DELHI CO-OPERATIVE SOCIETIES ACT, 2003

[Delhi Act 3 of 2004]

[3rd March, 2004]

An Act to consolidate and amend the laws relating to co-operative societies, to facilitate the voluntary formation and democratic functioning of co-operatives as people's institutions based on self help and mutual aid to enable them to promote their economic and social betterment and to provide for regulation, management, functional autonomy of such societies and for matters connected therewith or incidental thereto in the National Capital Territory of Delhi. BE it enacted by Legislative Assembly of the National Capital Territory of Delhi in the Fifty-fourth Year of the Republic of India as follows:--1 1. Vide Notification No. F. 14(32)/LA-2003/149 dated 2nd April, 2004.

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S.1 Short title, extent and commencement

(1) This Act may be called the Delhi Co-operative Societies Act, 2003.

(2) It extends to the whole of the National Capital Territory of Delhi.

(3) It shall come into force on such date as the Government may, by notification in the Official Gazette, appoint.

S.2 Definitions

In this Act, unless the context otherwise requires,--

• (a) 1[***]
• (b) "area of operation" means the area of Delhi from which the membership is drawn;
• (c) "bye-laws" means the registered bye-laws for the time being in force and includes registered or deemed amendments of such bye-laws;
• (d) "Collector" shall have the same meaning as is assigned to it in the General Clauses Act, 1897 (10 of 1897);
• (e) "committee' means the governing body of a co-operative society by whatever name called, to which the management of the affairs of the co-operative society is entrusted;
• (f) "co-operative bank" means a bank as defined under section 5 as amended by section 56 of the Banking Regulations Act, 1949 (10 of 1949);
• (g) "co-operative principles" means the co-operative principles specified in the Schedule to this Act;
• (h) "co-operative society" means a society registered or deemed to be registered under this Act;
  

S.3 Registrar

(1) The Government may, by notification in the Official Gazette, appoint a person to be the Registrar of co-operative societies for Delhi and may appoint other persons to assist him.

(2) The Government may, by general or special order, confer on any person appointed to assist the Registrar all or any of the powers of Registrar under this Act.

(3) Every person appointed to assist the Registrar shall exercise the powers conferred on him under sub-section (2) subject to the general guidance, superintendence and control of the Registrar.

(4) The Government may, by notification in the Official Gazette and subject to such conditions as it may think fit to impose, confer all or any of the powers of the Registrar under this Act on any federal co-operative society, or an officer of such federal co-operative society, and every such federal co-operative society or officer on whom the powers of the Registrar are so conferred shall exercise such powers under the general gui

S.4 Co-operative societies which may be registered

(1) Subject to the provisions hereinafter contained, a co-operative society which has its object the promotion of economic, social and cultural interests of its members, in accordance with co-operative principles, or a co-operative society established with the object of facilitating the operations of such a co-operative society, may be registered under this Act with limited liability:

Provided that a co-operative society shall be registered only if it fulfils the viability norms with limited liability as prescribed for a co-operative society or class of co-operative societies to ensure that it is economically sound and its registration may not adversely affect the development of co-operative movement.

(2) The word "limited" or its equivalent in any Indian language shall be the last word in the name of every co-operative society registered under this Act with limited liability.

S.5 Restrictions on registration

No co-operative society shall be registered under this Act unless it consists of at least fifteen members who are qualified to be members under this Act and who reside in the area of operation of the co-operative society:

Provided that in the case of a primary co-operative society each of such members shall be a member of different family.

Explanation.-- For the purpose of this section the expression, "member of a family" means father, mother, wife, husband and dependent children.

S.6 Restrictions on holding of shares

No member other than the Government or a co-operative society shall hold more than such portion of the share capital of a co-operative society subject to a maximum of one-tenths, as may be prescribed.

S.7 Application for registration

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

(2) The application shall be signed--

• (a) in case of a co-operative society of which no member is a co-operative society, by at least fifteen persons qualified in accordance with the requirements of section 4; and
• (b) in case of a federal co-operative society of which a member is a co-operative society, by a duly authorised person on behalf of such co-operative society and where all the members of the federal co-operative society are not co-operative societies, upto one-fifths of total strength or twenty, whichever is less, of other members, by the minimum number of fifteen and where all members are co-operative societies by duly authorised persons on behalf of fifteen different co-operative societies.

S.8 Power of the Registrar to decide certain questions

Where any question arises at the stage of registration whether for the purpose of this Act a person resides in the area of operation of a co-operative society or not, or whether a co-operative society is of same type as another co-operative society or of different type, the question shall be decided by the Registrar whose decision shall be final.

S.9 Registration

(1) If the Registrar is satisfied--

• (a) that the application complies with the provisions of this Act and the rules;
• (b) that the objects of the proposed co-operative society are in accordance with section 4;
• (c) that the proposed bye-laws are not contrary to the provisions of this Act and the rules;
• (d) that in case of co-operative bank prior written permission of the Reserve Bank for registration has been received by the Registrar; and
• (e) that the proposed co-operative society has reasonable chances of success, the Registrar may register the co-operative society and its bye-laws.
• (f) 1that in case of a co-operative housing society, the confirmation of availability of land to the co-operative housing society from the land allotting agency has been received by the Registrar.

