Madhya Pradesh Swayatta Sahakarita Madiiyastham Parishad Niyam, 2006

The M.P. Swayatta Sahakarita Adhiniyam, 1999

(M.P. Act No. 2 of 2000)

mp756

[Dated 29th December, 1999]

LEGISLATIVE HISTORY 6

Received the assent of the Governor on the 29th December, 1999; assent first published in the "Madhya Pradesh Gazette Extra ordinary)" dated the 4th January, 2000.

An Act to provide for the formation of co-operative and conversion of a cooperative society into the co-operative as self-reliant, self help, mutual-aid, autonomous, voluntary, democratic, business enterprises, owned, managed and controlled by members for their economic and social betterment, through the financially gainful provision of services which fulfil a common core need fell by them, and for the matters connected therewith or incidental thereto.

Be it enacted by the Madhya Pradesh Legislature in the Fiftieth Year of the Republic of India, as follows ;-

CHAPTER I

Preliminary

Short title, extent and commencement.- (1) This Act may be called the Madhya Pradesh Swayatta Sahakarita Adhiniyam, 1999.

(2) It extends to the whole of the State of Madhya Pradesh.

(3) It shall [come into force on such date] as the State Government may, by notification, appoint.

Definitions.- (1) In this Act, unless the context otherwise requires,-

(a) "arbitration council" means a group of three individuals constituted by the general body of a co-operative for settlement of disputes under Section 57 in accordance with the provisions of this Act and the bye laws;

(b) "board" means by governing body of a co operative by whatever name called, to which the direction of the affairs of the co-operative is entrusted under the bye laws;

(c) "bye-laws" means the bye-laws of a co-operative for the time being in force and includes the amendment made therein from time to time;

(d) "chief executive" means the individual, in paid or honorary capacity, nominated or elected or appointed by the board from among members, directors or others, in accordance with the bye-laws, who shall perform such functions, have such responsibilities and exercise such powers its specified in the bye-laws, and assigned by the board;

(e) "common need" means the economic need which is common to till persons who wishes to form a co-operative, or have taken membership in a co-operative, and which is consistent with the objective of the co-operative;

(f) "co-operative", where used as a noun, means an autonomous association of persons united voluntarily to meet their common need through a jointly owned and democratically controlled enterprise registered under this Act;

(g) "co-operative society" means a society registered under the Co operative Societies Act;

(h) "Co-operative Societies Act" means the Madhya Pradesh Co-operative Societies Act, 1960 (No. 17 of 1961);

(i) "co-operative business" means a business which intends to function in accordance with the co-operative principles specified m Schedule A;

(j) "co-operative identity" means the statement of co-operative identity specified in Schedule A;

(k) "cooperative tribunal" means the Madhya Pradesh State Co operative Tribunal constituted under Section 77 of the Co-operative Societies Act;

(l) "core services" means the central services provided to members, through which a co-operative intends to meet the need common to all members for the fulfilment of which the co-operative was formed, and includes value adding services;

(m) "Court" means the Civil Court of competent jurisdiction;

(n) "deficit" means the next excess of expenditure over income arrived at, at the end of a financial year;

(o) "deficit charge" means the amount collected from or debited to the accounts of members, in proportion to the use or non-use of the services of the co-operative, in accordance with the bye-laws and resolution of the general body to meet deficit, if any, in whole or m part;

(p) "delegate" means a person elected by group of individual members to represent them in the general body of the ci)operative in accordance with the bye-laws of the co-operative;

(q) "delegate general body" in relation to a co-operative means all its delegates;

(r) "delegate general body meeting" means a meeting of the delegates, called and conducted in accordance with the provisions of this Act and the bye-laws;

(s) "director" means the director of the board;

(t) "family" means a person, his spouse, his children dependent on him and his other relatives dependent on him and jointly residing with him;

(u) "general body" in relation to a co-operative, means all its members;

(v) "general meeting" means a meeting of the general body called and conducted in accordance with the provisions of this Act and the bye-laws;

(w) "member" means a person who is admitted as a member of the co-operative in accordance with the provisions of this Act and the bye-laws;

(x) "officer-bearer" means President and Vice-President and director elected by the board to any office of co-operative in accordance with the bye-laws;

(y) "potential member" means a person who does need the core services being offered by a co-operative, and is eligible to be a member of that co-operative, but has not yet applied for membership;

(z) "'primary co-operative" means a co-operative of which no other co-operative is a member;

(aa) "Registrar" means the Registrar of co-operatives appointed under Section 3 of this Act;

