Judgment :- K.J. Joseph J. The questions which need my answer for deciding this case, in the light of the arguments, are: (a) Whether the bye-laws of a co-operative society registered under the Kerala Co-operative Societies Act can be amended retrospectively so as to increase its share capital and regularise the membership of the persons from the date of their admission? (b) Whether such persons who were admitted without enhancing the authorised share capital can participate and vote in the general body meeting for such retrospective amendment of the bye-laws? 2. The facts of the case, in brief, are as follows: the petitioner is a member of the first respondent co-operative bank. As per the bye-laws (Ext. P2) of the bank, its authorised share capital is Rs. One crore, made up of A,B and C classes. A Class shares consist of Rs. 100/- each and the total number of shares available is 75,000/-, making the total share value as Rs. 75,00,000/-. According to the petitioner, the bank had paid up the entire shares under A Class as on 21.3.1994 and thereafter, it cannot legally admit new members without increasing the share capital by making an amendment of the bye-laws of the bank to that effect. Without amending the bye-laws of the bank and increasing the share capital, the board of directors of the first respondent bank enrolled more than 3,000 persons as A Class members. Such inclusion of members, it is contended, is illegal and, therefore, such persons cannot have the privilege of other members who were admitted within its authorised share capital. The bank published Ext.Pl notification dated 12.10.1995 informing the members that a special general body meeting would be convened on 29.10.1995 to get Bye-law 14 of Ext. P2 amended enhancing the share capital from Rs.75,000/- to Rs. Two Crores. By Ext.P1, all members admitted before and after 21.3.1994 were invited to participate and vote at the general body meeting. According to the petitioner, allowing those persons who were enrolled after 21.3.1994 to participate in the general body meeting and to the cast their votes for the proposed amendment to the bye-laws with retrospective effect so as to regularise their illegal admission after the share capital had been paid up is illegal. According to the petitioner, allowing those persons who were enrolled after 21.3.1994 to participate in the general body meeting and to the cast their votes for the proposed amendment to the bye-laws with retrospective effect so as to regularise their illegal admission after the share capital had been paid up is illegal. Stating these facts, the petitioner filed Ext.P3 representation before the second respondent and requested him not to allow the bank to convene the special general body meeting with those persons who were enrolled as members after 21.3.1994. Though subsequently Ext.P4 was also sent, the second respondent did not take any action in the matter. Therefore, he moved this Court by filing the original petition to restrain the first respondent from convening the general body meeting on 29.10.1995 and to direct the second respondent to consider and dispose of Exts. P3 and P4 representations and till such time, not to allow the bank to proceed with the general body meeting. 3. After hearing counsel for the petitioner and the Government Pleader on behalf of the second respondent, this court, as per the order dated 27.10.1995, prevented the first respondent from convening the special general body meeting on 29.10.1995. On notice from this Court, the respondents entered appearance and counter affidavits were filed by respondents 1 and 3. 4. In the counter affidavit, it is stated by the first respondent that as early as on 21.3.1994 itself, the shares under A Class had been fully paid up and taking into consideration the best interest of the bank, it decided to have a special general body meeting convened to consider the question of amendment to Bye-law 14 of Ext. P2 with retrospective effect from 21.3.1994 so as to regularise the admissions made after 21.3.1994 and accordingly published Ext.P1 notification. The term of office of the present committee is to expire on 28.2.1996 and the election process commence at least sixty days prior to that date. Since loans had already been sanctioned and disbursed to most of the members enrolled after 21.3.1994, in the interest of the bank, the bye-laws of the bank were to be amended with retrospective effect and if such amendment is not made, the interest of the bank would be jeopardized. Since loans had already been sanctioned and disbursed to most of the members enrolled after 21.3.1994, in the interest of the bank, the bye-laws of the bank were to be amended with retrospective effect and if such amendment is not made, the interest of the bank would be jeopardized. It was with that object, the bank decided to convene a special general body meeting on 29.10.1995 to get the bye-laws of the bank amended with retrospective effect, for which, it is contended, the bank has got every right under the provisions of the Kerala Co-operative Societies Act and the Rules made thereunder. 5.In the counter affidavit filed by the third respondent, while denying the entire allegations made in the original petition, it is stated that the shares under A Class had already been paid up as early as 21.3.1994 and without noticing that fact, new members were admitted and loans advanced. Therefore, it became necessary to amend the bye-laws with retrospective effect to safeguard the interest of the bank. 6.Heard both sides. 