CHAPTER XXIII
Co-operative Societies

               2321. Passes, Privilege Ticket Orders and Special Casual leave-: (i ) Special casual leave and special passes over the home and foreign lines are admissible to such railway servants as are members of managing committees of the consumer cooperative societies for attending the meetings of the managing committees including those of board of directors and sub-committees of the co-operative societies but not for attending meeting of the shareholders whether general, annual, ordinary or extra-ordinary. Special passes should not, however, be granted to the railway servants connected with the management of' consumer co-operative societies organised at different centres an the railways, for going out to make purchases from the wholesale markets.

            Railway employees who are managing committee member and office bearers of the Railway men's Credit /Consumer/Housing  Co-operative Societies and are posted outside the Headquarters of the societies when attending the Managing Committees, including those of Board of Directors and sub-committees of the Co-operative Societies may be allowed Special Casual leave upto a maximum of 15 days in a calendar year plus the minimum period required for the journeys to attend such meetings. 

            This is applicable to Railway servants who being members of the managing Committees of the Co-operative societies, have to remain absent from their duties on occasions enumerated below : �

(a)	to attend court in connection with co-operative matter;
(b)	to contact and settle matters with Registrar or other State officials at the instance of the Railway Administration;
(c)	to attend any special meeting which may be convened by the Railway Administration; and ;
(d)	to contact civil authorities for lifting of the weekly quota of fair price shops etc.
	(ii)	Privilege passes and privilege ticket orders that may be issued to the staff of the consumer co-operative stores are detailed in Railway servants (Pass) Rules, 1986.
	(iii)	Not more than one duty card pass may be granted to each retail society for its salesmen or managers where mobile van service is operated or up to places where sales depots or branches are located.

            Note-: In the case of Co-operative Credit Societies/Banks, special casual leave may be allowed as per actual requirements upto a maximum of 30 days in a calendar year. This increased limit would be applicable for attending meetings of the Managing committees and the Board of Directors but not for meeting of the sub-committees.

            (No. E (G)70 LEI/2 dt. 3-9-71)

             2322. Medical facilities� Free medical facilities as out-patients and in-door treatment as available in railway hospitals and dispensaries may be given to the staff of the consumer co-operative societies but at per capita basis in the case of members of their families, the per capita charge, being calculated on the basis of total expenditure on medical services incurred on railway servant and their families during the previous financial year.

             2323. Bye�law:- The  co-operative societies shall adopt the model bye-laws framed by the Railway Board in consultation with the Registrars of Co-operative Societies concerned, copies of which shall be obtainable from the Railway Administration or Co-operative Departments of the States.

Guiding Principles 

             2324. (i) The societies should not incur expenditure which is not in the interest of promotion of their stated objects and for the purpose set forth in the bye-laws particularly in view of the large number of concessions made to enable them to stand on their feet. The societies should, therefore, avoid all wasteful and unauthorized expenditure, e.g. making contributions to labour organisations or political bodies, giving farewell parties to outsider�s etc.

            (ii) With a view to strengthening their financial position, the consumer co-operative societies on railways should invest at least one-third of the reserve fund outside their business in Government securities or other approved forms of investment permitted by the rules farmed under the Co-operative Societies Act.

            (iii) In organising and running the societies, the following points need to be borne in mind:

(a)	They should not proliferate into number of .branches organised as �one-stop shopping facilities for the whole range of consumer needs."
(b)	A judicious selection should be made of items to be sold with emphasis on high-margin goods.
(c)	Close and constant watch should be kept on overheads which if unchecked, could erode into available margins, which are already low.
(d)	Maximum and minimum levels of stock should be prescribed in order to prevent over or under buying .
(e)	There should be a properly organised system of purchases based on reliable commercial intelligence and adequate expertise, a check on incoming material as regards quantity and quality and prompt, and effective system of stores accounting to keep a watch on inventories.
(f)	There should be a system of concurrent accounting and effective internal audit for detection as well as deterrence of mistakes and frauds.
(g)	A well defined budget should be prepared for setting up standards of performance.
(h)	There should be an experienced and alert management with a clear chart of responsibilities; who would be capable of inspiring confidence and enthusiasm and ensuring effective supervision at the floor and departmental level. This requited that management should be entrusted to men of integrity and proven experience in the line.
	(No. 70/E(Coop)/.9/ 15-dt. 1-7-1970)

             2325. The societies should not be allowed to bid at auction sales of lost and unclaimed property on railways nor should they be permitted to work as supply contractors for railways requirements. There is however, no objection to such co-operative societies as have acquired a certain amount of stability and are in a position to offer service in an efficient manner, being permitted to supply provisions, groceries, cereals, pulses etc., to the railway catering establishment and canteens and they should be considered along with other purely on the basis of competitive prices and quality of material.

             2326. The system of selling goods through an outside agency should be discouraged as also the practice of employment of private agents on payments of commission to conduct the business of consumer societies. If any society functions in contravention of the above policy its recognition should be withdrawn and all facilities to it stopped. 

              2327. The consumer co-operative societies shall purchase and sell as far as possible, store of established quality e.g. Agmark edible oil and ghee etc.