(bb) "Representative" means a member nominated for the time being by a co-operative to represent its interest at the time of promotion of a [principal co-operative] and at a meeting of [principal co-operative] to which the co-operative is affiliated;

(cc) "[principal co-operative]" means a co-operative whose members are co-operatives;

(dd) "service" means such facilities as are organised primarily for being provided by the co-operative to members to meet its objective;

(ee) "special resolution" means a resolution of the general body which has the approval of more than fifty per cent of the members having right to vote and not less than two-third members present and noting at the general meeting;

(ff) "surplus" means the excess of income over expenditure, arrived at, at the end of a financial year, after the payment of interest, if any, on share capital, and before the payment of surplus refund, and allocation of reserves and other funds;

(gg) "surplus refund" means the refund from the surplus given to or credited to the accounts of, members, in proportion to their use or non use of the services of the co-operative in accordance with the bye-laws and resolution of the general body.

(2) Words and expressions used in this Act and not defined herein but defined in the Madhya Pradesh Co-operative Societies Act, 1960 (No. 17 of 1961), and the rules made thereunder, shall have meaning assigned to them in that Act and the rules made thereunder.

CHAPTER II

Incorporation

Registrar and other officers.- (1) The State Government shall appoint a person to he the Registrar of co-operatives for the State and may appoint one or more officers of the following categories to assist him, namely :-

(a) Additional Registrar of Co-operatives;

(b) Joint Registrar of Co-operatives;

(d) Assistant Registrar of Co-operatives;

(e) Such other categories of officers as may be specified by the State Government in this behalf.

(2) The officers appointed to assist the Registrar shall within such areas as the State Government may specify, exercise such powers and perform such duties conferred and imposed on the Registrar by this Act as the State Government may, by special or general order, direct.

(3) The officers appointed to assist the Registrar shall be subordinate to him and shall work under his general guidance supervision and control.

Registration of Co-operative.- (1) Subject to the provisions of this act, a co-operative which intends to be self reliant, autonomous, voluntary, democratic business enterprise constituted in accordance with the co-operative principles specified in Schedule A or a co-operative established with the object of facilitating the operations of such co-operatives, other than the housing co-operative shall be registered under this Act:

Provided that no co-operative [which has taken loan, share capital or Government guarantee from Government] shall be registered as a co-operative under this Act.

(2) No co-operative, other than a co-operative of which another co-operative is a member, shall be registered under this Act unless it. consists of at least [ten] persons competent to contract under Section 11 of the Indian Contract Act, 1872 (IX of 1872) and belonging to [ten] different families.

(3) For the purpose of registration, an application therefor shall be submitted to the Registrar by hand or by registered post, signed by at least [ten] persons qualified under sub-section (2) who wish to form a primary co-operative or by a duly authorised person on behalf of every such registered co-operative which wish to form a [principal co-operative].

(4) The person by whom or on whose behalf such application is made, shall furnish such information in regard to the proposed co-operative as the Registrar may require.

(5) Every such application shall be accompanied by-

(a) the original declaration signed by applicants expressing commitment to the co-operative principles specified in Schedule A;

(b) the original and four copies of the proposed bye-laws of the co-operative as adopted by the applicants;

[(d) a list of names of all the applicants with their photos and such proof of their permanent residential address as specified by the Registrar;]

(e) a copy of a treasury challan in support of payment of registration fee calculated in accordance with the provisions of sub-section (1) of Section 18.

(6) The Registrar shall register the co-operative and also take on record its bye-laws and communicate by registered post a certificate of registration and the original bye-laws signed and sealed by him, within sixty days from the date of submission or receipt of application for registration as the case may be, to such person specified in the application for the purpose subject to the fulfilment of the following conditions, namely :-

(a) the application is in conformity with the requirements laid down by this Act;

(b) the object of the proposed co-operative is the economic and social betterment of its members through the provisions of core services to fulfil such common need as specified in the proposed bye-laws;

(c) the proposed bye-laws are not inconsistent with the provisions of this Act and are not against the aims and objects of the co-operative; and

(d) the registration fee has been paid.

(7) If the conditions laid down in sub-sections (4) and (6) are not fulfilled, the Registrar shall communicate by registered post the order of refusal together with the reasons therefor, within sixty days from the date of submission or receipt of application for registration, as the case may be, to the person as specified in the application for the purpose ;

Provided that no order of refusal shall be passed without giving an opportunity of being heard to the applicant.