7. Section 16 of the Act deals with persons who may become members of cooperative societies. Rules 16 of the Rules deals with the conditions to be complied with for admission for membership. Under Rule 16(1)(c), no person shall be admitted as a member of a society unless he has fulfilled all other conditions laid down in the Act, Rules and the Bye-laws. Ext.P2 is the bye-laws of the first respondent bank. The share value under A class is stated in Ext. P2 as Rs. 100/-. Under Rule 20, payments to acquire right of membership shall include (i) admission fee, (ii) subscription to share capital, and (iii) any other payments required to be made under the bye-laws. The above statutory provisions would make it clear that to become a member of the society, the person admitted to membership shall pay admission fee and subscription to the share capital. Ext. P2 bye-laws would show that to become a member of the bank, one shall pay the share amount and then only he can become a member. As per Bye-law 14 of Ext.P2, the share capital for A Class is Rs. 75,00,000/-. Admittedly, the entire share capital for A C lass had been paid up and subscribed by 21.3.1994. the share capital for A Class has not been increased so far by amending the bye-laws of the bank. As per Bye-law 14 of Ext.P2, the share capital for A Class is Rs. 75,00,000/-. Admittedly, the entire share capital for A C lass had been paid up and subscribed by 21.3.1994. the share capital for A Class has not been increased so far by amending the bye-laws of the bank. Admittedly, in this case, the board of directors enrolled persons to A Class membership without amending the bye-laws and increasing the share capital. It was for that purpose, Ext.Pl notification was issued. So far, the amendment to Bye-law 14 has not been made. 8. Under Rules 16 and 20 of the Rules, payment of share amount is an essential condition for membership. Unless the share amount is paid, one will not become a member. Approval of the application by the committee does not make any person a member of the society. Holding so, in the decision reported in Krishnan Ezhuthachan v. Assistant Registrar (1990 (1) K.L.T. 695), this Court held thus: "Rule 16 is mandatory in its terms, that no person shall be admitted as member unless he complies with the conditions prescribed therein. He has to file an application in writing in the prescribed form. His application should be approved by the committee. He should also fulfill the conditions laid down in the Act, Rules and Bye-laws. It is evident therefore, that it is not the mere application in writing, or its-approval by the committee, that ipso facto makes the applicant a member. He has also to fulfill the other conditions laid down, inter alia, in the bye-laws. If the bye-laws prescribe that he should execute a declaration or an agreement or that he should pay the share money and application fee, those conditions have to be fulfilled before he becomes a member. Rule 16 is imperative in its terms. All the conditions prescribed have to be cumulatively complied with, and if there is non-compliance with one or more, that postpones admission to membership till that condition is complied with. Application fee is the fee paid for consideration of the application by the Board of Directors. The share money is the vinculum which binds the member to the society and it is the payment of that which entitles the applicant to exercise right as a member. Application fee is the fee paid for consideration of the application by the Board of Directors. The share money is the vinculum which binds the member to the society and it is the payment of that which entitles the applicant to exercise right as a member. The fact that share money becomes payable on allotment does not indicate any vesting of membership on allotment, but only enables the person to acquire membership on fulfilling the other conditions. The declaration is intended to ensure that he shall perform certain obligations. Payment of share money, whether to a co-operative society or to a company, is an important ingredient in relation membership of the society. The member's rights are determined with reference to the share money, and the class of membership to which it pertains. Payment of share money is thus an essential condition precedent for membership. Unless the share money is paid, the applicant does not become a member " The above dictum was approved by a Division Bench of this court in the decision reported in Vasavan v. District Coir Project Officer. (1993(1) K.L.T 293). 9.Admittedly,in this case, all those persons who were admitted after 21.3.1994 as A Class members, are not entitled to pay the share capital since by then, the entire share capital under A Class had already been paid up. The committee in office was not legally justified in issuing share certificates also to those persons who were enrolled after 21.3.1994. Only after the amendment so proposed with retrospective effect and registration of that amendment as required under Section 12(2) of the Act, such persons could be said to be admitted to the membership of the bank. Till such time, it would be illegal and improper to consider them as members of the bank, since they were admitted against the specific provision contained in the Rules and the Bye-laws of the bank. Till such admissions are regularised by retrospective amendment of the bye-laws, those persons are not entitled to exercise the rights conferred on a member of the bank admitted within the authorised share capital. Even though the committee in office approved the application submitted by those persons as required under Rule 16(b) of the Rules, they cannot be legally enrolled to the membership of the bank without payment of the share amount as required under Rule 16(1)(c) and the bye-laws of the bank. 10. Even though the committee in office approved the application submitted by those persons as required under Rule 16(b) of the Rules, they cannot be legally enrolled to the membership of the bank without payment