(2) When the Registrar refuses to register a co-operative society, he shall communicate the order of refusal together with the

S.10 Registration certificate

Where a co-operative society is registered or deemed to be registered under this Act, the Registrar shall issue a certificate of registration signed by him, which shall be conclusive evidence that the co-operative society therein mentioned is duly registered under this Act.

S.11 Bye-laws of co-operative societies

(1) Every co-operative society may make its bye-laws consistent with the provisions of this Act and the rules made thereunder.

(2) In particular and without prejudice to the generality of the foregoing power, such bye-laws may provide for all or any of the following matters, namely:--

• (a) the name, address and area of operation of the society;
• (b) the objects of the society;
• (c) the services to be provided to its members;
• (d) the eligibility for obtaining membership;
• (e) the procedure for obtaining membership;
• (f) the conditions for continuing as member;
• (g) the procedure for withdrawal of membership;
• (h) the transfer of membership;
• (i) the procedure for expulsion from membership;
• (j) the rights and duties of the members;
• (k) the nature and amount of capital of the society;
• (l) the manner in which the maximum capital to which a single member can subscribe;

S.12 Amendment of bye-laws of a co-operative society and compulsory amendment of bye-laws by the Registrar

(1) No amendment of any bye-laws of a co-operative society shall be valid unless such amendment has been registered or deemed to have been registered under this Act.

(2) Every proposal for such amendment approved by the general body and complete in all respect as prescribed shall be forwarded to the Registrar within thirty days of approval of the general body and if the Registrar is satisfied that the proposed amendment--

• (a) is not contrary to the provisions of this Act and the rules;
• (b) does not conflict with the co-operative principles; and
• (c) will promote the economic, social and cultural interests of the members of the co-operative society, he may register the amendment:

Provided that in case of amendment of bye-laws of a co-operative bank, prior approval in writing of the Reserve Bank shall be necessary.

(3) The Registrar shall forward to the co-operative society a copy of the registered amendment together with a ce

S.13 When amendments of bye-laws come into force

An amendment of the bye-laws of a co-operative 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 or deemed to be registered.

S.14 Change of name

(1) A co-operative society may by an amendment of its bye-laws, change its name but such change shall not affect any right or obligation of the co-operative society or of any of its members or past members and any legal proceedings pending may be continued by or against the cooperative society under its new name:

Provided that prior approval in writing of the Reserve Bank shall be necessary for change of the name of a co-operative bank.

(2) Where a co-operative society changes its name, the Registrar shall enter the new name on the register of co-operative societies in place of the former name and shall amend the certificate of registration accordingly.

S.15 Change of liability

(1) Subject to the provisions of this Act and the rules, a co-operative society may, by an amendment of its bye-laws change the form or extent of its liability.

(2) When a co-operative society has passed a resolution to change the form or extent of its liability, it shall give notice thereof in writing to all its members and creditors and, notwithstanding any bye-laws or contract to the contrary, any member or creditor shall, during a period of thirty days from the date of service of the notice upon him, have the option of withdrawing his shares, deposits or loans, as the case may be.

(3) Any member or creditor who does not exercise his option within the period specified in sub-section (2) shall be deemed to have assented to the change.

(4) An amendment of a bye-laws of a co-operative society changing the form or extent of its liability shall not be registered or take effect until either--

• (a) the assent thereto of all members and creditors has bee
  

S.16 Amalgamation, transfer of assets and liabilities and division of cooperative societies

(1) A co-operative society may, by a resolution passed by a two-thirds majority of the members present and voting at a general body meeting of the co-operative society--

• (a) transfer its assets and liabilities in whole or in part to any other cooperative society;
• (b) divide itself into two or more co-operative societies.
• (c) 1approve a scheme of compromise or arrangement or reconstruction.

(2) Any two or more co-operative societies may, by a resolution passed by a two-thirds majority of the members present and voting at a general body meeting of each such co-operative society, amalgamate themselves and form a new co-operative society.

(3) The resolution of a co-operative society under sub-section (1) or sub-section (2) shall contain all particulars of the transfer, division or amalgamation, 2[or scheme of compromise or arrangement or reconstruction,] as the case may be:

Provided that in the case of a c

S.17 Power to direct amalgamation, division and re-organisation in public interest, etc.