(8) The certificate of registration signed and sealed by the Registrar shall be conclusive evidence that the co-operative mentioned therein is a co-operative duly registered under this Act, unless it is proved that the registration of the co-operative has been subsequently cancelled.

(9) No co-operative shall commence business unless it has obtained a certificate of Registration under sub-section (7) and every member of such co-operative carrying on business in contravention of this sub-section shall be severally liable for all liabilities incurred in such business.

(10) Where within sixty days of submission or receipt of the application for registration, as the case may be, an applicant receives neither the certificate of registration nor the order of refusal, the applicant may move the Co-operative Tribunal for redressal.

Conversion of co-operative society into co-operative.- (1) Notwithstanding anything contained in the Co-operative Societies Act, the co-operative society other than a housing co-operative society registered and functioning under the Co-operative Societies Act, which intends to convert itself into co-operative, may apply for conversion under this Act:

[Provided that where the Central Government or State Government have given share capital, loan or Government guarantee to a co-operative society intending to convert itself into a swayatta co-operative under this Act, the co-operative society shall, before applying for under this Act, return such share capital, loan or guarantee to such Government, and such Government shall accept such returned share capital, loan or guarantee as the case may be.]

(2) (a) An application for conversion shall be submitted to the Registrar by hand or by registered post, by the elected board of such co-operative society which intends to convert itself into a co-operative under this Act, on the basis of a resolution passed by a majority of members present at a meeting of the general body to the co-operative society making application under sub-section (1) (hereinafter in this section referred to as such general body), called with atleast twenty days notice provided that such meeting is attended by atleast twenty-five per cent of total members or five hundred members, which ever is less.

(b) The person by whom or on whose behalf such application is made shall furnish such information in regard to the co-operative society applying under sub-section (1) or the proposed co-operative as the Registrar may require.

(3) Every such application shall be accompanied by-

(a) a true copy of the resolution of such general body expressing commitment to the co-operative principles specified in Schedule A;

(b) evidences to show that the society is not in possession of any share capital, loan or guarantee [x x x] from the Central or the State Government;

(d) a true copy of the resolution of such general body adopting the bye-laws;

(e) a true copy of the latest annual report and audited statement of accounts of such co-operative society;

(f) a true copy of the resolution of such general body along with particulars regarding the writing off of accumulated losses, if any from various reserves or by debting to the accounts of members as decided at the meeting of such general body;

(g) a list of members who attend such general body meeting;

(h) a copy of the treasury challan in support of payment of registration fee calculated in accordance with the provisions of sub-section (1) of Section 18.

(4) The Registrar shall register the co-operative and also take on record its bye-laws and communicate by registered post a certificate of registration and the original bye-laws signed and sealed by him, within ninety days from the date of submission or receipt of application for registration, as the case may be, to such person as specified in the application for the purpose subject to the fulfilment of following, namely :-

(a) the application is in conformity with the requirements laid down by this Act;

(b) the object of the proposed co-operative is the economic and social betterment of its members through the provision of core services to fulfil such common need as specified in the proposed bye-laws;

(i) not inconsistent with the provisions of this Act; or

(ii) not against the aims and objects of the co-operative; or

(iii) is in conformity with the co-operative principles specified in Schedule A; and

(d) the registration fee has been paid.

(5) If the conditions mentioned in sub-sections (3) and (4) are not fulfilled, the Registrar shall communicate by registered post the order of refusal together with the reasons therefor, within ninety days from the date of submission or receipt of application for registration, as the case may be, to the person as specified in the application for the purpose :

Provided that no order of refusal shall be passed without giving an opportunity of being heard to the applicant.

(6) The certificate of registration signed and sealed by the Registrar shall be conclusive evidence that the co-operative mentioned therein is a co-operative duly registered under this Act, unless it is proved that the registration of the co-operative has been subsequently cancelled.

(7) Where within ninety days of submission or receipt of the application for registration, as the case may be, an applicant receives neither the certificate of registration nor the orders of refusal, the applicant may move the co-operative Tribunal for redressal.

(8) Where a co-operative is registered under sub-section (4), it shall send to the Registrar of Co-operative Societies a copy of the registration certificate under the Co-operative Societies Act, and a copy of the registration certificate under this Act and the Registrar of Co-operative Societies shall, within thirty days of the receipt of such information, delete the name of such co-operative society from the register of co-operative societies.

(9) Where a co-operative is registered under sub-section (4), the assets and liabilities, the rights and obligations, and members of the applicant co-operative society shall become the assets and liabilities, the rights and obligations, and the members of the co-operative registered under this Act, and all transactions of the applicant co-operative society shall be deemed to have been the transactions of the co-operative registered under this Act.

