Model Bye-laws – Salient feature (Milk Producers’ Cooperative Society and Union):

Model Bye-laws – Salient feature (Milk Producers’ Cooperative Society and Union):

The legal frame work for cooperatives consists of (1) the Cooperative Societies Acts passed by the legislatures (2) the rules framed under the Cooperative Societies Act to carry out the purpose of the Act and  (3) the bye-laws adopted by the cooperatives and registered by the Registrar Cooperative Societies.

Bye-Laws of Cooperatives:

Every cooperative makes a set of rules and regulations for internal management, business or administration. These rules and regulations are called the bye-laws of the cooperative. The bye-laws are adopted by the members of the cooperative and registered by the Registrar of the Cooperative Societies. As the bye-laws are framed and adopted by the cooperatives, they differ from one cooperative to another, as per their respective objectives and the needs. The Framework of the bye-laws is generally provided in the Act or Rules

The provisions of bye-laws cannot travel beyond the powers vested in by the Act and Rules. The provisions of Cooperative Societies Act and Rules have overriding effect on the provisions of the bye-laws. In case of conflict between the bye-laws and the provisions of the Act or Rules the provisions of the Act or Rules must be followed.

A) Salient features of the Model Bye-laws of Milk Producers’ Cooperative Society:

1.   Objectives

a)      To provide facilities for profitable marketing of milk through the District Milk Producers’ Union.

b)      To undertake activities necessary for clean and quality milk production and to increase milk production.

c)      To undertake programmes in dairy extension and dairy husbandry aimed at improving rearing the breed and health of the animals.

2.   Only genuine milk producers shall be eligible for membership of the society: 

3.   Prerequisites for voting rights of members:

a)      A member has supplied the minimum quantity of milk (500 lts) to the society or has supplied for at least 180 days in a year and,

b)      has not sold milk to any other agency other than society,

c)      has no dues with the society and has not ceased to have any of the qualifications provided in the bye-laws.

4.   Managing Committee:

a)      The elected managing Committee of the society shall be of nine members for a period of three years.  They shall elect a Chairman from amongst themselves for a period of three years.

b)      All members of the Managing Committee shall be honorary.

c)      A member shall be eligible to contest the election of a member of Managing Committee, if: 

i)        he is not a paid employee of this or any other society,

ii)      is not a relative of any of the paid employee of the society,

iii)    he or any member of his family does not undertake any business of the kind undertaken by the society.

iv)    has supplied milk to the society for at least 180 days/500 litres in a pervious  cooperative year.

d)     Any member of the Managing Committee shall automatically cease to be a member of Managing Committee:

                             i.when he ceases to posses any required qualification as a member of Managing Committee,

                           ii.when he remains absent in the Managing Committee meetings for three consecutive meetings without its consent,

e)      The Managing Committee shall have powers to appoint Secretary and other paid staff of the society.

7. Chairman shall be responsible for executions of resolutions passed by Managing Committee and General Meetings, supervision of the daily routine work through secretary, physical verification of stocks and dead stock, disposal of members’ problems, deposition of exceeding amount of cash in hand, etc. 

8.     Profit distribution after the statutory deduction shall be as under:

The net profit shall be distributed as follows

       Ø  A sum not less that 25% shall be taken to the Reserve Fund.

Ø  To set aside contribution for the Education Fund in accordance with provisions of the State Cooperative Societies Act.  The society shall pay dividend only after the Education Fund is paid to the District Cooperative Union.

Ø  To pay to the shareholders as dividend a sum not exceeding 12% of the paid up share capital.

Ø  The balance, after the above deductions, shall be distributed as under:


65%    -    

as bonus to the members in accordance with the price of milk supplied by them to the society.

10%    -   

to be set aside for the cattle development fund.

10%    -   

as bonus to the staff (Bonus to the staff shall be given as may be decided by the Managing Committee, but the amount should not exceed more than two months pay in each case). 

10%    -

to be set aside for the charity.

5%      -

to be set aside for the Cooperative Propaganda Fund.



The balance remaining after these deductions shall be credited to the Reserve Fund.

