CO-OPERATIVE SOCIETIES ACT, 1912

Preamble 1 - CO-OPERATIVE SOCIETIES ACT, 1912

 

 

THE CO-OPERATIVE SOCIETIES ACT, 1912

[Act, No. 2 of 1912 ][1]

[ 1 st March, 1912 ]

PREAMBLE

An Act to amend the law relating to Co-operative Societies

Whereas it is expedient further to facilitate the formation of Co-operative Societies for the promotion of thrift and self-help among agriculturists, artisans and persons of limited means, and for that purpose to amend the law relating to Co-operative Societies. It is hereby enacted as follows:

 

Section 1 - Short title and extent

1.      This Act may be called the Co-operative Societies Act, 1912; and

 

2.      It extends to  [the whole of India except  [the territories which, immediately before the  B States".

 

Section 2 - Definitions

In this Act, unless there is anything repugnant in the subject or context,--

(a)      "by-laws" means the registered by-laws for the time being in force, and includes a registered amendment of the by-laws;

 

(b)      "committee" means the governing body of a registered society to whom the management of its affairs is entrusted;

 

(c)      "member" includes a person joining in the application for the registration of a society and a person admitted to membership after registration in accordance with the by-laws and any rules;

 

(d)      "officer" includes a chairman, secretary, treasurer, member of committee, or other person empowered under the rules or the by-laws to give directions in regard to the business of the society;

 

(e)      "registered" society means a society registered or deemed to be registered under this Act;

 

(f)       "Registrar" means a person appointed to perform the duties of a Registrar of Co-operative Societies under this Act; or

 

(g)      "rules" means rules made under this Act.

 

Section 3 - The Registrar

The [2] [State Government] may appoint a person to be Registrar of Co-operative Societies for the [3] [State], or any portion of it and may appoint persons to assist such Registrar, and may, by general or special order, confer on any such person all or any of the powers of a Registrar under this Act.

 

Section 4 - Societies which may be registered

Subject to the provisions hereinafter contained, a society which has its object the promotion of the economic interests of its shall be limited ;shall be unlimited.Substituted by A.O. 

Section 5 - Restrictions on interest of member of society with limited liability and a share capital

Where the liability of the members of a society is limited by shares, no member other than a registered society shall--

(a)      hold more than such portion of the share capital of the society subject to a maximum of one-fifth, as may be prescribed by the rules; or

 

(b)      have or claim any interest in the shares of the society exceeding one thousand rupees.

 

Section 6 - Conditions of registration

(1)     No society, other than a society of which a member is a registered society, shall be registered under this Act which does not consist of at least ten persons above the age of eighteen years and where the object of the society is the creation of funds to be lent to its members, unless such persons?

 

(a)           reside in the same town or village or in the same group of villages; or

 

(b)          save where the Registrar otherwise directs, are members of the same tribe, class, caste or occupation.

 

(2)     ?The word "limited" shall be the last word in the name of every society with limited liability registered under this Act.

 

Section 7 - Power of Registrar to decide certain questions

When any question arises whether for the purposes of this Act a person is an agriculturist or a non-agriculturist, or whether any person is a resident in a town or village or group of villages, or whether two or more villages shall be considered to form a group, or whether any person belongs to any particular tribe, class, caste, or occupation, the question shall be decided by the Registrar whose decision shall be final.

 

Section 8 - Application for registration

 

(1)     For purposes of registration an application to register shall be made to the Registrar.

 

(2)     The application shall be signed?

 

(a)      in the case of a society of which no member is a registered society, by at least ten persons qualified in accordance with requirements of Sec 6, sub-section (1) ; and

 

(b)      in the case of a society of which a member is a registered society, by a duly authorised person on behalf of every such registered society, and where all the members of the society are not registered societies, by ten other members or, when there are less than ten other members, by all of them.

 

(3)     The application shall be accompanied by a copy of the proposed by-laws of the society, and the persons by whom or on whose behalf such application is made shall furnish such information in regard to the society as the Registrar may require.

Section 9 - Registration

If the Registrar is satisfied that a society has com-plied with the provisions of this Act and the rules and that its proposed by-laws are not contrary to the Act or to the rules, he may, if he thinks fit, register the society and its by-laws.

Section 10 - Evidence of registration

A certificate of registration signed by the Registrar shall be conclusive evidence that the society thereinmentioned is duly registered unless it is proved that the registration of the society has been cancelled.

Section 11 - Amendment of the by-laws of a registered society

 

(1)     No amendment of the by-laws of a registered society shall be valid until the same has been registered under this Act, for which purpose a copy of the amendment shall be forwarded to the Registrar.

 

(2)     If the Registrar is satisfied that any amendment of the by-laws is hot contrary to this Act or to the rules, he may, if he thinks fit, register the amendment.

 

(3)     When the Registrar registers an amendment of the by-laws of a registered society, he shall issue to the society a copy of the amendment certified by him, which shall be conclusive evidence that the same is duly registered.