(1) Where the Registrar is satisfied that it is essential in the public interest, or in the interest of the co-operative movement, or for the purpose of securing the proper management of any co-operative society that two or more co-operative societies should be amalgamated or any co-operative society should be divided to form two or more co-operative societies or should be reorganised, then notwithstanding anything contained in section 16, but subject to the provisions of this section, the Registrar may, by order, provide for the amalgamation, division or reorganisation of these co-operative societies into a single co-operative society or into co-operative societies with such constitution, property, rights, interest and authorities and such liabilities, duties and obligations as may be specified in the order:

Provided that no such order of amalgamation, division or reorganisation in respect of a co-operative bank shall be made without the previous sanction in writing of the

S.18 Registrar to prepare scheme of amalgamation of co-operative bank in certain cases

(1) When an order of moratorium has been made by the Central Government under sub-section (2) of section 45 of the Banking Regulations Act, 1949 (10 of 1949) in respect of a co-operative bank, the Registrar, with the previous approval of the Reserve Bank in writing, may, during the period of moratorium, prepare a scheme--

• (a) for the reorganisation of the co-operative bank; or
• (b) for the amalgamation of the co-operative bank with any other cooperative bank.

S.19 Liability of a co-operative bank to the Deposit Insurance Corporation

Notwithstanding anything contained in sections 16 and 17 or any other provision of this Act, where a co-operative bank, being an insured bank within the meaning of the Deposit Insurance and Credit Guarantee Corporation Act, 1961 (47 of 1961), is amalgamated or reorganised and the Deposit Insurance Corporation has become liable to pay to the depositors of the insured bank under sub-section (2) of section 16 of that Act, the bank with which insured bank is amalgamated or the new co-operative bank formed after such amalgamation, as the case may be, the insured bank or transferee bank shall be under an obligation, to repay the Deposit Insurance Corporation in the circumstances, to the extent of and in the manner referred to in section 21 of the Deposit Insurance and Credit Guarantee Corporation Act, 1961 (47 of 1961).

S.20 Cancellation of registration certificate of the co-operative societies in certain cases

(1) Where the whole of the assets and liabilities of a co-operative society are transferred to another co-operative society in accordance with the provisions of section 16 or section 17, the registration of the first mentioned cooperative society shall stand cancelled and the co-operative society shall be deemed to have been dissolved and shall cease to exist as corporate body.

(2) Where two or more co-operative societies are amalgamated into a new co-operative society in accordance with the provisions of section 16 or section 17, the registration of each of the amalgamating co-operative society shall stand cancelled on the registration of the new co-operative society, and each cooperative society shall be deemed to have been dissolved and shall cease to exist as a corporate body.

(3) Where a co-operative society divides itself into two or more co-operative societies in accordance with the provisions of section 16 or is divided by the Registrar in accordance with the

S.21 Classification

The Registrar shall classify co-operative societies with reference to their objects, area of operation, membership or any other matter.

S.22 Persons who may become members

(1) No person shall be admitted as member of a co-operative society except the following, namely:--

• (a) an individual competent to contract under section 11 of the Indian Contract Act, 1872 (9 of 1872);
• (b) any other co-operative society;
• (c) the Government;
• (d) a firm, a joint stock company, or any other body corporate constituted under any law; and
• (e) such class or classes of persons or association of persons as may be notified by the Government in this behalf:

Provided that the provisions of clause (a) shall not apply to an individual seeking admission to a co-operative society exclusively formed for the benefit of students of a school or college:

Provided further that no individual shall be eligible for admission as a member of any financing bank or federal co-operative society except as provided in clause (m) of section 2.

(2) Notwithstanding anything contained in sub-section (1), the Government may,

S.23 Nominal or associate or joint member

(1) Notwithstanding anything contained in section 22, a co-operative society may admit any person as a nominal or associate or joint member in accordance with its bye-laws and subject to the rules.

(2) A nominal or associate member shall not be entitled to any share in any form whatsoever, in the assets or profits of the co-operative society.

(3) Save as provided in this section, a nominal or associate or joint member shall have such privileges and rights of a member and be subject to such liabilities of a member as may be prescribed in rules and specified in the bye-laws of the co-operative society.

S.24 Member not to exercise rights till due payment made

No member of a co-operative society shall exercise the right of a member unless he has made such payment to the co-operative society in respect of membership and share or has acquired such interest in the co-operative society as may be specified in the bye-laws.

S.25 Votes of members

Every member of a co-operative society shall have one vote in the affairs of the co-operative society:

Provided that--

• (a) in the case of an equality of votes, the Chairman shall have a second or casting vote;
• (b) a nominal or associate or joint member shall not have the right of vote;
• (c) 3[where the Government is a member of the co-operative society, each person nominated by the Government on the committee shall have one vote: Provided that where the Government has subscribed to the share capital of such co-operative society, the voting rights of the Government nominees shall be in proportion to the share of the Government in the paid up equity of the cooperative society which shall be distributed among the nominated members equally;]
• (d) if a member is in default in payment of the sum demanded by the co-operative society or has transferred his interest in a co-operative society to any other member or to any other person w
  

S.26 Manner of exercising vote

(1) Every member of a co-operative society shall exercise his vote in person and no member shall be permitted to vote by proxy.