9.  No credit facilities to members, not even for purchase of milch animals. 

B) Salient features of the Model Bye-laws of the District Milk Producers’ Cooperative Union:

1.   Objectives

The objective of the Union shall be to carry out activities conducive to the economic and socio-economic development of the milk producers by organizing effective production, processing and marketing of commodities.

2.   Membership

There are two types of membership:

a)      Ordinary members – Registered primary milk producers cooperative societies.

b)      Nominal members – The person having financial dealings with the Union and shall have no right to vote or participate in the management of the Union.

3.   Obligation of members:

a)      Society shall not supply milk to any agency other than the union after meeting its local demand     

b)      Buy shares and debentures in relation to the value of commodities handled through the Union as may be called upon by the Board. 

c)      Follow direction issued by the Union.

d)     Collect commodities in pure and unadulterated conditions.

4.   General Body: The General Meetings shall consist of the following:

a)      Only the Chairman of Milk Producers’ Cooperative Societies to attend the General Meeting of the Union and vote/contest elections of the Board of Directors.

b)      All nominated members of the Board and Managing Director shall have no right to vote and contest for any election of office bearer.

5.   The General Body of the milk Union shall have supreme powers subject to the provisions of the Coop. Societies Act, Rules and the bye-laws.

6.   The Board of Directors of the Union shall consist of not more than 15 members (12 elected + one nominee of NDDB + one nominee of Federation to which union is affiliated  + Managing Director of the Union as ex-officio member secretary). The Chairman shall be elected by and from amongst the elected members of the Board.   The term of the Board and Chairman shall be three years. No post of Vice-Chairman shall be there on the Board. 

7.   Qualifications of the Members to contest the election of Board of Directors of the Union:

a)      The society is placed in Audit Class “A” or “B” during last audit.

b)      The society has supplied the required quantity of milk as fixed by the Board.

c)      The society has supplied milk for at least 270 days.

d)     The society should be an ordinary member of the Union for not less than 1 year as on the date of election.

e)      The society has not sold or supplied milk to any other agency than the Union during the preceding year.

8.   Expert panel to be constituted for selection of the Managing Director, other staff and to approve the administrative set up of the union

Qualification of Managing Director

A degree in any discipline.  Preference will be given to a candidate having degree in Food Technology/Engineering/Dairy Technology/Animal Husbandry.  A degree/ diploma in business management/marketing will be considered as an additional qualification for selection.   Must have at least 10 years managerial experience, out of which three years as overall in-charge of a large dairy/food/consumer products processing unit.  Should be a man of proven managerial competency.

             A. Panel for administrative set-up shall comprise:

a)      Chairman of the Union.

b)      Managing Director of the Union.

c)      A nominee of the Federation to which the union is affiliated.

d)     A representative of the NDDB

B.  Panel for selection of MD.

b)      Chairman of the Union.

c)      Representative of the State Federation to which the union is affiliated.

d)     Representative of NDDB.

      C.For recruiting junior staff of the Union the Managing Director shall have powers to form a panel of at least three officers of the Union.

9.   Managing Director shall have general control in the matter of finance, administration, management and the business of the union.

10.  Distribution of profits

Subject to the provisions of the Act, the net profit shall be appropriated as follows:

Not less than 25% shall be carried to the reserve fund.

Ø  Contribution towards the Education Fund of the State Cooperative Union as per the Act and any other such   statutory provisions.

Ø  A sum not exceeding 12% per annum shall be distributed as dividend on the paid up share capital.

Ø  Any other funds to be created for the interest of milk producer keeping in view the provisions of the Act and the Rules. 

Ø  The remaining profit shall be taken to the General Fund to be utilized as decided by the General Meeting.

11.  The Union shall not provide credit facilities to the member societies for the purchase of cattle.

Conclusion: The provisions of the Model Bye-laws for the Milk Union and village dairy cooperatives have been prepared keeping in view the cooperative principles so that they can function as autonomous business entity owned, managed and controlled by the members. Provisions are aimed at ensuring that only user members may vote, contest and participate in the management of the cooperative. The provisions also facilitate for professional management accountable to the Management Committee / Board of Directors for the organizational performance.