[STATE AMENDMENTS

[Uttar Pradesh

[4] [After Section 11

The following shall be added as new sections 11-A, 11-B, 11-C, 11-D, 11-E, and 11-F.

"11-A. Powers to Registrar Co-operative Societies to compel Societies to change bye-laws

(1)     Where the Registrar is of the opinion, whether on the representation of the society or any of its members or otherwise, that an amendment of the bye-laws of the society is necessary or desirable in the interest of the society or in public interest, he may, by order in writing to be issued to the society by registered post, require the society to make the amendment within such time as he may specify in such order.

 

(2)     On the failure of the society to make any such amendment within the time specified, the Registrar may, after giving the society an opportunity of being heard, register such amendment and issue to the society by registered post a copy of the amendment so certified by him, which shall be conclusive evidence that the amendment has been duly made and registered. A bye-law so amended by the Registrar shall be a bye-law of the society.

 

(3)     An appeal shall lie to the State Government from any order of the Registrar passed under sub-section (2) within two months from the date of the issue of such order. The order of the State Government on appeal and subject to the result of an appeal, if any the decision of the Registrar shall be final."

 

"11-B. Change of names of societies and its effects

A society may by amending its bye-laws change its name and such change shall in no case affect any right or obligation of the society or any of its members or past-members or the heirs of the deceased members and any legal proceedings may be continued by or against the society under its new name."

"11-C. Change of liabilities vice versa

(1)     A society may by amending its bye-laws and subject to the provisions of section 4 and section 11 change its liability from 'limited' to 'unlimited' or

 

(2)     No amendment of a bye-law relating to the change of liability of a society shall be registered by a Registrar, unless he is satisfied that?

 

a)        sufficient notice has been given to every member of the society and all persons whose interests are in his opinion likely to be affected by the proposed change of liability; and

 

b)        with respect to every such member or person who, in the opinion of the Registrar, is entitled to object?

 

1)       either his assent has been obtained to the change, or

 

2)       if he signified his objection?

 

                                                                                                                                            I.                  he is allowed to withdraw his share, if he is a member,his debt or claim has been discharged or determined and secured to the satisfaction of the Registrar within three months from the date of the notice. "

"11-D. Amalgamation and transfer of assets and liabilities of societies

(1)     Subject to the approval of the Registrar, any two or more societies may, by a resolution passed by majority of the members present at a general meeting of each such society held for the purpose, amalgamate as a single society and the resolutions of the societies concerned shall, on such amalgamation and subject to compliance of the provisions below, vest the assets and transfer the liabilities of the amalgamating societies in the amalgamated society, which shall be deemed to be duly registered under the Act;

Provided that before the passing of such a resolution each member of the societies concerned shall be given fifteen days' clear notice of such a resolution together with the date and the place of the meeting.

(2)     The amalgamating societies shall, by resolutions passed in accordance with the procedure laid down in sub-section (1), transfer all their assets and liabilities to the amalgamated society :

Provided that when any such amalgamation involves the transfer of liabilities by any society, it shall be subject to three months' prior notice to creditors of such societies, whose liabilities are proposed to be transferred :

Provided further that if a creditor of any of the society concerned objects to such amalgamation by thirty days notice in writing prior to the date of amalgamation, to the societies concerned, the amalgamation shall not be made, unless the dues of such creditor have been satisfied".

"11-E. Splitting of division of societies

(1)     Subject to the approval of the Registrar, any society may, by a resolution passed by a majority of the members present at a general meetings of the society held for the purpose, resolve to divide itself into two or more societies :

Provided that before the passing of such a resolution each member of the society, and all persons whose interests are likely to be affected by the resolution, shall be given thirty days' clear notice of such a resolution specifying the area of operation of, and the names of members of, each of the new societies together with the date and the place of meeting.

(2)     ?Notwithstanding anything contained in sub-section (1)?

 

(a)      any member of the society may, on receipt of a notice of a resolution for the division of the society, intimate his intention of not becoming a member of any or all of the societies; and

 

(b)      any person, whose interest is likely to be affected by the resolution, may, on receipt of notice of the resolution for the division of the society, demand satisfaction of his claim.

 

(3)     After the expiry of three months from the date of despatch of copy of the preliminary resolution to all the members and persons likely to be affected by the resolution, another special general meeting of the society, of which at least fifteen days' clear notice shall be given to its members, shall be convened for considering the preliminary resolution, and if at such meeting the preliminary resolution is confirmed by a resolution passed by a majority of the members present, either without changes or with such changes as in the opinion of the Registrar are not material to the subject-matter of the preliminary resolution, the Registrar may, subject to the provisions of sub-sections (4) and (6), register the new societies and the bye-laws thereof, after cancelling the registration of the old society, which shall be deemed to be dissolved from the date of such cancellation.