(2) Notwithstanding anything contained in sub-section (1), a co-operative society which is a member of another co-operative society, may appoint one of its member to vote on its behalf in the affairs of that other co-operative society.

S.27 Restriction on transfer of shares or interest

The transfer of the share or interest of a member in the capital of a co-operative society shall be subject to such conditions as to maximum holding as are specified in section 6.

S.28 Transfer of interest on death of member

(1) On the death of a member, a co-operative society shall transfer the share or interest of the deceased member 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 the bye-laws:

Provided that--

• (i) such nominee, heir or legal representative, as the case may be, may require payment by the co-operative society of the value of the share or interest of the deceased member ascertained as aforesaid; or
• (ii) the co-operative 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 bye-l
  

S.29 Liability of past member and estate of deceased member

(1) Subject to the provisions of sub-section (2), the liability of a past member or of the estate of a deceased member of a co-operative society for the debts of the cooperative society as they existed--

• (a) in case of a past member, on the date on which he ceased to be a member; and
• (b) in the case of a deceased member, on the date of his death, shall continue for a period of seven hundred and thirty days from such date.

(2) Where a co-operative society is ordered to be wound up under section 95, section 96 or section 97, the liability of a past member or of the estate of a deceased member who ceased to be a member or died within seven hundred and thirty days immediately preceding the date of the order of winding up shall continue until the entire liquidation proceedings are completed but such liability shall extend only to the debts of the co-operative society as they existed on the date of his ceasing to be a member or death, as the case may b

S.30 Final authority in a co-operative society

(1) The final authority in a co-operative society shall vest in the general body of members:

Provided that where the bye-laws of a co-operative society provide for the constitution of a smaller body consisting of delegates of members of the cooperative society elected or selected in accordance with such bye-laws, the smaller body shall exercise such powers of the general body as may be prescribed or as may be specified in the bye-laws of the co-operative society.

(2) Notwithstanding anything contained in sub-section (2) of section 26 each delegate shall have one vote in the affairs of the federal co-operative society.

S.31 Annual general body meeting

(1) Every co-operative society shall within a period of 1[one hundred and eighty days] next after the date fixed for making-up its accounts for the year under the rules for the time being in force, call a general body meeting of its members for the purpose of--

• (a) approval of the programme of the activities of the co-operative society prepared by the committee for the ensuing year;
• (b) election, if any, of the members of the committee other than the nominated members subject to the provisions of section 35;
• (c) consideration of the audit report along with audited accounts and the annual report;
• (d) disposal of the net profits; and
• (e) consideration of any other matter which may be brought forward in accordance with the bye-laws.

(2) If a co-operative society fails to hold the annual general body meeting within the aforesaid period of 1[one hundred and eighty days], the Registrar or any person auth

S.32 Returns to be filed to the Registrar after annual general body meeting

Every year within thirty days of holding of annual general body meeting, the committee shall file returns relating to its constitution, business and allied matters to the Registrar as prescribed and if the returns are not filed, it shall be an offence under this Act and the persons responsible shall be penalised in accordance with the provisions of this Act.

S.33 Special general body meeting

(1) The committee of a co-operative society may, at any time, call a special general body meeting of the co-operative society and shall call such meeting within thirty days after the receipt of a requisition in writing from the Registrar or on a request to the Registrar by the institution to which co-operative society is indebted, if the number of defaulter members of such co-operative society is one-fifths or more among the loanee members or on a requisition from one-fifths members out of total membership of a co-operative society.

(2) If a special general body meeting of a co-operative society is not called in accordance with the requisition referred to in sub-section (1), the Registrar or any person authorised by him in this behalf shall have the power to call such meeting and that meeting shall be deemed to be a meeting called by the committee and the Registrar may order that the expenditure incurred in calling such a meeting shall be paid out of the funds of the co-oper

S.34 Constitution of committee

The general body meeting of a co-operative society shall constitute a committee as prescribed and in accordance with the bye-laws and entrust the management of affairs of the co-operative society to such committee.

S.35 Election and nomination of members of committee

2[(1) The superintendence, direction and control of the preparation of the electoral rolls for, and the conduct of elections of the members of the committee of, a co-operative society shall be vested in the committee which shall appoint returning officer who shall not be a member or an employee of the society:

Provided that on the request of the committee or one-sixth members of the society, and in case of dispute in a society, the Registrar may appoint the returning officer to conduct the election of a society:

Provided further that the Government shall appoint returning officer, not below the rank of a gazetted officer or a retired gazetted officer to conduct the election of a co-operative bank, financial bank, federal co-operative society and such housing society as has been allotted land and draw of lots has not been conducted in accordance with the provisions of section 77 and such housing society as is awaiting allotment of land.]

(2) The vote

S.36 Removal of committee or its officer

(1) A motion for expressing lack of confidence in the committee or any of its officer may be made in a special general body meeting convened for the purpose.