Co-operative to be body corporate.- The registration of a co-operative shall render it a body corporate by the name under which it is registered having perpetual succession and a common seal with power to acquire, hold and dispose of property, to enter into contracts, to institute and defend suits and other legal proceedings and to do all other things necessary for the purpose for which it was constituted.
Bye-laws.- (1) A co-operative, shall have a set of bye-laws, and the affairs of the co-operative shall be managed in accordance with the terms, conditions and procedure specified in the bye-laws.

(2) Subject to the provisions of this Act, the functioning of every co-operative shall be regulated by its bye-laws.

(3) The bye-laws may contain such matters as decided by the general body and shall be specific on all matters listed in Schedule B.

Amendment of bye-laws.- (1) A co-operative may decide, by a special resolution, to amend he provisions of its bye-laws and for that purpose the text of proposed amendment with reasons therefor shall be sent to each member, alongwith the notice of the general meeting at which the proposed amendment is to be discussed.

(2) A copy of an amendment of the bye-laws shall be forwarded by the co-operative by registered post to the Registrar within a period of thirty days from the date of the general meeting at which the resolution was passed.

(3) A copy of amendment forwarded to the Registrar shall be signed by the President and two directors and shall be accompanied by the following particulars :-

(a) a copy of the resolution adopting the amendment;

(b) the date of the general meeting at which the amendment was adopted;

(d) a list of members who attended such general meeting and a list of members who voted for or against the resolution in such general meeting.

(4) The Registrar shall take on record the amendment of the bye-laws received under sub-section (2) subject to the fulfilment of the following conditions, namely :-

(a) the amendment is not inconsistent with the provisions of this Act or any of its existing bye-laws or is not against the aims and objects of the co-operative; and

(b) the amendment is in conformity with the co-operative principles specified in Schedule A.

(5) The Registrar shall, by order, refuse to register the amendment if any of the conditions specified in sub-section (4) is not fulfilled :

Provided that no such order of refusal shall be passed without giving a reasonable opportunity to the co-operative to reconsider the amendment within the period specified by him.

(6) The Registrar-

(i) may after considering the reply received in response to the opportunity given under sub-section (5), refuse amendment; and

(ii) shall, if no reply is received within the period specified by him under the proviso to sub-section (5), refuse amendment; and he shall communicate such decisions within thirty days of the receipt of such reply or the expiry of the period referred to in clause (ii), as the case may be.

(7) An appeal against the order of refusal shall lie to the Co-operative Tribunal for redressal.

Name of co-operative.- (1) The full name of every co-operative shall contain the word "co-operative" or its equivalent in any Indian language.

(2) A co-operative shall not be registered with the same name as another co-operative business already registered under this Act or the Co-operative Societies Act :

Provided that where the bye-laws of a [principal co-operative] require that all its members which are co-operatives to use a common name, the name of each such member co-operative shall have its location or other distinguishing feature included in the name at the beginning or end of the common name.

(3) Every co-operative shall display its full name in legible characters in a conspicuous position :-

(a) at every office or place at which it carries on business;

(b) in all notices and other official publications;

(c) on all its contracts, business letters, orders for goods, invoices, statements of accounts, receipts and letters of credit; and

(d) on all bills of exchange, promissory notes, endorsements, cheques and orders for money signed on its behalf.

(4) Every co-operative shall display its full name in legible characters on its common seal.

(5) A co-operative registered with limited liability under this Act shall have as a suffix to its name the word "limited" or its equivalent in any Indian language.

(6) Nothing in sub-section (2) shall prevent a co-operative displaying more conspicuously than the full name, any shorter name by which it is popularly known and which, too, is included in the bye-laws.

(7) A co-operative may, by an amendment of its bye-laws, change its name; before changing the name the co-operative shall send notice of its intention to change its name to the Registrar under this Act and the Registrar under the Co-operative Societies Act, along with the proposed name, and the Registrar shall, within fifteen days of receiving such notice inform the co-operative if such name is already in use by another co-operative or cooperative society, as the case may be.

(8) Where a co-operative changes its name, the Registrar enter the new name of the co-operative in the register of co-operatives in place of the former name on receipt of a copy of amendment of bye-laws under sub-section (2) of Section 8 and issue a certificate to that effect.

(9) The change of name of a co-operative shall not affect any rights obligations of the co-operative or any of its members or past members or deceased members or render defective any legal proceedings by or against it, and any legal proceedings which might have been continued or commenced by or against the co-operative by its former name shall be so continued or commenced by its new name.