Explanation--The opinion of the Registrar as to whether the changes made in the preliminary resolution are or are not material shall be final.

(4)     At a special general meeting referred to in sub-section (3) a special resolution shall also be passed for?

 

(i)       the repayment of the share capital of all the members who have given notice under sub-section (2); and

 

(ii)     satisfaction of the claim of the persons whose interests are likely to be affected by the resolution of division of the society and who have given notice under sub-section (2).

 

(5)     Where, within such time as the Registrar may consider reasonable, the share capital of the members or the claims of the persons likely to be affected by the resolution for the division of the society referred to in sub-section (4), is not secured or satisfied, the Registrar shall refuse to register the new societies.

 

(6)     Not withstanding anything contained in the Transfer of Property Act, 1862, or the Indian Registration Act, 1908 (Act V of 1908), the registration of the new societies shall be sufficient to vest the assets and transfer the liabilities of the original society in, and to the new societies in the manner specified in the preliminary resolution as confirmed under sub-section (3)"

 

"11-F. Final authority of a society

(1)     The final authority of a society shall vest in the general body of its members in general meeting :

Provided that, in such circumstances, as may be prescribed by the Registrar, the final authority may vest in the delegates of such members, elected in the manner prescribed by the Registrar and assembled in the meeting of the general body.

(2)     The meeting of the general body of the members of a society, or of the delegates of such members, shall be summoned and shall exercise its authority in such manner as may be prescribed."]

 

 

Section 12 - Member not to exercise rights till due payment made

No member of registered society shall exercise the rights of member unless or until he has made such payment to the society in respect of membership or acquired such interest in the society, as may be prescribed by the rules of by-laws.

Section 13 - Votes of members

(1)     Where the liability of the members of a registered society is not limited by shares, each member shall, not?withstanding the amount of his interest in the capital, have one vote only as a member in the affairs of the society.

 

(2)     Where the liability of the members of a registered society is limited by shares, each member shall have as many votes as may be prescribed by the by-laws.

 

(3)     A registered society which has invested any part of its funds in the shares of any other registered society may appoint as its proxy, for the purpose of voting in the affairs of such other registered society, and one of its members.

 

Section 14 - Restrictions on transfer of share or interest

(1)     The transfer or charge of the share or interest of a member in the capital of a registered society shall be subject to such conditions as to maximum holding as may be prescribed by this Act or by the rules.

 

(2)     In case of a society registered with unlimited liability a member shall not transfer any share held byhim or his interest in the capital of the society or any part thereof unless,--

 

(a)      he has held such share or interest for not less than one year, and

 

(b)      the transfer or charge is made to the society or to a member of the society.

 

Section 15 - Address of societies

 

Every registered society shall have an address registered in accordance with the rules, to which all notices and communications may be sent, and shall send to the Registrar notice of every change thereof

 

Section 16 - Copy of Act, rules and by-laws to be open to inspection

Every registered society shall keep a copy of this Act and of the rules governing such society, and of its by-laws, open to inspection free of charge at all reasonable times at the registered address of the society.

Section 17 - Audit

(1)     The Registrar shall audit or cause to be audited by some person authorised by him by general or special order in writing in this behalf the accounts of every registered society once at least in every year.

 

(2)     The audit under sub-section (1) shall include an examination of overdue debts, if any, and a valuation of the assets and liabilities of the society.

 

(3)     The Registrar, the Collector or any person authorised by general or special order in writing in this behalf by the Registrar shall at all times have access to all the books, accounts, papers and securities of a society, and every officer of the society shall furnish such information in regard to the transactions and working of the society as the person making such inspection may require.

 

Section 18 - Societies to be bodies corporate

The registration of a society shall render it a body corporate by the name under which it is registered, with perpetual succession and a common seal, and with power to hold property, to enter into contracts, to institute and defend suits and other legal proceedings and to do all things necessary for the purposes of its constitution.

Section 19 - Prior claim of society

1.        Subject to any prior claim of the other creditors to enforce outstanding demand due to the society from amember or past other agricultural produce of such member or person at any time within eighteen months from the date of such supply or loan;

 

2.        in respect of the supply of cattle, fodder for cattle, agricultural or industrial implements or machinery, or raw materials for manufacture, or of the loan of money for the purchase of any of the foregoing things upon any such things so supplied, or purchased in whole or in part from any such loan, or any articles manufactured from raw materials so supplied or purchased.

[STATE AMENDMENTS

[Uttar Pradesh

[5] [In Section 19

The following shall be substituted :

"19. Charge created in favour of societies

Notwithstanding anything contained in the Provincial Insolvency Act, 1920, or in the Code of Civil Procedure, 1908 (Act V of 1908), or in any other enactment relating to land-tenure for the time being in force, any debt or outstanding demand due to a society by any member past or present, or standing against the estate of any deceased member, shall, subject to any claim of the State Government arising from a loan granted by it before, but not after, the grant of the loan by the society and in respect of land revenue, or any sum recoverable as arrears of land revenue, be a first charge?