(2) The requisition for convening the special general body meeting as above shall not be admissible unless moved in writing by not less than one-fifths of the total members of a co-operative society, if the motion of no confidence is carried by a simple majority of the members present and voting, the committee shall be removed and special general body meeting shall also elect an ad-hoc committee to take care of the affairs of the co-operative society which shall also hold elections to the committee within ninety days of the date of the appointment of ad-hoc committee.

S.37 Supersession of committee

(1)If, in the opinion of the Registrar, the committee of any co-operative society 1[continuously makes default for ninety days] or is negligent in the performance of the duties imposed on it by or under this Act or the rules framed thereunder, the bye-laws or commits any act which is prejudicial to the interest of the co-operative society or its members or defies the directions issued by the Registrar under section 42 of this Act or 2[ fails to comply with the provisions of section 92 or there is a stalemate in the constitution or function of the committee or fails to initiate recovery of the dues of the financing institution inspite of a notice issued to the co-operative society by the financing institution within a period of ninety days or fails to remit the recovered amount from members, to the financing institution to which the society is indebted within a period of ninety days,] the Registrar may after giving the committee an opportunity to state its obje

S.38 Securing possession of records, etc

(1) (a) If the records, registers or the books of account of a co-operative society are likely to be tampered with or destroyed and the funds and property of a co-operative society are likely to be misappropriated or misapplied; or

(b) if the committee of a co-operative society is reconstituted at general body meeting of the co-operative society or the committee of a co-operative society is removed by the Registrar under section 37 or if the co-operative society is ordered to be wound up under section 95, section 96 or section 97 and the outgoing members of the committee refuse to hand over charge of the records and the property of the co-operative society within fifteen days of notice by the new committee or administrator or the liquidator to those having or entitled to receive such charge;

(c) the newly elected committee or administrator or the liquidator, as the case may be, on expiry of fifteen days notice shall apply to the Registrar, who on application by the ne

S.39 Acts of co-operative society not to be invalidated by certain defects

No act of a co-operative society or of any committee or of any officer shall be deemed to be invalid by reason only of the existence of any defect in procedure or in the constitution of the co-operative society or of the committee or in the appointment or election of an officer or on the ground that such officer was disqualified for his appointment.

S.40 Expulsion of members

(1) Any member of a co-operative society (other than a co-operative housing society) may be expelled by a resolution passed by the committee of the co-operative society subject to the approval of such resolution by the Registrar if--

• (i) the member has wilfully deceived the co-operative society by false document to obtain the membership of such co-operative society; or
• (ii) the member incurs any of the disqualifications for being a member of the co-operative society; or
• (iii) the member has brought disrepute to the co-operative society or has done any other act detrimental to the interest and proper working of the co-operative society:

Provided that the member concerned shall not be expelled unless he has been given a reasonable opportunity to represent himself in the matter:

Provided further that no member shall be expelled unless the resolution for such expulsion is passed by a majority of not less than three-fourths of the memb

S.41 Cessation of membership of co-operative society

(1) Notwithstanding anything contained in this Act, a person shall cease to be a member of a co-operative society--

• (a) on his resignation from such membership; or
• (b) on his death, if there is no claim by the nominee or legal heirs within three hundred sixty-five days; or
• (c) on transfer of the whole of his share or interest in that co-operative society; or
• (d) on his expulsion or incurring any disqualification for being a member of that co-operative society.

(2) If any question as to whether a member has incurred any of the disqualifications mentioned in sub-section (1), it shall be referred to the Registrar for his decision, whose decision shall be final and binding.

(3) The Registrar may of his own motion, if satisfied that any member has incurred any of the disqualification under sub-section (1) declare through an order in writing that such member is disqualified to be a member:

Provided that no such order sha

S.42 Directions by the Registrar for successful conduct of business

The Registrar may from time to time issue such directions or directives to a cooperative society or a class of co-operative societies as he considers necessary for successful conduct of business and on all matters incidental thereto and such directions or directives shall be binding on them:

Provided that this power shall be limited to co-operative society with government equity of fifty-one percentum or more.

S.43 Co-operative society to be body corporate

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

S.44 First charge of co-operative society on certain movable assets of member for the amount due to him

(1) Notwithstanding anything contained in this Act or any other law for the time being in force, but subject to any prior claim of the Government in respect of land revenue or any money recoverable as land revenue, any debt or outstanding demand owing to a co-operative society by any member or past member or deceased member shall be a first charge upon the crops and other agricultural produce, cattle, fodder for cattle, agricultural or industrial implements or machinery, raw materials for manufacture and any finished products manufactured from such raw materials, belonging to such member, past member or forming part of the estate of the deceased member, as the case may be.

(2) No person shall transfer any property which is subject to a charge under sub-section (1) except with the prior permission in writing of the co-operative society which holds the charge.