(10) A prominent co-operative which changes its name shall publicise such change-in name in a prominent newspaper in the district in which its head office is located.

Location of head office.- [(1) Every co-operative shall have the same registered address which has been mentioned in its bye-laws and the co-operative shall carry on day to day business at its registered address mentioned in the bye-laws and shall maintain records pertaining to the co-operative at its registered address.]

(2) Every co-operative shall display the full address of its head office in legible characters in a conspicuous position :-

(a) at every office or place at which it carries on business;

(b) in all notices and other official publications;

(c) on all its contracts, business letters, orders for goods, invoices, statements of accounts, receipts and letters of credit; and

(d) on all bills of exchange, promissory notes, endorsements, cheques and order for money signed on its behalf.

[(3) The Board may, by resolution, change the address of its head office and it shall give notice of such change by registered post to its members, creditors, the Registrar and to any principal co-operative to which it is affiliated, within fifteen days of the passing of such resolution.]

(4) The Registrar shall, within fifteen days of receiving notice of change of address from a co-operative take on record, in the register of co-operatives, the changed address of the head office of a co-operative.

[(4-A) If the co-operative docs not-

(i) communicate the changed address to the Registrar; or

(ii) carry on the business at its registered address; or

(iii) maintain the records at its registered address, the Registrar may impose penalty not exceeding ten thousand rupees on the Officer responsible after giving a reasonable opportunity of being heard.]

Transfer of assets and liabilities.- (1) A co-operative may, by special resolution, decide to transfer its assets and liabilities, in whole, to any other co-operative which, by special resolution, agrees to receive such assets and liabilities.

(2) Where special resolutions are passed sub-section (1), each co-operative shall give notice thereof together with a copy of the resolution passed by it to all its members and creditors, and any member other than those who voted in favour of the proposed transfer of assets and liabilities, or the proposed agreement to receive such assets and liabilities, as the case may be, and any creditor shall, during a period of thirty days from the date of service of notice upon him, have the option of withdrawing his shares, deposits or loans from the co-operative, as the case may be, subject to the discharge of his obligations to the co-operative.

(3) Any member or creditor who fails to exercise the option within the period specified in sub-section (2) shall be deemed to have assented to the transfer or receipt of assets and liabilities as the case may be.

(4) The special resolution passed under sub-section (1) shall not lake effect until :-

(a) all claims of the members and creditors of each co-operative who have exercised the option under sub-section (2) have been met in full or otherwise satisfied; and

(b) information of the intended transfer of assets and liabilities and settlement of claims of members and creditors of co-operatives concerned is sent to the Registrar and his acknowledgement is obtained.

(5) When a co-operative transfers the whole of its assets and liabilities to any other co-operative under this section, the registration of the co-operative transferring the assets and liabilities shall stand cancelled and it shall be deemed to have been dissolved and shall cease to exist as a corporate body, and the Registrar shall delete the name of such co-operative from the register of co-operatives.

Division of co-operative.- (1) A co-operative may, by special resolution, decide to divide itself into two or more co-operatives.

(2) Where special resolution is passed under sub-section (1), the co-operative shall give notice thereof together with a copy of the resolution passed by it to all its members and creditors and any member other than those who voted in favour of the proposed division and any creditor shall, during a period of thirty days from the dale of service of notice upon him have the option of withdrawing his shares, deposits or loans, from the co-operative as the case may be, subject to the discharge of his obligations to the co-operative.

(3) Any member or creditor who fails to exercise the option within the period specified in sub-section (2) shall be deemed to have assented to the division.

(4) The special resolution passed.under sub-section (1) shall not take effect until :-

(a) all claims of the members and creditors of the co-operative who have exercised the option under sub-section (2) have been met in full or otherwise satisfied;

(b) information of the intended division and settlement of claims of members and creditors is sent to the Registrar and his acknowledgment of receipt of the information is obtained; and

(c) the certificates of registration and the original bye-laws of the resultant co-operatives, signed and sealed by the Registrar, are issued under sub-section (6) of Section 4.

(5) When a co-operative divides itself into two or more co-operatives under this section, the registration of such co-operative shall stand cancelled and it shall be deemed to have been dissolved and shall cease to exist as a corporate body and the Registrar shall delete the name of such co-operative from the register of co-operatives.

(6) When a co-operative divides itself into two or more co-operatives, each member who has assented or deemed to have assented to the division shall be deemed to have become a member of that newly formed co-operative to which his interests were transferred, in accordance with the scheme of division approved by the general body of such co-operative notwithstanding anything contained in this Act.