 

(a)      if such debt or demand is due in respect of the supply of, or any loans to provide the means for, seed, manure, labour, subsistence, fodder for cattle or any other thing incidental to the conduct of agricultural operations, upon the crops or agricultural produce of such member;

 

(b)      if such debt or demand is due in respect of any loan to provide the means of paying the rent or revenue of the land, or for irrigation facilities, upon the land whose rent or revenue has been so paid, or as the case may be, the irrigation facilities provided;

 

(c)      if such debt or demand is due in respect of supply of or, any loan to provide the means for the purchase of, cattle, agricultural implements or warehouse for the storage of agricultural produce,--upon the crops and agricultural produce of such member and also upon the cattle, agricultural implements or warehouse so supplied or purchased wholly or in part from any such loan, at any time within three years from the date on which the last instalment of such loan becomes repayable;

 

(d)      if such debt or demands is due in respect of the supply of or, any loan for the purchase of raw material, industrial implements, plant and machinery, work-shops, ware-house or business premises,--upon the raw material or other things so supplied or purchased by such member and in the case of a debt or demand in respect of the supply or for the purchase of raw materials, also upon articles manufactured from such raw material;

 

(e)      if such debt or demand is due in respect of any loan for the purchase on redemption of land purchased or redeemed,--upon the land purchased or redeemed by such member, past-member, or deceased member; and

 

(f)       if such debt or demand is due in respect of any loan for the purchase or construction of any house or building or any portion thereof or in respect of the supply of materials for such constructions,--upon the house or building or material so purchased or constructed by such member :

 

Provided that along with the 'charge' created under sub-section (1) all the property including any amount payable by a society to the indebted member shall be liable to attachment and sale in execution of a decree in favour of the society irrespective of the object of the loan or the set-off of sums due on the member of the society towards the payment of such debt."]

Section 20 - Charge and set-off in respect of shares or interest of member

A registered society shall have a charge upon the share or interest in the capital and on the deposits of a member or past member and upon any dividend, bonus or profits payable to a member or past member in respect of any debt due from such member or past member to the society, and may set-off any sum credited or payable tomember or past member in or towards payment of such debt.

 

Section 21 - Share or interest not liable to attachment

Subject to the provisions of Sec.

[STATE AMENDMENTS

[Uttar Pradesh

[6] [After Section 21

The following shall be added as a new section 21-A :--

"21-A. Sale of, the Holding of a sirdar in execution of decree for money due to a society

(1)     Notwithstanding anything in section 153 of the U.P. Zamindari Abolition and Land Reforms Act, 1950;, the interest of a sirdar in his holding may, on the application of the society concerned, be sold in execution of any decree or order for payment of money, being money due to such society in respect of a debt or demand referred to in clauses (a) to (f) of section 19, as though it were land revenue payable in respect of the holding within the meaning of section 284 of the said Act.

 

(2)     The expressions 'holding' and 'sirdar' in this section shall have the meaning assigned to therein the U. P. Zamindari Abolition and Land Reforms Act, 1950."]

 

 

Section 22 - Transfer of interest on death of members

(1)     On the death of a member a registered society may transfer the share or interest of the deceasedmember to the person nominated in accordance with the rules made in this behalf, or, if there is no person so nominated, to such person as may appear to the committee to be the heir or legal representative of the deceased member, or pay to such nominee, heir or legal representative, as the case may be, a sum representing the value of such member's share or interest, as ascertained in accordance with the rules or by-laws:

Provided that--

(i)       in the case of a society with unlimited liability, such nominee, heir or legal representative, as the case may be, may require payment by the society of the value of the share or interest or the deceased member ascertained as aforesaid.

 

(ii)     in the case of a society with limited liability, the society shall transfer the share or interest of the deceased member to such nominee, heir or legal representative, as the case may be, being qualified in accordance with the rules and by-laws for membership of the society, or on his application within one month of the death of the deceased member to any person specified in the application who is so qualified.

(2)     A registered society may pay all other moneys due to the deceased member from the society to such nominee, heir or legal representative, as the case may be.

 

(3)     All transfers and payments made by a registered society in accordance with the provisions of this section shall be valid and effectual against any demand made upon the society by any other person.

 

Section 23 - Liability of past member

The liability of a past member for the debts of a registered society as they existed at the time when he ceased to be a member shall continue for a period of two years from the date of his ceasing to be a member.

Section 24 - Liability of the estates of deceased member

The estate of a deceased member shall be liable for a period of one year from time of his decease for the debts of a registered society as they existed at the time of his decease.

Section 25 - Register of members

Any register or list of members or shares kept by any registered society shall be prima facie evidence of any of the following particulars entered therein:

(a)      the date at which the name of any person was entered in such register or list as a member ;

 

(b)      the date at which any such person ceased to be a member.

