Understanding Societies in India:

Formation, Governance, and Legal Framework

Introduction

A society, in the legal context of India, is a voluntary association of individuals who unite for a common purpose that is often non-commercial. These purposes typically include charitable, literary, scientific, or educational goals. Societies offer a structured form for community-focused endeavors, allowing a group of people to act collectively and legally for mutual benefit.

Historical Background

The origin of societies as legal entities can be traced back to England, where in 1854, the Literary and Scientific Institutions Act was enacted to recognize the independent legal existence of societies. Inspired by this framework, India adopted the Societies Registration Act, 1860, which remains the principal legislation governing societies. Over time, various Indian states have also introduced their own amendments or enacted separate laws tailored to local governance needs.

What Constitutes a Society?

A society is a collection of individuals who come together by mutual agreement to deliberate, decide, and act jointly towards a shared objective. These objectives may range from promoting science, literature, or fine arts to managing orphan funds, public libraries, or museums

Legal Identity

Upon registration, a society becomes a separate legal entity - a juridical person - capable of owning property, entering into contracts, and suing or being sued in its own name. However, it does not possess a physical existence or personal stake like an individual.

Applicable Legislations

The functioning and registration of societies in India are governed by a combination of central and state legislations, including:

1. (*) Societies Registration Act, 1860
2. (*) Religious Societies Act, 1880
3. (*) State-specific Societies Registration Acts

While the central Act provides the foundational framework, states may introduce variations to suit local requirements
 

Purposes for Forming a Society
According to Section 20 of the Societies Registration Act, 1860, societies can be formed for the following
purposes:

1. Charitable activities
2. Promotion of science, literature, or fine arts
3. Dissemination of useful knowledge or political education
4. Establishment and maintenance of libraries, reading rooms, museums, and galleries
5. Collection and preservation of natural history or scientific instruments
6. Assistance to military orphans
  
Who Can Form a Society?

• Individuals, including foreign nationals (excluding minors)
• Partnership firms
• Registered companies or other societies acting through authorized representatives

A minimum of seven members is required to register a society. There is no upper limit on membership, and entities such as corporations can also become members

Governance Structure General Body and Governing Body
A society is managed by two main bodies:

• General Body: Comprising all members, usually with permanent status unless disqualified.
• Governing Body/Executive Committee: Elected by the General Body for a term (usually 1-3 years), responsible for daily operations.

Rights of Member

Members of a society enjoy certain legal rights, including:

1. Right to receive notices and attend general meetings
2. Right to vote and elect the governing body
3. Right to inspect financial statements and bye-law

Key Documents for Registration
To register a society, the following documents are typically required:

1. Memorandum of Association (MOA): Outlines the society's name, aims, and objectives.
2. Rules and Regulations: Define internal management practices and governance mechanisms.
3. Affidavit from the President/Secretary on a non-judicial stamp paper
4. Proof of Registered Office (e.g., rent receipt or property tax bill)
5. No Objection Certificate from the landlord
6. Covering Letter requesting registration
7. Registration Fee as prescribed by the local authority

Once registered, a society typically enjoys permanent status unless dissolved or cancelled under exceptional circumstances.

Cancellation of Registration
A society's registration may be revoked by the Registrar under the following conditions:

• Office has moved out of the registering state
• Activities are unlawful or contrary to declared objectives
• Fraudulent operations
• Violation of the Act or bye-laws
• Financial insolvency

Sources of Income
The income of a society may come from:

• Member subscriptions
• Voluntary donations (excluding corpus donations)
• Income from society-owned property
• Returns on investments
• Sale of beneficiary-produced goods
• Other local or foreign contribution

Taxation
Under the Income Tax Act, 1961, registered societies are classified as Associations of Persons (AOPs). Unless registered under Section 12A/12AA and compliant with Section 2(15) for charitable purposes, their  income is taxable similarly to individuals. Societies operating for public charitable purposes are akin to Public Charitable Trusts, where no member has a claim on the property or income.

Amendments and Dissolution

AMENDENTS

Registrars can mandate amendments to the society's MOA or bye-laws if deemed necessary for proper governance.

DISSOLUTION

Unlike trusts, societies may be dissolved with the consent of at least three-fifths of the members. Post-dissolution, remaining assets must be transferred to another charitable society with similar objectives and not distributed among members. The recipient organization must be registered under Section 80G of the  Income Tax Act.

Operation of Bank Accounts

Bank accounts may be opened in the name of the society based on authorizations mentioned in its bye-laws. Proper clauses regarding account management should be incorporated during the drafting of the rules and regulations.

Conclusion

Societies in India offer a robust legal framework for individuals and institutions to pursue non-profit and community-oriented objectives. By obtaining registration under the appropriate Act, societies gain legal recognition, enabling them to manage assets, enter contracts, and seek financial support. However, adherence to statutory norms, transparent governance, and compliance with tax regulations are vital to their sustained functioning and public trust.