Amalgamation of co-operatives.- (1) Any two or more co-operatives may, by special resolutions, decide to amalgamate themselves and form a new co-operative.

(2) Where special resolutions are passed under sub-section (1), each co-operative shall give notice thereof together with a copy of the resolution passed by it to all its members and creditor and any member other than those who voted in favour of the proposed amalgamation. Any creditor shall, during a period of thirty days from the date of service of notice upon him, have the option of withdrawing his shares, deposits or loans from the co-operative, as the case may be, subject to the discharge of his obligations to the co-operative concerned.

(3) Any member or creditor who fails to exercise the option within the period specified in sub-section (2) shall be deemed to have assented to the amalgamation.

(4) The special resolutions passed under sub-section (1) shall not take effect until :-

(a) all claims of the members and creditors of each co-operative who have exercised the option under sub-section (2) have been met in full or otherwise satisfied;

(b) information of the intended amalgamation and settlement of claims of members and creditors is sent to the Registrar and his acknowledgment is obtained; and

(c) the certificate of registration and the original bye-laws of the co-operative which is formed as a result of amalgamation, signed and sealed by the Registrar, is issued under sub-section (6) of Section 4.

(5) When two or more co-operatives amalgamate themselves into a new co-operative under this section, the registration of the co operatives so amalgamated, shall stand cancelled and they shall be deemed to have been dissolved and shall cease to exist at corporate bodies, and the Registrar shall delete the names of the co-operative so amalgamated from the register of co-operatives.

(6) When two or more co-operatives amalgamate themselves into a new co-operative under this section, all the members of the co-operatives who have assented or deemed to have assented to the amalgamation shall be deemed to have become members of the new co-operative notwithstanding anything contained in this Act.

Merger of co-operatives.- (1) A co-operative may, by special resolution, decide to merge itself into any other co-operative which, by special resolution, agrees to such merger.

(2) Where special resolutions are passed under sub-section (1), each co-operative shall give notice thereof together with a copy of the resolution passed by it to all its members and creditors, and any member other than those who voted in favour of the proposed merger and any creditor shall, during a period of thirty days from the date of service of notice upon him, have the option of withdrawing his shares, deposits or loans from the co-operative, as the case may be, subject to the discharge of his obligations to the co-operative concerned.

(3) Any member or creditor who fails to exercise the option within the period specified in sub-section (2) shall be deemed to have assented to the merger.

(4) The special resolutions passed under sub-section (1) shall not take effect until :-

(a) all claims of the members and creditors of each co-operative who have exercised the option under sub-section (2) have been met in full or otherwise satisfied; and

(b) information of the intended merger and settlement of claims of members and creditors is sent to the Registrar and his acknowledgment is obtained.

(5) When a co-operative merges itself into any other co-operative under this section, the registration of the merged co-operative shall stand cancelled and it shall be deemed to have been dissolved and shall cease to exist as a corporate body, and the Registrar shall delete the name of such co-operative from the register of co-operatives.

(6) When a co-operative merges itself into any other co-operative under this section, the members of the first co-operative who assented or deemed to have assented to the merger, shall be deemed to have become the members of the second co-operative notwithstanding anything contained in this Act.

Vesting of assets and liabilities in resulting co-operative.- A resolution passed under sub-section (1) of Section 11 or sub-section (1) of Section 12 or sub-section (1) of Section 13 or sub-section (1) of Section 14 shall be sufficient conveyance to vest the assets and liabilities of each affected co-operative in the resulting co-operative or co-operatives concerned, such vesting being subject only to the provisions of the scheme of transfer of assets and liabilities or of division of co-operative or of amalgamation of co-operatives or of merger of co-operative as the case may be.

Explanation :-For the purpose of this section-

(a) "affected co-operative" means a co-operative which decides in any of the manners specified in Section 11, 12, 13 or 14;

(b) "resulting co-operative" shall have the meaning assigned to it in Section 17.

conversion of a co-operative into co-operative society.- A co-operative registered or a co-operative society converted as co-operative under this Act intending to convert into a co-operative society may apply to the Registrar in accordance with the provisions of Co-operative Societies Act.
Saving of rights and obligation of resulting co-operative etc.- (1) The reorganisation of the co-operatives under Section 11, 12, 13 or 14 shall not, in any manner whatsoever affect any right or obligation of the resulting co-operative or co-operatives or render defective any legal proceedings by or against the co-operative or co-operatives and any legal proceedings that might have been continued or commenced by or against the co-operative or co-operatives, as the case may be, before the reorganisation may be continued or commenced by or against the resulting co-operative or co-operatives.

