Maharashtra Board Class 12 Cooperation Chapter 4 Maharashtra Co operative Societies Act 1960 PDF Download

Maharashtra Co-Operative Societies Act 1960

4.1 Introduction

The source of Indian co-operative movement and its origin if given a thought is dated back to the first co-operative act of the year 1904. The co-operative movement in India was pioneered by the Government and it won't be an exaggeration to mention that the Government has made extreme efforts to develop the co-operative movement. The co-operative movement in India is originated out of its financial and social conditions.

The idea that the problems of the rural region can be addressed through co-operative medium. This was proposed by the then Government of Madras (Chennai). In the year 1882, Madras Government for addressing the agricultural needs of the State sent Sir Frederick Nicholson to Europe to study the possibility of establishing co-operative bank. In the year 1899, Sir Frederick Nicholson in his report suggested to establish rural co-operative societies on the "Raiffeisen" model of co-operative lines in Germany. During this period, Mr. Dupernex tried to establish rural banks in the Uttar Pradesh region. Later on, in the year 1900, a committee was set up under the leadership of "Sir Edward Law" to study on the introduction of co-operative societies and propose a suitable Act for the co-operative societies. On 23rd October 1903 Denzel Ibbetson prepared the draft of Co-operative Act. As per the recommendations of Sir Edward Law committee, first Credit Co-operative Societies Act was passed in 1904 by the Government of India. This was the beginning of Indian Co-operative movement.

As per the co-operative act of the year 1904, arrangements were made to form credit societies on the principles of co-operation. During the next 7 - 8 years, several shortcomings were observed in this Act. This was because except for credit supply societies, there was no provision to establish any other form of co-operative society. To remove the weakness of this Act, during the year 1912 second co-operative Act was enacted in India. In this Act, most of the points from 1904 act were retained. In this Act, it encouraged to establish different types of societies other than credit societies. This was one of the important feature of 1912 Act. As per the Co-operative Amendment Act of 1919, the subject of co-operation as a whole was transferred from the Central Government to State Government.

Teacher's Note

The first co-operative act in India was passed in 1904. In India, today many farmers use co-operative societies to sell their crops together and get better prices, like sugar factories or cotton societies in villages.

Exam Trick

Remember: 1904 = First Co-operative Act in India. 1912 = Second Act (allowed different types of societies). 1960 = Maharashtra Act. Just count: 1904, 1912, 1960 to remember the years easily.

Points to Remember

The first co-operative act was passed in India in 1904.
The second co-operative act was passed in India in 1912.
In 1919, co-operation was transferred from Central Government to State Government.
Maharashtra Co-operative Societies Act was passed in 1960.
Co-operative societies help rural people with money and agricultural needs.

4.2 Capital Raising Of Co-Operative Society

Capital is required for venturing in to any kind of business and to keep it running. The primary objective of the Co-operative Society is to enhance the financial welfare of its members. Similarly, the Co-operative Societies also requires capital to operate its business. Co-operative Societies requires capital for extending loan, providing various farm accessories, necessaries of life etc. to its members. For this, Co-operative Societies need to raise capital as per the provisions of the Act. Under Maharashtra Co-operative Society Act section 28 and 29 provisions have been made for Co-operative Societies to raise capital.

Teacher's Note

Capital means money. Co-operative societies need money to lend to farmers and run their business. Just like a shopkeeper needs money to buy goods, a co-operative society needs capital to work.

Exam Trick

Remember: Capital = Money needed. Co-operative gets capital from two sources only: Internal (from members) and External (from outside).

Points to Remember

Capital is money needed to run a business.
Co-operative societies raise capital from members and outside sources.
Maharashtra Act sections 28 and 29 allow co-operative societies to raise capital.
Capital is used for loans, farm supplies, and daily needs of members.
Without capital, a co-operative society cannot operate.

4.3 Sources Of Capital Raising Of Co-Operative Societies/Financial Sources

Co-operative society requires finance to achieve the determined objectives. Co-operative society prominently raise the finance through two sources.

