration and Conciliation Act, 1996. The Bill amends it by stating that all disputes shall be referred to the Central Registrar. If there is a question as to whether a dispute touches the constitution or management of a society, it shall be decided by the Central Registrar and shall not be questioned by the court.
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National Conference On Co-Operative Societies, Trusts, Organized by Institute of Chartered Accountants of India - Cell Tower Radiation Hazards and Solutions

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National Conference on Co-operative Societies, Trusts, Redevelopment of Properties, Legal and Taxation Aspects

11.30 am - 12.00 noon

02.30 pm - 03.15 pm 03.15 pm - 03.45 pm

11.30 am - 12.00 noon 12.00 noon - 12.30 pm 12.30 pm - 01.00 pm

Sr. No. Technical Sessions 1.

Laws governing co- operative societies, trusts, real estate transactions

DATE OF BIRTH : QUALIFICATION : EXPERIENCE

COMPILED BY:- MANOJ DAISARIA

DCR 35(4) Compensatory FSI (Floor Space Index):

This FSI admissible for Rehab. component - without charging premium.

PROVISIONS PRIOR TO AND AFTER MODIFIED D.C. REGULATION

33(7) REDEVELOPMENT ON CESSED BUILDING ON ISLAND CITY

33(7) REDEVELOPMENT ON CESSED BUILDING ON ISLAND CITY

Cell Towers - an income avenue or a menace ?

Cell Towers Radiation Hazards and Solutions

Do Not Fear The Tower

Service tax Issues

VAT Issues (in redevelopments, in repairing properties)

Stamp Duty and Registration Aspects in Co-operative Housing Society

Labour Laws Each Employer Should Know

LABOUR LAWS EACH EMPLOYER SHOULD KNOW

Presentation By M. B. Gajare Joint Commissioner of Labour (Retired)

Laws regulating working conditions:

Laws regulating working conditions:

Laws dealing with wages:

Laws related to Deprived and Disadvantaged Sections of the Society

Laws related to Employment & Training

========================================== =============== RAJENDRA N SHAH Versus UNION OF INDIA & ANR.

CORAM: HONOURABLE THE CHIEF JUSTICE

WRIPT PETITION (PIL)/166/2012

MR. BHASKAR BHATTACHARYA and HONOURABLE MR.JUSTICE J.B.PARDIWALA Date : 22/04/2013

By this Public Interest Litigation, the writ-petitioner has prayed

The case made out by the writ-petitioner is that the

According to the petitioner, the power under Article 368 of the

WRIPT PETITION (PIL)/166/2012

According to the petitioner, it is settled law that a constitutional

WRIPT PETITION (PIL)/166/2012

appeared. The submissions of the Union of India may be summarized thus:

WRIPT PETITION (PIL)/166/2012

WRIPT PETITION (PIL)/166/2012

Representation of States in Parliament, and, The provisions of Articles 368 itself.

WRIPT PETITION (PIL)/166/2012

WRIPT PETITION (PIL)/166/2012

WRIPT PETITION (PIL)/166/2012

substantively or the procedural safeguards included in other clauses of Article 368.

WRIPT PETITION (PIL)/166/2012

(e) of the provision.

Therefore, the question that falls for determination before us is

In order to appreciate the aforesaid contention, it will be

profitable to refer to part IXB of the Constitution of India containing

WRIPT PETITION (PIL)/166/2012

Articles 243ZH to 243ZT, which are quoted below:

WRIPT PETITION (PIL)/166/2012

office bearer means a President, Vice-President, Chairperson, Vice-Chairperson, Secretary or

participation and autonomous functioning.

WRIPT PETITION (PIL)/166/2012

WRIPT PETITION (PIL)/166/2012

first proviso to clause[1].

Supersession and suspension of board management.-[1] Notwithstanding

WRIPT PETITION (PIL)/166/2012

WRIPT PETITION (PIL)/166/2012

Convening of general body meetings.--

Right of a member to get information.--