 

Section 26 - Proof of entries in societies books

A copy of any entry in a book of a registered society regularly kept in the course of business, shall, if certified in such manner as may be prescribed by the rules, be received, in any suit or legal proceeding, as prima facie evidence of the existence of such entry, and shall be admitted as evidence of the matters, transactions and accounts therein recorded in every case where, and to the same extent as, the original entry itself is admissible.

 

Section 27 - Exemption from compulsory registration of instruments relat?ing to shares and debentures of registered society

 

Nothing in Sec. 17, sub-section (1), Cls. (b) and (c) of the Indian Registration Act, 1908 (XVI of 1908),shall apply to--

(1)     any instrument relating to shares in a registered society, notwithstanding that the assets of such society consist in whole or in part immoveable property; or

 

(2)     any debenture issued by any such society and not creating, declaring, assigning, limiting or extinguishing any right, title or interest to or in immoveable property except in so far as it entitles the holder to the security afforded by a registered instrument whereby the society has mortgaged, conveyed or otherwise transferred the whole or part of its immoveable property or any interest therein to trustees upon trust for the benefit of the holders of such debentures; or

 

(3)     any endorsement upon or transfer of any debenture issued by any such society.

 

Section 28 - Power to exempt from income-tax, stamp-duty and registration fees

[7] [( 1 )] The[8] [Central Government], by notification in the[9] [offlcial Gazette], may, in the case of any registered society or class of registered society, remit[10] [* * *] the income-tax payable in respect of the profits of the society, or of the dividends or other payments received by the members of the society on account of profits;

[11] [* * *]

[12] [( 2 ) The[13] [Government], by notification in the[14] [offlcial Gazette) may, in the case of any registered society or class of registered society, remit--

(a)      the stamp duty with which, under any law for the time being in force, instruments executed by or on behalf of a registered society or by an officer or member and relating to the business of such society, or any class of such instruments, are respectively chargeable ; and

 

(b)      any fee payable, under the law of registration for the time being in force.]

 

[15] [In this sub -section "Government" in relation to stamp duty in respect of bills of exchange, cheques, promissory notes, bills of lading, letters of credit, policies of insurance,[16] [ transfer of shares, debentures,] proxies and receipts, and in relation to any stamp duty falling within[17] [gentry 96 ] in List I in the Seventh Schedule to[18] [the Constitution], means the Central Government, and save as aforesaid means the[19] [State Government],

Section 29 - Restriction on loans

 

(1)     registered society shall not make a loan to any person other than a member :

Provided that, with the general or special sanction of the Registrar, a registered society may make loans to another registered society.

(2)     Save with the sanction of the Registrar, a society with unlimited liability shall not lend money on the security of moveable property.

 

(3)     The[20] [State Government] may, by general or special order, prohibit or restrict the lending of money on mortgage of immovable by any restricted society or class of registered societies.

Section 30 - Restrictions on borrowing

A registered society shall receive deposits and loans from persons who are not members only to such extent and under such conditions as may be prescribed by the rules or by-laws.

Section 31 - Restrictions on other transactions with non-members

Save as provided in Secs. 29 and 30, the transactions of a registered society with persons other than members shall be subject to such prohibitions and restrictions, if any, as the[21] [State Government] may, by rules, prescribe.

 

Section 32 -

(1)     A registered society may invest or deposit its funds?

 

(a)      in the Government Savings Bank, or

 

(b)      in any of the securities specified in Sec. 20 of the Indian Trusts Act. 1882 (2 of 1882), or

 

(c)      in the shares or on the security of any other registered society, or

 

(d)      with any bank or person carrying on the business of banking approved for this purpose by the Registrar, or

 

(e)      in any other mode permitted by the rules.

 

(2)     Any investments or deposits made before the commencement of this Act which would have been valid if this Act had been in force are hereby ratified and confirmed.

Section 33 - Funds not to be divided by way of profit

No part of the funds of a registered society shall be divided by way of bonus or dividend or otherwise among its members:

Provided that after at least one-fourth of the net profits in any year have been carried to a reserve fund, payments from the remainder of such profits and from any profits of past years available for distribution may be made among the members to such extent and under such conditions as may be prescribed by the rules or by-laws:

Provided also that in the case of a society with unlimited liability no distribution of profits shall be made without the general or special order of the[22] [State Government] in this behalf.

 

Section 34 - Contribution to charitable purpose

Any registered society may, with the sanction of the Registrar, after one-fourth of the net profits in any year has been carried to a reserve fund, contribute an amount not exceeding ten per cent. of the remaining net profits to any charitable purpose, as defined in Sec. 2 of the Charitable Endowments Act, 1890 (6 of 1890).

Section 35 - Inquiry by Registrar

(1)     The Registrar may of his own motion, and shall on the request of the Collector, or on the application of a majority of the committee, or of not less than one-third of the members, hold an inquiry or direct some person authorised by him by order in writing in this behalf to hold an inquiry into the constitution, working and financial condition of a registered society.