(3) Notwithstanding anything contained in any law for the time being in force, any transfer of property made in

S.45 Charge on immovable property of members borrowing loans from certain co-operative societies

Notwithstanding anything contained in this Act or in any other law for the time being in force--

• (i) any person who makes an application to a co-operative society of which he is a member for a loan shall, if he owns any land or has interest in any land as tenant, make a declaration in the prescribed form which shall state that the applicant thereby creates a charge on such land or interest specified in the declaration for the payment of the amount of loan which co-operative society may make to the member in pursuance of the application and for all future advances, if any, required by him which the co-operative society may make to him as such member subject to such maximum as may be determined by the co-operative society together with the interest on such amount of loan and advances;
• (ii) a declaration made under clause (i) may be varied at any time by a member with the consent of the co-operative society in favour of which such charge is created;
• (iii
  

S.46 Charge and set-off in respect of share or contribution or interest of members

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

S.47 Share or contribution or interest not liable to attachment

Subject to the provisions of section 45, the share or contribution or interest of a member or past member or deceased member in the capital of a co-operative society shall not be liable to attachment or sale under any decree or order of any court in respect of any debt or liability incurred by such member, and a receiver under the Provincial Insolvency Act, 1920 (5 of 1920) shall not be entitled to or have any claim on such share or contribution or interest.

S.48 Register of members

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

• (a) the date on which any person entered in such register or list became a member; and
• (b) the date on which any such person ceased to be a member.

S.49 Admissibility of copy of entry as evidence

(1) A copy of any entry in a book of a co-operative society regularly kept in the course of its business shall, if certified in such manner as may be prescribed, be received in any suit or legal proceedings 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,

(2) No officer of a co-operative society and no officer in whose office the books of a co-operative society are deposited after liquidation shall, in any legal proceedings to which the co-operative society or the liquidator is not a party, be compelled to produce any of the co-operative society's books or documents the contents of which can be proved under this section, or to appear as a witness to prove the matters, transactions and accounts therein recorded, except under order of the court or the arbitrator made for special cause.

S.50 Exemption from compulsory registration of instruments

Nothing in clauses (b) and (c) of sub-section (1) of section 17 of the Registration Act, 1908 (16 of 1908) shall apply to--

• (1) any instrument relating to shares in a co-operative society notwithstanding that the assets of the co-operative society consist in whole or in part of immovable property; or
• (2) any debenture issued by any such co-operative society and not creating, declaring, assigning, limiting or extinguishing any right, title or interest to or in immovable property, except in so far as it entitles the holder thereof to the security afforded by a registered instrument whereby the co-operative society has mortgaged, conveyed or otherwise transferred the whole or part of its immovable 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 co-operative society.

S.51 Exemption from certain taxes, fees and duties

(1) The Government may, by notification in the Official Gazette, remit in respect of any class of co-operative societies--

• (a) the stamp duty chargeable under any law for the time being in force in respect of any instrument executed by or on behalf of a co-operative society or by an officer or member thereof and relating to the business of such co-operative society or any class of such instruments or in respect of any award or order made under this Act, in cases, where, but for such remission the co-operative society, officer or member, as the case may be, would be liable to pay such stamp duty; and
• (b) any fee payable under any law for the time being in force relating to the registration of documents or court fees.

(2) The Government may, by notification in the Official Gazette, remit in respect of any class of co-operative societies--

• (b) taxes on agricultural income; and
• (c) taxes on professions, trades, callings and empl
  

S.52 Deduction from salary to meet co-operative society's claim in certain cases

(1) Notwithstanding anything contained in any law for the time being in force, a member of a co-operative society may execute an agreement in favour of the co-operative society providing that his employer shall be competent to deduct from the salary or wages payable to him by the employer, such amount as may be specified in the agreement and to pay the amount so deducted to the co-operative society in satisfaction of any debt or other demand owing by the member to the co-operative society.

(2) On the execution of such agreement, the employer shall, if so required by the co-operative society by a requisition in writing and so long as the cooperative society does not intimate that the whole of such debt or demand has been paid, make the deduction in accordance with the agreement and pay the amount so deducted to the co-operative society, as if it were a part of the salary or wages payable on the day as required under the Payment of Wages Act, 1936 (4 of 1936). Such payment sha

S.53 Funds other than net profits not to be divided among members

No part of the funds other than net profits of a co-operative society shall be divided by way of bonus or dividend or otherwise distributed among its members:

Provided that after at least one-fourths of the net profits in the year has been carried to the reserve fund, payments from the remainder of such profits and from any profits of past years available for distribution may be made to the member to such extent and under such conditions as may be prescribed by the rules or bye-laws.

S.54 Contribution to charitable purpose

Any co-operative society may, with the prior approval of the general body, after one-fourths of the net profits in any year has been carried to the reserve fund, contribute an amount not exceeding five per cent of the remaining net profits to any purpose connected with the development of co-operative movement or charitable purpose as defined in section 2 of the Charitable Endowments Act, 1890 (6 of 1890).

S.55 Contribution to Co-operative Education Funds

(1) A co-operative society shall out of its net profits in any year credit such portion of the profits not exceeding five per cent as may be prescribed to the Co-operative Education Fund constituted under the rules.