of the share amount as required under Rule 16(1)(c) and the bye-laws of the bank. 10. Under Section 11 of the Act, subject to the provisions of the Act and the Rules, a society may, by an amendment of its bye-laws, change the form or extent of its liability. Section 12 says that no amendment to any bye-law of a society shall be valid unless such amendment has been registered under the Act. Section 12(3) says that Registrar shall forward to the society a copy of the registered amendment together with a certificate of registration signed and sealed by him, and such certificate shall be conclusive evidence that the amendment has been duly registered. Rule 9 of the Rules deals with the procedure regarding amendment of bye-laws, which reads: "Every proposal for amendment to the byelaws of a society shall be made only by a resolution passed by a 2/3 majority of the members present and voting. Such resolution shall be forwarded to the Registrar within one month from the date- of the general body meeting at which such amendment was passed provided that the Registrar may condone the delays, if any, for sufficient cause". In exercise of the above statutory obligation, the first respondent bank took steps to convene a special general body meeting to amend Bye-law 14 of the bye-laws of the bank. Unless and until such amendment is made, no legal right confers on those persons who were admitted to the bank after 21.3.1994. It is perfectly open for the general body of a co-operative society to amend its bye-laws with retrospective effect if the said amendment is for the best interest of the society and for safeguarding its objects. It is the prerogative right of the general body to accept or reject the amendment proposed. A co-operative society is not different from a company. The only limitation on the power of the general body to amend its bye-laws, either retrospectively or prospectively, is that it should conform to the requirements of Section 11 of the Act. The basic principle, which underlies Sections 7,9,12 and 27 of the Act is that the power to make and amend bye-laws belongs to the society. The only limitation on the power of the general body to amend its bye-laws, either retrospectively or prospectively, is that it should conform to the requirements of Section 11 of the Act. The basic principle, which underlies Sections 7,9,12 and 27 of the Act is that the power to make and amend bye-laws belongs to the society. In this context, it is pertinent to consider Section 13 of the Act, which specifically states that an amendment of the bye-laws of a society shall, unless it is expressed to come into operation on a particular day, come into force on the day on which it is registered. Thus, it is legally possible for the general body of a society to prescribe that the amendment to the bye-laws of the society should come into force with retrospective effect, provided it is in the interest of the society. Ordinarily, an amendment comes into force on the date on which it is registered by the Registrar under Section 7 of the Act. But, in extra ordinary circumstances, it is for the general body to frame the bye-laws with retrospective effect and there will be no jurisdiction for the Registrar not to register the bye-laws with retrospective effect. Neither the Act nor the Rules limits the authority of the general body in the matter of amendment of bye-laws to make it prospectively only. The amendment should conform to the provisions of the Act and the Rules and must be made bona fide and in the interest of the society. It has been held so by this Court in the decision reported in Sekharan v. Joint Registrar (1993(1) KLT. 538) and by a Division Bench of this court in its recent decision in O.P.No. 12312 of 1993 dated 25.1.1995. Thus, it must be held, the bye-laws of a co-operative society can be amended retrospectively to enable the society to increase its share capital and regularise the admission of persons as members of the society from the date of their admission. 11. then comes the next point viz. Question (b). An amendment to the bye-law can be made only in the general body meeting of the society. Section 2(k) of the Act defines 'general body meeting' thus:- a meeting of the members who are entitled to vote in the affairs of the society. 11. then comes the next point viz. Question (b). An amendment to the bye-law can be made only in the general body meeting of the society. Section 2(k) of the Act defines 'general body meeting' thus:- a meeting of the members who are entitled to vote in the affairs of the society. 'Member', as defined in Section 2 (1) of the Act, means, a person joining in the application for the registration of a cooperative society or a person admitted to membership after such registration in accordance with the Act, the rules and the bye-laws and includes a nominal or associate member. Thus, in a general body meeting, those who are admitted to membership of a society alone are entitled to participate. As found earlier, unless the share money is paid, the applicant does not become a member of the society. Therefore those persons who are legally prohibited from paying the share money do not become members of the society and, they are not entitled to participate in the general body meeting. 