(2) Every resulting co-operative shall have such structure, property, powers, rights, interests, authorities, duties and obligations as may be specified in the scheme of :-

(i) transfer of assets and liabilities under Section 11; or

(ii) division of co-operative under Section 12; or

(iii) amalgamation of co-operatives under Section 13; or

(iv) merger of co-operative under Section 14,

as the case may be, and such scheme may contain such consequential, incidental and supplemental provisions as may be considered necessary to give effect to such scheme.

Explanation:- For the purpose of this Section "resulting co-operative" means a co-operative-

(i) to which the assets and liabilities of a co-operative transferring the assets and liabilities are transferred in whole under Section 11; or

(ii) which is formed as a result of division under Section 12; or

(iii) which is formed as a result of amalgamation under Section 13; or

(iv) which is formed as a result of merger under Section 14.

Fee for services.- (1) Registration fee amounting to one percent of the authorised equity capital of the proposed cooperative, subject to the minimum of rupees one hundred and maximum of rupees five thousand, shall be charged for registration of each co-operative :

Provided that the fee shall be rupees two hundred in the case of such co-operatives which do not intend to have any equity capital.

(2) Subject to the provisions of sub-section (2) and sub-section (6) of Section 53 the Registrar may, by order, prescribe a scale of fee to be paid by co-operatives and others for various services rendered by him under this Act.

CHAPTER III

Membership

Eligibility for membership in co-operative.- (1) Any person who needs the services of a co-operative, expresses willingness to accept the responsibilities of membership meets such other conditions as may be specified in the bye-laws of the co-operative, and is in a position to use the services, may seek membership and if the co-operative is in a position to extend its services to the applicant, it may admit him as a member.

(2) Every applicant for membership and every member of a cooperative shall keep each co-operative of which the person is a member, informed of membership in other co-operatives, and in case of conflicting membership, the board may, by resolution, refuse admission under Section 21 or terminate from membership under Section 24 as the case may be :

Provided that no such resolution to refuse admission shall be passed without giving the applicant as the case may be, a reasonable opportunity to make representation to the board as to why he should not be refused admission.

Explanation :- For the purpose of this sub-section, the expression "conflicting membership" means the membership of the common objective co-operatives functioning within the jurisdiction of a co-operative of which the membership is sought.

Disqualification of member.- No person shall be eligible for admission as member and any member shall cease to be a member of a co-operative, if he incurs disqualification of membership prescribed in the bye-laws.
Admission of member.- (1) The board may admit a person for membership in accordance with the procedure laid down in the bye-laws within sixty days from the date of receipt of application for membership if he is eligible for membership or refuse admission to the applicant if he is not eligible for membership and communicate the same to the applicant by registered post.

(2) Where admission is refused, the decision with the reasons therefor shall be communicated by registered post to such applicant within fifteen days of the date of the decision. If nothing is communicated within the period of sixty days under sub-section (1) the admission shall be deemed to have been refused by the board.

(3) Where an applicant has been refused or deemed to have refused admission by the board, the applicant may appeal to the Arbitration Council within thirty days of-

(i) the communication of such decision under sub-section (2); or

(ii) the expiry of the period of sixty days referred to in sub-section (2):

Provided that no decision of refusal of admission shall be taken by the Arbitration Council without giving an opportunity of being heard to the applicant.

Withdrawal of membership.- (1) Subject to the provisions of sub-section (2) of Section 48, a member may at any time withdraw from membership in a co-operative in accordance with the procedure laid down in the bye-laws.

(2) The withdrawal from membership shall nonetheless require the person to fulfil such obligations as were under taken or assumed as a member, under the provisions of this Act, the.bye-laws or any agreement.

Cessation of membership.- (1) If any person having been admitted as a member of a co-operative dies or subsequently becomes subject to any of the disqualification specified in the bye-laws shall cease to be a member of the co-operative.

(2) Every co-operative shall inform, in the event of the death of the member, the nominee of the member, and in every other instance, the member, about the cessation of membership, for the settlement of accounts.

Termination of membership.- (1) The board may, by a resolution passed by three-fourth majority of the directors present and voting at a meeting held for the purpose, terminate the membership of a member if he-

(a) intentionally does any act likely to injure the credit of the co-operative or bring it to disrepute; or

(b) wilfully deceives the co-operative; or

(d) persistently makes default in payment of his dues or fails to comply with the provisions of the bye-laws; or

(e) having been admitted as a member subsequently becomes a member of any other common objective co-operative functioning within the jurisdiction of the co-operative of which he is a member :

Provided that no such resolution shall be passed without giving the member concerned a reasonable opportunity to make representation at the board meeting.

