Short Answer

No, a society cannot incur expenses like a loan without the sanction of the general body and recording it in the books.

Detailed Explanation

Section 29 of the Gujarat Cooperative Societies Act, 1961 states that a cooperative society must conduct its business in accordance with the Act, Rules, and its by-laws. Any financial transactions, including incurring expenses like loans, must be authorized by the general body of the society. This means that any significant financial decision, such as taking a loan, must be approved by the members of the society in a general body meeting.

Rule 116 of the Gujarat Cooperative Societies Rules, 1965 further elaborates on the maintenance of proper accounts and records by the society. It mandates that all financial transactions, including loans or expenses incurred, must be accurately recorded in the books of the society. This ensures transparency and accountability in the financial dealings of the society.

In practice, before taking any loan or incurring significant expenses, the society must convene a general body meeting to seek approval from the members. The decision must be recorded in the minutes of the meeting, and the details of the loan or expenses should be properly documented in the society's books of accounts.

For example, if a cooperative housing society wants to take a loan for a renovation project, the managing committee must first propose this to the general body meeting. The members will then discuss and vote on the proposal, and if approved, the decision will be recorded in the meeting minutes and the loan details will be entered into the society's financial records.

In another scenario, if a society incurs expenses without the sanction of the general body and fails to record it in the books, it can lead to financial mismanagement, lack of transparency, and potential legal issues. Therefore, it is crucial for societies to follow the legal requirements of obtaining approval from the general body and maintaining accurate financial records for all transactions.

References

• Section 29 of the Gujarat Cooperative Societies Act, 1961: Official PDF

• Rule 116 of the Gujarat Cooperative Societies Rules, 1965: Official PDF