A) Internal sources
B) External sources

Internal sources include: Share capital, Entrance fees, Reserve fund, Members deposit
External sources include: Non-members deposit, Loans and advances, Issue of debentures, Government grants and aids, Donations and Gifts

A. Internal Sources

From the point of view of co-operative society internal sources are very important because due to such sources capital raised through internal sources, is permanent and long-term capital. A huge amount of capital is raised through internal sources which helps the society to enjoy independence and ensures financial stability. The capital is raised by the members in the co-operative society through internal sources. It is not mandatory to return such capital raised through such sources till the membership. Such capital as compared to external sources is cheaper. Following are the sources of raising capital through internal sources.

1) Share Capital

Share capital is the prime financial source of raising internal capital of co-operative society. It is the own capital of the society. Share is the smallest part in the total share capital of the society. Capital raised through selling shares is called share capital. According to the business forms, the face value of shares is decided. What should be the face value of shares is mentioned in the bye-laws of the society. An individual is more important than the share capital in the co-operative society. According to the share capital the credit of co-operative society is decided. The person who holds the share is known as shareholder. The rules of raising the share capital is mentioned in the bye-laws of the co-operative society accordingly the share capital is collected. The authorized share capital is mentioned in the bye-laws of the co-operative society.

Share capital remains till with the society till its existence. A member cannot purchase shares more than 1/5th of the total paid-up share capital or shares of Rs. 5,00,000 whichever is less. State government, Zilla parishad and panchayat samiti are exceptional to it however state government Can decide to increase the limits of shareholding by publishing the notification in the official gazette. Shareholders are the owners of the co-operative society. Co-operative society raise the funds by issuing the shares to the members. In a co-operative society share capital is collected as per the rules.

Features Of Share Capital

1. Selling Of Shares In Work Area: The working area limit of the co-operative society is fixed. Individuals residing in the working area of the co-operative society can purchase the shares, individuals residing out of working area can't purchase shares of the co-operative societies. Persons working in specific business and comes together with same objectives can purchase shares. Due to this there is limitation on sell of shares.

2. Limitation On Shareholding: A member cannot purchase shares more than 1/5th of the total paid-up share capital or shares of Rs. 5,00,000 whichever is less. This limit is also mentioned in the bye-laws of the society. Co-operative society works on democratic principles. If there is no restriction on shareholding then the powers and wealth of the society will be concentrated among the few peoples in the society which will take away the society from their motto of rendering services. Moreover, the co-operative societies are formed for the benefit of weaker section of the society so to include more and more people in the co-operative societies, this provision is made in the act.

3. Restriction On Share Transfer: In a co-operative society member cannot freely transfer or sell their shares to others for this permission of the managing committee is necessary. Restrictions are levied on transfer of shares in co-operative society. The members cannot sell the shares beyond the fixed price. The member willing to transfer the share should be a member of a co-operative society for minimum 1 year. Instead of that member cannot transfer the share.

4. Protection Against Cessation Of Shares: The court cannot cease the shares of a member of co-operative society. So, they get legal protection due to the act. To protect the capital in the co-operative society and the Investments made by the members as well as to promote the Co-operative movement special concessions is provided by the government. Co-operative societies members a) share capital b) funds raised through saving account c) amount invested in debentures of a co-operative society etc. is not eligible to be ceased by the order of the court.

Teacher's Note

A share is like a small piece of ownership in a co-operative society. When you buy a share, you become an owner. Like in a school, if 100 children together form a co-operative to sell books, each child gets one equal share.

Exam Trick

Remember: Share = Ownership. Shareholder = Owner of the society. Maximum shares a member can buy = 1/5th of total paid-up capital or Rs. 5,00,000, whichever is LESS.

Points to Remember

Share capital is the main internal source of capital.
A share is the smallest part of total share capital.
Shareholders are the owners of the co-operative society.
A member cannot hold more than 1/5th of total paid-up share capital.
Shares cannot be freely transferred without permission of managing committee.

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