 

(2)     All officers and members of the society shall furnish such information in regard to the affairs of the society as the Registrar or the person authorised by the Registrar may require.

Section 36 - Inspection of books of indebted society

(1)     The Registrar shall, on the application of a creditor of a registered society, inspect or direct some person authorised by him by order in writing in this behalf to inspect the books of the society :

 

Provided that--

(a)      the applicant satisfies the Registrar that the debt is a sum then due, and that he has demanded payment thereof and has not received satisfaction within a reasonable time; and

 

(b)      the applicant deposits with the Registrar such sum as security for the costs of the proposed inspection as the Registrar may require.

 

 

(2)     ?The Registrar shall communicate the results of any such inspection to the creditor.

 

Section 37 - Costs of inquiry

Where an inquiry is held under Sec. 35, or an inspection is made under Sec. 36, the Registrar may apportion the costs, or such part of the costs as he may think right, between the society, the members or creditor demanding an inquiry or inspection, and the officers or former officers of the society.

Section 38 - Recovery of costs

Any sum awarded by way of costs under Sec. 37 may be recovered, on application to a Magistrate having jurisdiction in the place where the person from whom the money is claimable actually and voluntarily resides or carries on business, by distress and sale of any movable property within the limits of the jurisdiction of such Magistrate belonging to such person.

Section 39 - Dissolution

(1)     If the Registrar, after an inquiry has been held under Sec. 35 or after an inspection has been made under Sec. 36 or on receipt of an application made by three-fourths of the members of a registered society, is of opinion that the society ought to be dissolved, he may cancel the registration of the society.

 

(2)     Any member of a society may, within two months from the date of an order made under sub -section ( 1 ), appeal from such order.

 

(3)     Where no appeal is presented within two months from the making of an order canceling the registration of a society, the order shall take effect on the expiry of that period.

 

(4)     Where an appeal is presented within two months, the order shall not take effect until it is confirmed by the appellate authority.

 

(5)     The authority to which appeals under this section shall lie shall be the[23] [State Government] :

 

Provided that the[24] [State Government] may by notification in the[25] [Official Gazette], direct that appeals shall lie to such Revenue authority as may be specified in the notification.

 

Section 40 - Cancellation of registration of society

Where it is a condition of the registration of a society that it should consist of at least ten members, the Registrar may, by order in writing, cancel the registration of the society if at any time it is proved to his satisfaction that the number of the members has been reduced to less than ten.

Section 41 - Effect of cancellation of registration

Where the registration of a society is cancelled, the society shall cease to exist as a corporate body--

(a)      in the case of cancellation in accordance with the provisions of Sec. 39, from the date the order of cancellation takes effect ;

 

(b)      in the case of cancellation in accordance with the provisions of Sec. 40, from the date of the order.

Section 42 - Winding up

(1)     Where the registration of a society is cancelled under Sec. 39 or Sec. 40, the Registrar may appoint a competent person to be liquidator of the society.

 [(2) A liquidator appointed under sub-section (1) shall have power?

(a)      to institute and defend suits and other legal proceedings on behalf of the society by his name of office ;

 

(b)      to determine the contribution to be made by the members and past members of the society respectively to the assets of the society ;

 

(c)      to investigate all claims against the society and, subject to the provisions of this Act, to decide questions of priority arising between claimants ;

 

(d)      to determine by what persons and in what proportions the costs of the liquidation are to be borne ; and

 

(e)      to give such directions in regard to the collection and distribution of the assets of the society, as may appear to him to be necessary for winding-up the affairs of the society.

 

(3) ? Subject to any rules, a liquidator appointed under this section shall in so far as such powers are necessary for carrying out the purposes of this section, have power to summon and enforce the attendance of witnesses and to compel the production of documents by the same means and (so far as may be) in the same manner as is provided in the case of a Civil Court under the Code of Civil Procedure, 1908 (5 of 1908).

(4) ??Where an appeal from any order made by a liquidator under this section is provided for by the rules, itshall lie to the Court of the District Judge.2

[(5) Orders made under this section shall, on application, be enforced as follows:

(a)      when made by a liquidator, by any Civil Court having local jurisdiction in the same manner as decree of such Court;

 

(b)      when made by the Court of District Judge on appeal, in the same manner as a decree of such Court made in any suit pending therein.

(6) ??Save in so far as hereinbefore expressly provided, no Civil Court shall have any jurisdiction in respect of any matter connected with dissolution of a registered society under this Act.

 

[STATE AMENDMENTS

[Uttar Pradesh

?[After Section 42

The following shall be added as new section 42-A :

"42-A. Exemption from Indian Limitation Act

Notwithstanding any provision in the Indian Limitation Act 1908, the period of limitation for the institution, of suits to recover any sum, including interest thereon due to a society by a member thereof shall be computed from the date on which such member dies or ceases to be a member of the society.]

