Section 91 v/s Section 101 of The Maharashtra Co-operative Societies Act 1960 for Recovery of Dues of the society from Defaulters

Co-operative Guru Shri P. Y. Rathod states that the Co-operative movement has been officially functioning in the State of Maharashtra since last 95 years or so. Essentially, the Co-operative movement is based on Co-operation between its members. Unfortunately however, it is human nature to dispute and so disputes are rather commonplace among the members. Thus, the importance of the Maharashtra Co-operative Societies Act 1960 cannot be undermined. It is primarily concerned with the settlement of such disputes.

Shri P. Y. Rathod further adds that the Disputes, relating to the affairs of Co-operative societies, were required to be settled by some authority in which the powers under the Maharashtra Co-operative Societies Act 1960 (MCS Act) were required to be vested so that decisions in such cases could be made. The objective of creating separate judicial machinery for disputes of Co-operative societies was to provide justice to the aggrieved parties quickly, independently and more economically. The machinery so set up was also intended to be easily accessible to the disputing parties.

Initially, when there were fewer disputes between the members, arrangements were made to refer the matters to the Registrar's nominees. They were either pleaders or advocates or persons, sufficiently qualified in the field of Co-operative law. Gradually, several changes were made in this process says Shri P. Y. Rathod.

Shri P. Y. Rathod further states that finally, in 1974, when he was working in the Co-operative department Section 91-A of the MCS Act 1960 was inserted and Co-operative Courts were established in certain territories to deal with the number of cases, then pending in this area. He further adds that even though the Co-operative Courts were established in 1974, the disputes were first required to be referred to the Registrar in order to decide whether the said dispute existed within the meaning of the Section & then it were subjected before the Co-operative Court. He further recollects and states that in that era there was one Office of the Registrar which was formerly known as “India Gate” and different wards were not formed.

Shri P. Y. Rathod states that Section 91 of the MCS Act 1960 confers exclusive jurisdiction on Co-operative Courts to decide the disputes between parties referred to in section. It prescribes the jurisdiction of ordinary civil courts to decide such disputes between the parties referred to in the said section.

He further states that Section 101 of the MCS Act 1960 contemplates a recovery of the amount due to the society in a summary manner with regards to certain societies. The different procedures that are followed under these two sections often conflict with one another. Societies and Co-operative banks are interested in recovering amounts, due from the members, by adding sureties as parties u/s 101 of the MCS Act 1960. The reason for this is that a certificate can be obtained from the Registrar as per the provisions of the MCS Act 1960 without a full-fledged trial. Thus, the procedure for the recovery of money due to a society or bank is comparatively easy & speedily disposed off.

Unfortunately, often Co-operative Societies and banks, in order to defraud their creditors and to expedite their claims from borrowers, file proceedings under Section 101 before the Registrar. The reason is that this section gives relief quickly and without any full-fledged inquiry. However, this practice is prejudicious to the members of the society.

Before examining the anomalies of different provisions of this Act, let us understand what a dispute, under the MCS Act 1960, essentially is says Shri P. Y. Rathod.

Section 91 of the MCS Act 1960 refers to a dispute between the society or its past or present servant, nominee, or heir or legal representative of any deceased officer or a member, past member, claiming through a member of past member of a deceased member of society. A dispute touching the constitution or conduct of a general meeting or business of the society can be decided u/s 91 of the MCS Act 1960. The provisions of section 91(1)(d) provide for a surety of a member, as one of the parties to the dispute, and therefore, even though the surety is not a member, dispute could be filed against the surety for recovery of dues. For any such dispute, the matter can be taken to the Co-operative Court.

v         Section 101 of the MCS Act contemplates a recovery of the amount due in a summary manner and the power is given to the Registrar to issue a certificate for the amount due by making a summary inquiry on the basis of the affidavits, filed by the respective parties. (i.e. an application is filed by the disputant and the respondent simply files a written reply to it). On the other hand, section 91 prescribes a full- fledged trial in the Co-operative court, with all the ingredients of a trial e.g. cross-examination of witnesses, appreciation of evidence, interpretation of documents etc.

v   Under section 91, an appeal lies to the Co-operative Appellate Court whereas under sec. 101 there is no provision for appeal. However, a revision can be made to the Divisional Joint Registrar.

v    In an appeal u/s 91, there is an appreciation of evidence whereas in a revision, there is no possibility. The joint Registrar simply reads the order and if he finds any anomaly he revises it. Thus, the procedure is very arbitrary and depends upon the subjective satisfaction of the authority.

v      Often, the claims of huge amounts are decided on the basis of the affidavits and certificates. These claims are decided without testing the validity of documents like loan bonds, promissory notes etc. Further, it involves the interpretation of provisions of complicated property laws.

v    Under section 91, the court has full discretion to stay the entire decree, whereas under Section 101, fifty percent of the award amount that is recoverable has to be deposited in the court. Only then will a revision can be entertained. Thus, even if the aggrieved person has a good case on merit, if he is not in a position to deposit 50% of the amount due, he will be deprived of the right to file revision.

v   The proceedings under Section 91 are judicial proceedings and form a substantive remedy, provided by law. On the other hand, proceedings under Section 101 are quasi judicial and provide a summary remedy, under law.

v   In view of the above conflict between Section 91 and 101 of the MCS Act 1960, the Full Bench of the Co-operative Appellate Court Bombay, in Sangli Urban Co-operative Bank Limited v/s. Nandkumar Prashuram Prabhudesai ( 1994 C.T.J. 653) made certain observations, which are very relevant while entertaining applications u/s 101. The salient points are mentioned below:

v   Under the provisions of section 101, no certificate can be issued against the surety. However, in case such a certificate is issued, it would not debar a surety from challenging the statement of accounts in a proceeding u/s 91 of the MCS Act 1960.

v   A member or a surety can file a dispute against the society for settlement of accounts and such proceeding is not barred because of the provisions of section 101 of the MCS Act 1960.

v   However, the execution proceedings, started on the basis of a certificate issued u/s 101, cannot be interfered within a proceeding u/s 91.

v   The claims by the Co-operative Society for recovery of its dues against the members and surety of a member, based upon the execution of documents as well as on the basis of statement of accounts, are maintainable u/s 91 of MCS 1960.

In spite of the above observations made by the Full Bench, often Co-operative banks and societies take recovery of the amount due on the basis of documents before the Registrar u/s 101. Further, the amendment to sec. 154, dated: 23-8-2000 puts the restriction that no revision shall be entertained unless fifty percent of the amount due is deposited. Further, it takes away the valuable right of the surety to file a revision even if the order of the Registrar is bad.

However, as this judgment is given by the Co-operative Appellate Court, it has only a persuasive value. It cannot be considered to be a law. It is merely a guideline for the subordinate Co-operative Appellate Courts. Contradictions between these sections can be solved only by a judgment by the Hon'ble Bombay High Court or the Supreme Court. In the absence of such a ruling by the higher authorities, serious cognizance of the full-bench judgment of the Co-operative Appellate Court should be taken concludes Shri P. Y. Rathod.

Co-operative Guru
Ex- Co-operative Officer, Grade (I).
Registrar of Co-op Societies,
Administrator & Enquiry Officer,
Election & Authorised Officer
Govt. Certified Auditor & Tax Advisor
 Co-operative Societies, Mumbai & Thane Division.