                2328. Registration under sales Tax Act.- The societies should get themselves registered under the respective Sales Tax Acts and the tax should be recovered from the purchasers or included in the selling price and paid to the respective state Government in accordance with the law and practice of the state concerned.

             2329. Divident.� A consumer society may not declare a dividend when it has sustained a loss in its working for a particular year.

             2330. Rebate.� The net profit earned by the society in any year shall be disposed of in accordance with the bye laws of the society. The society shall maintain a proper, and correct account of purchases made by every member and at the end of the year, consolidate the total amount of purchases in each cases . This account shall be utilised for calculating the share  of rebate earned by the member on the purchases he makes. Rebate shall be paid after the audited financial statements are passed by general meeting and only if there is a surplus left after making allocations to reserve fund, dividend etc., in accordance with the bye laws. If the dividend or rebate is not claimed for 3 years from the date it becomes due, it shall be forfeited to the reserve fund of the society. Rebate shall be paid at higher rate on cash purchases than on purchases made on credit. 

             2331. Restrictions regarding collection of minimum share capital:- No. restriction other than what may have been fixed statutorily or through executive instructions by the state Governments need be imposed by the railways on the consumer 'co-operative societies regarding the collection of minimum shares capital before the societies are recognised by the Railway Administration. 

               2332. Audit- (i) The audit of consumer co-operative societies should be done by the State Co-operative Departments. Normally, the audit should be completed within six months of the close of the co-operative year ending 30th June. The Railway Administrations should keep a watch on the progress in auditing the societies and where necessary approach the registrars of Co-operative Societies concerned for arranging timely audit. Any case of undue delay in completing the audit of societies should be brought to the notice of the Railway Board.

            (ii) In order to assist the auditors in the timely completion of audit, the railways should impress on the societies the need to keep their accounts up-to-date and to close them soon after the close of the co-operative year. They should also ensure through the agency of the welfare Organisation, including the Personnel Officers that the societies have done so and have kept their accounts ready for check by the auditors.

            (iii) Soon after the receipt of the audit report in each case, the Railway Administration should obtain two copies of the audited balance sheets and other final accounts (viz, statements of receipts and disbursements, trading and profit and loss accounts) from the societies concerned so as to facilitate a comparative study of the progress made by the societies during each year. One copy of these statements should also be submitted to the Railway Board for their information.

            (iv) The welfare Inspectors should check up during their visits to the societies whether the audit has been completed and audit reports received  by the societies. If so, they should anrrange for submission of the copies of the reports to the Railway Administrations on the spot. If not, they should meet the Assistant Registrar/ Auditor, and arrange for the timely completion of audit.

             2333. Progress Reports� The co-operative inspectors as well as the consumer co-operative societies should furnish their reports in regard to the organisation .and registration of new societies and supervision of the copies of the existing societies as the case may be to the Railway Administration concerned, who should prepare monthly reports in form No.86 of Appendix 9 on the basis of the above information and furnish the same to the Railway Board together with their own remarks about the general progress made by the consumer co-operative societies by the 10th of the month following that to which the report pertained.

             2334. Scale for paid establishment :- Standards to be followed ordinarily as regards the optimum size of the cooperative stores and the managerial personnel to be employed in each case are given below:-

(i)

A small store having a membership of at least three hundred but not exceeding one thousand, can be managed by a secretary-cum-manager with a committee of management for exercising supervesion and deciding policy matters;

(ii)

The bigger stores having a membership of over one thousand may require the services of a secretary and a manager to assist the governing body in managing the stores. The need for this will depend on the volume of business, the location of the clientele etc. If branches have to be opened at stations other than the headquarters, of the stores, staff for such branches will naturally have to be found separately. The emphasis should, however, be on economy in expenditure.

             2335. Training  of staff.� (i) Staff employed as managers and accountants should be got properly trained in the Co-operative Training Institute run by the Co-operative Department of the State in which the society is located. The cost of the training should  either be borne by the employee himself or by society concerned and the railways will not incur any expenditure on that account except in the matter of giving free passes to the employees. For this purpose, one set of passes of appropriate class should be issued either to the manager or the accountant of each society per year from the place of working up to the training centre and return.

            (ii) With a view to disseminating knowledge to the members of the Managing Committee of the Railwaymen�s consumer Co-operative societies and free flow of ideas of what is happening in one part of the country to such co-operative in other parts, Railway Administration should conduct �Co-operative Work-shops� at the divisional or headquarters level under advice to the Railway Board. Where it is decided to conduct a seminar on a state-wise basis, members of the managing Committee of a Co-operative society located in the contiguous area but on a different railway may be invited by mutual consent of the concerned Railways.

            Attendance in such workshop/meetings/seminars etc. organised by Railway Administrations is obligatory on the part of the railway employees and their absence from duty for the purpose would be treated �on tour�

            (No. 67/E (Coop)/23/l. pt. dt. 27-10-67:/E(Coop)/23/l. pt. dt 31.8.68: 67/E/(Coop)/23/1. pt. dt. 16.9.68.)