 

1.        This sub-section amended in its application to C.P. and Berar by C.P. and Berar Co-operative Societies Amendment and Liquidators', Order Validation Act, 1945 (C.P. & B. 10 of 1945) as continued in force by the C.P. & Berar Expiring Laws Continuance and Amending Act, 1947 (C.P. & B. 48 of 1947).

 

2.        For sub-section {4-A} applies in U.P., see the Co-operative Societies Act 3 of 1919 (U.P. 3 of 1919).

 

3.        Section 42-A Inserted in C.P., seethe Co-operative Societies (C.P. Amendment) Act, 1930 (C.P. 7 of 1930)

For sections 42-B and 42-C Inserted in the C.P., and Berar, see the following Acts as continued in force by the C.P. and Berar Act, 48 of 1947,--

1.        The C.P. and Berar Co-operative Societies (Amendment) Act, 1940 (C.P. and B. 5 of 1940);

 

2.        The C.P. and Berar Co-operative Societies (Amendment) Act, 1941 (C.P. and B. 6 of 1941); and

 

4.        Added by Co-operative societies (U.P. Amendment) act, 1956 (Act 10 of 1957 and 28 of 1951).

 

1.        This sub-section amended in its application to C.P. and Berar by C.P. and Berar Co-operative Societies Amendment and Liquidators', Order Validation Act, 1945 (C.P. & B. 10 of 1945) as continued in force by the C.P. & Berar Expiring Laws Continuance and Amending Act, 1947 (C.P. & B. 48 of 1947).

 

2.        For sub-section {4-A} applies in U.P., see the Co-operative Societies Act 3 of 1919 (U.P. 3 of 1919).

 

3.        Section 42-A Inserted in C.P., seethe Co-operative Societies (C.P. Amendment) Act, 1930 (C.P. 7 of 1930)

 

For sections 42-B and 42-C Inserted in the C.P., and Berar, see the following Acts as continued in force by the C.P. and Berar Act, 48 of 1947,--

1.        The C.P. and Berar Co-operative Societies (Amendment) Act, 1940 (C.P. and B. 5 of 1940);

 

2.        The C.P. and Berar Co-operative Societies (Amendment) Act, 1941 (C.P. and B. 6 of 1941); and

 

 

Section 43 - Rules

 

RULES

(1)     The [26] [State Government] may, for the whole or any part of the 2 [State] and for any registered society or class of such societies, make rules to carry out the purposes of this Act.

 

(2)     In particular and without prejudice to the generality of the foregoing power, such rules may?

 

(a)      subject to the provisions of Sec. 5, prescribe the maximum number of shares or portion of the capital of a society which may be held by a member ;

 

(b)      prescribe the forms to be used and the conditions to be complied with in the making of applications for the registration of a society and the procedure in the matter of such applications ;

 

(c)      prescribe the matters in respect of which a society may or shall make by-laws and for the procedure to be followed in making, altering and abrogating by-laws and the conditions to be satisfied prior to such making, alteration or abrogation ;

 

(d)      prescribe the conditions to be complied with by persons applying for admission or admitted asmembers, and provide for the election and admission of members, and the payment to be made and the interests to be acquired before the exercise of the right of member-ship ;

 

(e)      regulate the manner in which funds may be raised by means of shares or debentures or otherwise ;

 

(f)       provide for general meetings of the members and for the procedure at such meetings and the powers to be exercised by such, meetings ;

 

(g)      provide for the appointment, suspension and removal of the members of the committee and otherofficers, and for the procedure at meetings of the committee, and for the powers to be exercised and the duties to be performed by the committee and other officers ;

 

(h)     prescribe the accounts and books to be kept by a society and provide for the audit of such accounts and the charges, if any, to be made for such audit, and for the periodical publication of a balance-sheetshowing the assets and liabilities of a society ;

 

(i)       prescribe the returns to be submitted by a society to the Registrar and provide for the persons by whom and the form in which such returns shall be submitted ;

 

(j)       provide for the persons by whom and the form in which copies of entries in books of societies may be certified ;

 

(k)      provide for the formation and maintenance of a register of members and, where liability of themembers is limited by shares, of a register of shares ;

 

(l)       provide that any dispute touching the business of a society between members or past members of the society or persons claiming through a member or past member or between a member or pastmember or persons so claiming and the committee or any officer shall be referred to the Registrar for decision or, if he so directs, to arbitration and prescribe the mode of appointing an arbitrator or arbitrators and the procedure to be followed in proceedings before the Registrar or such arbitrator or arbitrators, and the enforcement of the decisions of the Registrar or the awards of arbitrators ;

 

(m)    provide for the withdrawal and expulsion of members and for the payments, if any, to be made tomembers who withdraw or are expelled and for the liabilities of past members;

 