S.56 Investment of funds

(1) A co-operative society may invest or deposit its fund--

• (a) in the postal savings bank; or
• (b) in any of the securities specified in section 20 of the Indian Trusts Act, 1882 (2 of 1882); or
• (c) in the shares or securities of any other co-operative society; or
• (d) with co-operative or scheduled or nationalised banks; or
• (e) in any federal co-operative society of which it is a member or apex or financing bank; or
• (f) in any other mode permitted by the rules:

Provided that the co-operative bank shall be required to make investment of its funds in accordance with the directions, instructions and guidelines of the Reserve Bank.

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

S.57 Restrictions on loans

(1) A co-operative 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 co-operative society may make a loan to another co-operative society:

Provided further that the co-operative bank shall make loans and advances as per directions of the Reserve Bank from time to time.

(2) Notwithstanding anything contained in sub-section (1), a co-operative society may make a loan to a depositor within his deposit on its security.

S.58 Restrictions on borrowings

(1) A co-operative society may receive deposits, raise loans and receive grants from external sources to such extent and under such conditions as may be specified in the bye-laws:

Provided that the total amount of deposits and loans received during any financial year shall not exceed ten times of the sum of subscribed share capital and accumulated reserves:

Provided further that while calculating the total sum of subscribed share capital accumulated reserves, the accumulated losses shall be deducted.

(2) Subject to the provisions of sub-section (1), a co-operative society may accept funds or borrow fund for the fulfillment of its objects as are mutually contracted upon and approved by the general body of members of the cooperative society.

(3) A co-operative society may issue non-convertible debentures or other instruments subject to the provisions of any law for the time being in force to raise resources for fulfillment of its objectives to the extent o

S.59 Restrictions on other transactions with non-members

Save as provided in section 57 and section 58, the transactions of a co-operative society with any person other than a member shall be subject to such prohibitions and restrictions, if any, as may be prescribed.

S.60 Audit

(1) A co-operative society shall get its accounts audited annually by an auditor selected from the panel prepared by the Registrar in the prescribed manner within the period of 1[one hundred twenty days from the prescribed date for making up its account for the year]

(2) The audit under sub-section (1) shall include an examination of overdue debts, if any, the verification of the cash balance, securities and a valuation of the assets and liabilities of the co-operative society:

Provided that in the case of a co-operative group housing society where land has been allotted, the audit report shall contain a separate chapter regarding detailed financial working of the co-operative society before construction, during construction, and on allotment of flats to members, detailing individual investment, defaults if any, by an individual, action taken by the committee in case of default, etc.:

Provided further that the Registrar shall be competent to issue gu

S.61 Inspection of co-operative societies

(1) The Registrar may, on the request made by a creditor or, not less than one thirds of the members of the committee, or not less than one fifths of the total number of members, of a co-operative society, undertake inspection of a co-operative society or class of co-operative societies by general or special order in writing and authorise any person by order in writing in this behalf, to make an inspection into the constitution, working and financial condition of a co-operative society.

1[ Provided that where a serious complaint is made by a member or a pubic servant in writing about the affairs of a co-operative society or committee or office bearers, to the Registrar or to any person authorized by him in this regard not below the rank of Joint Registrar and if the Registrar is prima-facie satisfied, after recording his views in writing and affording an opportunity to the person against whom complaint has been made, he may order an inspection in respect of only i

S.62 Inquiry by Registrar

(1) The Registrar may on the basis of findings of audit or inspection under section 61 or request from any creditor, or not less than one-thirds of the total members of the co-operative society, by general or special order in writing in this behalf, hold an inquiry or direct any of the subordinate officials authorised by general or special order in this behalf to hold an inquiry in respect of such matters and such period as may be specified in this order, into the constitution, business, management and financial affairs of a co-operative society and such enquiry shall be completed within such period as may be specified in the order but not exceeding ninety days.

(2) The Registrar or the official authorised by him under sub-section (1) shall have the following powers, namely:--

• (a) he shall at all times have, for purpose of examination free access to the books, accounts, cash and other properties belonging to, or in the custody of, the co-operative society and ma
  

S.63 Inspection of books of indebted co-operative societies

(1) The Registrar shall, on the application of creditor of a co-operative society, inspect or direct a subordinate official authorised by him by order in writing in this behalf, to inspect the books of the co-operative society:

Provided that no such inspection shall be made unless the applicant--

• (a) satisfies the Registrar that the debt is sum then due, and that he has demanded payment thereof and has not received satisfaction within a reasonable time; and
• (b) deposits with the Registrar such sum as security for the costs of proposed inspection as the Registrar may require.

