Section 79 of MSCS Act, 2002 : Section 79: Inspection Of Multi-State Co-Operative Societies

Explanation using Example

Imagine that there is a multi-State cooperative society named "GreenFarm Co-op" that operates in several states and is affiliated with a federal cooperative named "AgroFed Union." Several members of GreenFarm Co-op have raised concerns about potential mismanagement and financial irregularities within their society. A group of members, constituting more than one-fifth of the total membership, come together and request the Central Registrar to inspect GreenFarm Co-op to ensure its compliance with cooperative principles and financial integrity.

In response to this request, the Central Registrar issues a notice to GreenFarm Co-op informing them of the impending inspection, scheduled to take place 15 days from the date of the notice. This notice period is in accordance with the requirement that the society be given not less than fifteen days' notice before an inspection.

On the day of the inspection, the authorized inspector arrives at GreenFarm Co-op and is granted full access to the society's books, accounts, and financial documents. During the inspection, the inspector discovers that there are indeed serious irregularities in the financial records. As a result, the inspector takes custody of certain documents and verifies the cash balance of the society.

Given the severity of the findings, the inspector, under the authority given by the Central Registrar, calls an immediate meeting of the board of directors to discuss the irregularities and to decide on corrective measures. Furthermore, considering the potential impact on the society's operations, the inspector decides that it is necessary to call a general meeting of all members to address the issues transparently and to involve the members in the decision-making process.

After the inspection is completed, a detailed report is prepared by the inspector, which includes the findings and recommendations. This report is communicated to GreenFarm Co-op within three months from the date of completion of the inspection, as required by law. The society is then expected to take appropriate actions to rectify the issues identified in the report.