Section 123 of The Multi-State Co-operative Societies Act, 2002
- (1)If in the opinion of the Central Government, the board of any specified multi-State co-operative society is persistently making default or is negligent in the performance of the duties imposed on it by this Act or the rules or the bye-laws or has committed any act which is prejudicial to the interests of the society or its members, or has omitted or failed to comply with any directions given to it under section 122 or that there is a stalemate in the constitution or functions of the board, the Central Government may, after giving the board an opportunity to state its objections, if any, and considering the objections, if received, by order in writing, remove the board and appoint one or more administrators, who need not be members of the society, to manage the affairs of the society for such period not exceeding six months, as may be specified in the order which period may, at the discretion of the Central Government, be extended from time to time; so, however, that the aggregate period does not exceed one year: Provided that in the case of a co-operative bank, the provisions of this sub-section shall have effect as if for the words "one year", the words "two years" had been substituted.
- (2)The Central Government may fix such remuneration for the administrators, as it may think fit and the remuneration shall be paid out of the funds of the specified multi-State co-operative society.
- (3)The administrator shall, subject to the control of the Central Government and to such instructions as it may from time to time give, have power to exercise all or any of the functions of the board or of any officer of the specified multi-State co-operative society and take all such actions as may be required in the interests of the society.
- (4)Save as otherwise provided in sub-section (5), the administrator shall, before the expiry of his term of office, arrange for the constitution of a new board in accordance with the bye-laws of the specified multi-State co-operative society.
- (5)If, at any time during the period the administrator is in office, the Central Government considers it necessary or expedient so to do, it may, by order in writing giving reasons therefor, direct the administrator to arrange for the constitution of a new board for such specified multi-State co-operative society in accordance with the bye-laws of such society and immediately on the constitution of such board, the administrator shall hand over the management of such society to such newly constituted board and cease to function.
- (6)Where a specified multi-State co-operative society is indebted to any financial institution, the Central Government shall, before taking any action, under sub-section (1) in respect of that society, consult the financial institution. Explanation.--For the purposes of sections 122 and 123, "specified multi-State co-operative society" means any multi-State co-operative society in which not less than fifty-one per cent. of the paid-up share capital or, of total shares, is held by the Central Government.
Summary
- It allows the Central Government to suspend or supersede the board of a specified multi-state co-operative society in cases of default, negligence, fraud, or stalemate.
- It permits the appointment of administrators to manage the society's affairs for a maximum period of six months.
- It mandates that the board must be given an opportunity to state its objections before any supersession or suspension order is made.
- It requires the Central Government to consult the relevant financial institution if the specified society owes money to it before taking supersession action.
- It specifies that the remuneration of the appointed administrators is paid out of the funds of the society.
Practical examples
FAQ
1. What is the maximum duration for which a board can be superseded under Section 123 of The Multi-State Co-operative Societies Act, 2002?
Under Section 123 of The Multi-State Co-operative Societies Act, 2002, the Central Government can supersede or suspend the board and appoint administrators for a period not exceeding six months.
2. Must the government consult any entity before superseding an indebted society under Section 123 of The Multi-State Co-operative Societies Act, 2002?
Yes, under Section 123 of The Multi-State Co-operative Societies Act, 2002, if the specified society is indebted to a financial institution, the Central Government must consult that financial institution before taking any action.
3. How are the administrators paid when appointed under Section 123 of The Multi-State Co-operative Societies Act, 2002?
Under Section 123 of The Multi-State Co-operative Societies Act, 2002, the remuneration of the administrators is fixed by the Central Government and paid out of the funds of the specified multi-state co-operative society.
Test yourself
Q1.Under Section 123 of The Multi-State Co-operative Societies Act, 2002, what is the maximum period for which the Central Government can appoint administrators to manage a superseded board?
Q2.Under Section 123 of The Multi-State Co-operative Societies Act, 2002, which of the following is a mandatory procedural step before the Central Government can issue a written order of supersession?
Q3.Under Section 123 of The Multi-State Co-operative Societies Act, 2002, who is responsible for paying the remuneration of the appointed administrators?
Q4.Under Section 123 of The Multi-State Co-operative Societies Act, 2002, how does a failure to comply with directions issued under Section 122 affect the board of a specified society?