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

S.64 Cost of inquiry

Where an inspection is held under section 61, or an inquiry is made under sections 62, the Registrar may apportion the costs or such part of the costs as he may think fit, between the co-operative society, the members or creditor demanding an inspection or inquiry if any and the officers or former officers and the members or past members of the co-operative society:

Provided that--

• (a) no order of the apportionment of the costs shall be made under this section unless the co-operative society or the person liable to pay the costs thereunder has had reasonable opportunity of being heard;
• (b) the Registrar shall state in writing under his own hand the grounds on which the costs are apportioned.

S.65 Recovery of cost

Any sum awarded by way of costs under section 64 may be recovered, as if it were an arrears of land revenue.

S.66 Surcharge

(1) If in the course of an audit, inspection, inquiry or the winding up of a co-operative society, it is found that any person who is or was entrusted with the organisation or management of such co-operative society or who is or has at any time been an officer or an employee of the co-operative society had made any payment contrary to this Act, the rules or the bye-laws or has caused any deficiency in the assets of the co-operative society by breach of trust or wilful negligence or has misappropriated or faudulently retained any money or other property belonging to such co-operative society, the Registrar may, of his own motion, or on the application of the committee, liquidator or any creditor, inquire himself or direct any person authorised by him by an order in writing in his behalf, to inquire into the conduct of such person.

(2) Where an inquiry is made under sub-section (1), the Registrar may, after giving the person concerned an opportunity of being heard make an orde

S.67 Rectification of defects in audit inspection or inquiry

The Registrar shall draw the attention of the co-operative society to the defects noticed in every audit to be conducted under section 60 or inspection held under section 61 or inquiry made under section 62 or inspection of books made under section 63 and if the co-operative society is affiliated to federal co-operative society also draw the attention of that federal co-operative society may make an order directing the co-operative society or its officers to take such action and within such time as may be specified therein to remedy such defects.

S.68 Power to summon and examine documents and persons, etc.

(1) The Registrar, or the auditor or any person authorised by either of them to exercise any powers under this Act shall at all reasonable times have free access to the books, accounts, documents, records, securities, cash and other properties belonging to, or in the custody of the co-operative society and may summon any person in possession of, or responsible for the custody of any such books, accounts, documents, records, securities, cash or other properties, to produce all or any of them at any place at the headquarters of the co-operative society or any branch thereof.

(2) The Registrar or any other subordinate official authorised by him to exercise any powers under this Act--

• (a) may summon any person who, he has reason to believe has knowledge of any of the affairs of the co-operative society to appear before him at any place at the headquarters of the co-operative society or any branch thereof or at any other place specified by the Registrar, and may exam
  

S.69 Maintenance of accounts and books, etc.

(1) The paid executive of every co-operative society by whatsoever designation he is called, or the president or any other office bearer as provided in the bye-laws of the co-operative society, if there is no such paid executive for that co-operative society, shall be bound to keep, maintain or cause to be maintained such accounts and books relating to that co-operative society in such manner as may be prescribed and shall be responsible for the correct and up-to-date maintenance of such accounts and books, for producing or causing production of the same when called for in connection with audit, inspection or inquiry.

(2) If such accounts and books are not maintained, the Registrar may direct the person who is responsible to bring the accounts and books up-to-date to make them up-to-date, and he shall be bound to comply with such direction within the period specified therein.

(3) If the person fails to comply with the direction under sub-section (2), the Registrar may

S.70 Disputes which may be referred for arbitration

(1) Notwithstanding anything contained in any law for the time being in force, if any dispute touching the constitution, management or the business of a co-operative society other than a dispute regarding disciplinary action taken by the co-operative society or its committee against a paid employee of the co-operative society arises--

• (a) among members, past members and persons claiming through members, past members and deceased members; or
• (b) between a member, past member or person claiming through a member, past member or deceased member and the co-operative society, its committee or any officer, agent or employee of the cooperative society or liquidator, past or present; or
• (c) between the co-operative society or its committee and any past committee, any officer, agent or employee, or any past officer, past agent or past employee or the nominee, heirs or legal representatives of any deceased officer, deceased agent, or deceased employee of the co-
  

S.71 Reference of disputes to arbitration

(1) The Registrar on the receipt of reference of dispute under section 70 shall--

• (a) decide the dispute himself, or
• (b) refer it for disposal to arbitration council.

(2) The Government shall constitute as many arbitration councils as may be necessary each consisting of three members including a Chairman, to decide disputes under this section.

(3) (a) For selecting persons for appointment as members of the arbitration council, the Government shall constitute a selection committee as often as may be required which shall consist of the following, namely:--

• (i) Principal Secretary to the Government -- Chairman
• (ii) Secretary, Law and Judicial -- Member
• (iii) Registrar Co-operative Societies -- Member Secretary.

(b) The selection committee shall finalise within a period of thirty days from the date on which the reference is made to it.

(c) The selection committee shall recommend a panel of na

S.72 Power of financing bank and federal co-operative society to proceed

(1) If a co-operative society is unable to pay its debts to a financing bank or a federal co-operative society by reason of its members committing default in the payment of the moneys due by them, the financing bank or the federal cooperative society