             2336. Quarters for staff.� Wherever quarters are provided to the employees of the consumer co-operative societies rent shall be recovered in accordance with the provisions of paragraphs 1961 of the Indian Railway Code of the Engineering Department. (Revised Edition 1982).

                2337. Deputation of Railway servants.� prior approval of the competent authority has to be taken whenever any railway servant is sent on deputation to work as paid secretary, manager, accountant etc., of a Co-operative store. The railway servant placed on deputation with a co-operative store will be on the usual "Foreign Service� terms and the requisite contributions towards leave, pension, provident fund, bonus, gratuity etc., will be paid by the co-operative societies concerned to the Railway Administration.

Note- The above provisions are also applicable in the case of  railway servants to railway employees Co-operative credit, societies/Banks and paid secretaries or managers.

             2338. Protective measures against defalcation and thefts:- (1) Defalcation- The following measures shall inter alia be taken to check defalcation of money in Co-operative stores:-

(i)	Adequate security from the societies' staff handling cash and property should be obtained;
(ii)	Proper accounts should be maintained from day to day and examined in the monthly meetings of the managing committee of the societies;
(iii)	Once a week or fortnight, proper accounts should be obtained by the managing committees from the directors or office bearers who have taken advances for making purchases of stocks.

              (2) Thefts.� Co-operative societies should make adequate arrangements for watch and ward by appointing a night watchman whose work should be supervised and checked by the office bearers periodically. Where the doors and windows of buildings provided by the Railway Administration require repairs or replacement, the matter should be brought to the notice of the administration without delay. 

Co-operative Credit Societies /Banks 

             2339. The main object of Co-operative Credit societies is to encourage habit of thrift among members rather than provided loans to them at reasonable rate of interest. The rates of subscription recoverable from subscribers every month, rate of interest on the subscription, withdrawal of sum from compulsory thrift deposit, re-admission of a member of a Co-operative  Credit Society, penal rate of interest in case of compulsory monthly subscription falling in arrears, deduction of amount due to a Society from the subscription at the time of making an advance from the compulsory deposit etc; should be as per bye- laws of respective registered Co-operative Credit societies /Banks 

             2340. The following facilities are extended, to co-operative credit societies and banks-

(i)	recovery of loans, bank deposits, and compulsory thrift deposits through the salary bills of the staff concerned;
(ii)	privilege passes and privilege ticket order for the employees of the societies available over    both home and foreign lines as per scale laid  down in Railway Servants (Pass) Rules 1986.
(iii)	special casual leave and passes for members of the managing committee to attend meetings as laid down in paragraph 2921;
(iv)	provision of accommodation at reasonable rent in railway premises in accordance with the provision contained in para 1960 of the code of Engineering Department (Revised edition of 1982);
(v)	free publication of their notices in the weekly gazettes;
(vi)	medical facilities in railway hospitals and health units to the staff and to the members of their families at a per capital charge, calculated on the basis of total expenditure on medical services incurred on the railway servants and their families during the previous financial year.

             2341. Co-operative credit societies/banks should pay for railway accommodation under extent orders, as well as per for telephones, electricity, water, etc.

             2342. In regard to the services rendered under item (i) of paragraph 2340, the Co-operative credit societies and banks will pay for such recoveries as are made from the salaries /wages of railway servants concerned towards repayment of loans including interest thereon only and not in respect of deposits and mutual retirement benefit funds etc. For this purpose, the following standardised basis of charges has been laid down.

Societies/ Banks-

            Note:- Monthly bills should be prepared against the societies concerned for the work done for them. These recoveries can, however, be waived in respect of those societies which setup a welfare fund in accordance with the rules framed for the purpose.

               2343. Prior sanction of the Railway Board should be taken if any credit society is to be organised on the Railways.

             2344. Co-operative Housing societies:-Railway servants whose income range between Rs. 701 and 1500 p.m. or Co-operative Housing Societies consisting of such Railway servants are eligible for loan under the low Income Group Housing Scheme for construction of houses. These loans will be available to them through the Head of Department. Not more than one loan or advance can be obtained by Railway servants from any Govt. source. In order that Railway servants might take advantage under either of these  schemes, it would be desirable for Co-operative Housing Societies to acquire suitable land and allot it to members after development. In this connection, the Societies might also take the help of state Governments which have been advised by the Central Government to try to arrange, where possible, to acquire suitable sites and sell them after development to intending builders.

F. NO. 86/CR/IREM/Ch. XXIX

MISCELLANEOUS

             2345. Levy of income tax on profit:- (i) No tax is payable on the profits and gains of business carried by  Railway men's Co-operative Credit societies /Banks as they are engaged in providing credit: facilities to their  members.

            (ii) (a) Consumer Co-operative Societies will have to pay income tax in respect of their profits and gains of business which is in excess of Rs. 40,000 in any years.

            (b) Where a Consumer Co-operative Society makes bulk purchases of commodities which it sells to its members the rebate passed on to the members on the value of purchases made by them during a year will be treated as deferred discounts and allowed as a deduction in computing the taxable income.

            (Authority�Board's letter No. 87/E(Co-op)25/2 dt. 5.1.89)