12. admittedly, in this case, so far the bye-laws of the society have not been amended and without amending the bye-laws with retrospective effect and registering it by the Registrar, nobody admitted to A Class membership after 21.3.1994 can be invited for the general body meeting. Those who were admitted after 21.3.1994 cannot have the privilege as a member who was admitted to membership within the share capital of the society does have, in accordance with the Rules and the bye-laws. Such persons become members only when the general body decides to have the bye-laws amended increasing the share capital with retrospective effect and registered. Till such a course is adopted, those persons who were admitted by the committee in excess of the share capital, as stated earlier, are not entitled to claim the privilege of a member. Under Section 19 of the Act, no member of a society shall exercise the rights of a member unless he has made such payments to the society in respect of membership or has acquired such interest in the society, as may be prescribed by the rules or the bye-laws. Rule 20 of the Rules makes the position clear that the subscription to share capital along with admission fee and any other payments required to be paid under the bye-laws is the sin-qua-non for acquiring the right of a member. 13. Rule 20 of the Rules makes the position clear that the subscription to share capital along with admission fee and any other payments required to be paid under the bye-laws is the sin-qua-non for acquiring the right of a member. 13. As stated earlier, the bye-laws of a society constitutes a contract between the society and its members in respect of their rights qua members. Any proposal for amendment must, therefore, have the sanction of its general body as prescribed under Rule 9 of the Rules. An enrolment made to the membership of a society after its entire share capital is fully paid off, is unauthorised and destructive of the provisions of the bye-laws. It is the prerogative right of the general body of a society either to refuse or approve the amendment either with prospective or retrospective effect. If the general body does not approve the amendment, enrolment after the entire share capital is paid off will make such admission illegal. Therefore, I am of view that such persons who were admitted to the first respondent bank after its entire share capital is paid off are not entitled either to participate in the general body meeting or to exercise vote in such meeting. 14. This court, in its decision reported in Janardhanan v. Joint Registrar (1990(1) K.L.T. 530), had occasion to consider the effect of enrolment of members 'on the basis of permissive sanction by the Registrar after the entire share capital of the society is paid off and found that the Registrar has no power to grant permissive sanction for amending the bye-laws without following the procedure laid down in Section 12 read with Rules 9 and 180 of the Rules and that those who enrolled on the basis of the permissive sanction are not entitled to participate in the general body meeting or to exercise votes in such meeting, even though permissive sanction accorded by the Registrar is there. That being the position, there can be no legal basis to permit those persons who were admitted to membership after the entire share capital of the bank is paid off and without any amendment is made to that effect in the bye-laws of the bank. Even under Rule 180, what is prohibited under the bye-laws cannot be allowed to be performed. Even under Rule 180, what is prohibited under the bye-laws cannot be allowed to be performed. Where the bye-laws are grossly violated or departed from, no exercise of powers under Rule 180 by the Registrar is contemplated. Admittedly, in this case, so far no amendment to Bye-law 14 has been made by the general body and got it registered by the Registrar under Section 7 of the Act. In its absence, the members who were admitted after 21.3.1994 cannot be allowed to participate and vote in the general body meeting. Therefore, I see no substance in the contention raised by counsel for the first respondent, based on Rule 16(3) and (4) of the Rules, that persons admitted to membership after 21.3.1994 can be removed only after complying with the procedure prescribed under the Rules. The above provision is applicable only to those who were admitted in accordance with the Act, Rules and the Bye-laws and not in respect of those who were admitted in violation of the provisions of the Act, Rules and the bye-laws. 15. For all these reasons, it must be declared that there is no legal basis for the first respondent to allow those persons who were admitted to membership after 21.3.1994 to take part in the general body meeting to amend Bye-law 14 of Ext. P2 and that if the amendment is made by the general body without allowing those persons who were enrolled after 21.3.1994 to take part in the meeting, it will be perfectly open for the Registrar to approve the amendment and register the same with retrospective effect, thereby regularising the admissions made to A class membership after 21.3.1994. Till then, I declare, those persons who were enrolled to A Class membership after 21.3.1994 would not be entitled to exercise any rights conferred on members who were admitted within the authorised share capital, including the right to participate in the general body meeting and to exercise votes in such meetings. The first respondent is directed not the conduct any general body meeting as proposed in Ext. P1 allowing the persons who were admitted to its membership after 21.3.1994 to participate in the meeting. The original petition is allowed, to the above extent. But I make it clear that it will be open for the first respondent to convene a special general body meeting to consider the proposed amendment to Bye-Law 14 of Ext. P1 allowing the persons who were admitted to its membership after 21.3.1994 to participate in the meeting. The original petition is allowed, to the above extent. But I make it clear that it will be open for the first respondent to convene a special general body meeting to consider the proposed amendment to Bye-Law 14 of Ext. P2 in accordance with law and in the light of the findings arrived by this court herein above. No costs.