(n)     provide for the mode in which the value of a deceased member's interest shall be ascertained, and for the nomination of a person to whom such interest may be paid or transferred ;

 

(o)      prescribe the payments to be made and the conditions to be complied with by members applying for loans, the period for which loans may be made, and the amount which may be lent, to an individualmember;

 

(p)      provide for the formation and maintenance of reserve funds, and the objects to which such funds may be applied, and for the investment of any funds under the control of the society ;

(q)      prescribe the extent to which a society may limit the number of its members ;

 

(r)      prescribe the conditions under which profits may be distributed to the members of a society with unlimited liability and the maximum rate of dividend which may be paid by societies ;

 

(s)      subject to the provisions of Sec. 39, determine in what cases an appeal shall lie from the orders of the Registrar and prescribe the procedure to be followed in presenting and disposing of such ap?peals ; and

 

(t)       prescribe the procedure to be followed by a liquidator appointed under Sec. 42, and the cases in which an appeal shall lie from the order of such liquidator.

 

(3)     The [27] [State Government] may delegate, subject to such conditions, if any as it thinks fit, all or any of its powers to make rules under this section to any authority specified in the order of delegation.

(4)     The powers to make rules conferred by this section is subject to the condition of the rules being made after previous publication.

(5)     All rules made under this section shall be published in the [28] (official Gazette], and on such publicationshall have effect as if enacted in this Act.

(6)     Every rule made by the State Government under this Act shall be laid, as soon as may be after it is made, before the State Legislature.]

 

Section 44 - Recovery of sums due to Government

(1)     All sums due from a registered society or from an officer or member or past member of a registered society as such to the Government, including any costs awarded to the Government under Sec. 37, may be recovered in the same manner as arrears of land revenue.

 

(2)     Sums due from a registered society to Government and recoverable under sub-section (1) may be recovered, firstly, from the property of the society; secondly, in the case of a society of which the liability of the members is limited from the members subject to the limit of their liability, and thirdly, in the case ofother societies, from the members.

[STATE AMENDMENTS

[Uttar Pradesh

[29] [After Section 44

1.        The following shall be added as new section 44-A.:-

"44-A. Where as a result of an audit under section 17, or an inquiry under section 35, or an inspection under section 36, or the winding up of a society under section 42, it appears to the Registrar that any person, who has taken part in the organization or management of the society or any past or present officer of the society, has--

(a)      made any payment which is contrary to law or to the rules or by-laws of the society or instructions of any authority empowered by the Act to issue the instruction, or

 

(b)      by reason of his culpable negligence or misconduct, involved the society in any loss or deficiency, or

 

(c)      failed to bring into account any sum which ought to have been credited in the account of the society, or

 

(d)      misapplied, misappropriated or fraudulently retained any funds or property of the society or has otherwise become liable or accountable therefor, or

 

(e)      is guilty of misfeasance or breach of trust in relation to the society,the Registrar may, notwithstanding that the act is one for which the defaulter may be criminally liable, on his own motion, or on the application of the officer conducting the audit or holding the inspection or inquiry or the liquidator, inquire into the conduct of such person or officer and, after giving such person or officer an opportunity of being heard, make an order requiring him to contribute such sum to the assets of the society by way of compensation in respect of such payment or loss of sum, or to restore such property, as the Registrar thinks fit, together with such sum as the Registrar may fix to meet the cost of proceedings under this section :

Provided that, before any order requiring such person or officer to contribute is passed in respect of a payment referred to in clause (a) reasonable time shall be given to such person or officer to recover the amount from the payee and to credit it to the funds of the society :

Provided further that no order shall be passed under this sub-section in respect of any act or omission mentioned in clauses (a) to (e) except within five years of the date on which such act or omission occurred.

2.        ?An appeal shall lie from the Order of the Registrar under sub-section (1) to the State Government on application made by the person or officer against whom such order was passed within three months from the date of the communication to him of such order. The order of the State Government on appeal, and, subject to the result of such appeal, if any, the order of the Registrar shall be final.".]

 

 

Section 45 - Power to exempt societies from conditions as to registration

Notwithstanding anything contained in this Act the  [State Government] may, by a special by A.O. 1950, for "Provincial Government".

Provided that nothing in this section shall apply to the use by any person or 2) Whoever contravenes the provisions of this section shall be punishable with fine which may extend to fifty rupees, and in the case of a continuing offence with further fine of five rupees for each day on which the offence is continued after conviction therefore.

 

Section 49 - Saving of existing societies

Every society now existing which has been registered under the Co-operative Credit Societies Act, 1904 (10 of 1904), shall be deemed to be registered under this Act, and its by-laws shall, so far as the same are not inconsistent with the express provisions of this Act, continue in force until altered or rescinded.

Section 50 - Repealed

Rep. by the Second Repealing and Amending Act, 1914 (17 of 1914), Sec. 3 and Sch. II.