(2) Any member aggrieved by the resolution passed under sub-section (1) may appeal to the Arbitration Council within thirty days of the communication of such resolution.

(3) No member of a co-operative whose membership has been terminated under sub-section (1) shall be eligible for re-admission as a member of the co-operative for a period as may be specified in the resolution but not exceeding five years.

Register of members.- (1) Every co-operative shall maintain a register of members. The name of every person admitted as a member of the co-operative shall be entered in the register along with such particulars as may be deemed necessary by the board.

(2) The name of a person-

(i) whose admission is refused under Section 21; or

(ii) who has withdrawn from membership under Section 22; or

(iii) who ceased to be a member under Section 23; or

(iv) whose membership has been terminated under Section 24 shall be deleted from the register of members :

Provided that the name of a person referred to in clause (i) or clause (iv) shall not be deleted from the register of members till the decision of the Arbitration Council in appeal preferred under sub-section (3) of Section 21 or under sub-section (2) of Section 24 as the case may be.

(3) The register maintained under sub-section (1) shall beprima facieevidence of the date on which any person was admitted to the co-operative as a member and of the date on which he ceased to be a member.

Education of members etc.- (1) Every co-operative shall include in its budget annually, provision for expenses on member and potential member, education and training of staff and directors for the development of their co-operative in accordance with the co-operative principles specified in Schedule A and practices of co-operative.

(2) Any balance under the budget head provided for under sub-section (1) shall be taken at the end of the year into a co-operative education fund, and may be used only for the purpose of educating and training of staff and directors in according with co-operative principles specified in Schedule A and practices of co-operation.

Exercise of rights.- (1) No member of a co-operative shall exercise the right of a member, including the right of vote, unless he has made such payment to the co-operative in respect of membership or has acquired and continues to have such interest in the co-operative as may be specified in the bye-laws.

(2) Every financial year, within twenty days of closure of the previous financial year, the Chief Executive shall prepare a list of members with the right of vote, and a list of members without the right of vote, valid for the current financial year. The list shall be affixed on the notice board of the head office of the co-operative for information of all members, and any member, not satisfied with the specific instances of inclusion or non-inclusion of members in the lists, may appeal to the board within ten days from the date of the affixation of the lists on the notice board, for re-examination of the records, and the board shall, within forty-five days of closure of the previous financial year, review the lists, finalise it, and have it affixed on the notice board of the head office of it the co-operative.

Votes of members and manner of exercising vote.- (1) In primary co-operatives, members shall have equal voting rights (one members, one vote). Similarly in case of [principal co-operatives]the representative of such co-operatives shall have same voting rights (one representative one vote). Every member of a co-operative or the representative referred herein shall exercise his vote in person and in the manner specified in the bye-laws and no member or representative shall be permitted to vote by proxy :

Provided that a person shall have been a member for at least one full financial year, before being eligible to vote :

Provided further that the condition of one year membership shall not apply to the members who join at registration or at any time after the registration of a co-operative but before the first financial year ending.

(2) Every member of a co-operative shall exercise his vole in the manner specified in the bye-laws.

Liability of member.- (1) A co-operative may be registered with limited or unlimited liability :

Provided that unless the State Government, by a general or special order otherwise directs, the liability of a co-operative of which another co-operative is a member shall be limited.

Explanation : - For the purpose of this sub-section-

(a) "cooperative with limited liability" means a co-operative in which the liability of its members for the debts of the co-operative is limited by its bye-laws, to such form and extent as they may undertake to contribute to any deficit in the assets of the co-operative, in the event of its being wound up; and

(b) "co-operative with unlimited liability" means a co-operative the members of which are, in the event of its being wound up, jointly and severally liable for and in respect of all its obligations, to contribute to any deficit in the assets of the co-operative.

(2) Where a co-operative by special resolution amends its bye-laws to change the form and extent of liability, of its members it shall give notice thereof together with a copy of the amendment to its members and creditors and any member other than those who voted in favour of the proposed change of liability and any creditor shall, within a period of thirty days from the date of service of notice upon him, have the option of withdrawing his shares, deposits or loans from the co-operative as the case may be subject to the discharge of his obligations to the co-operative.

(3) Any member or creditor who fails to exercise the option within the period specified in sub-section (2) shall be deemed to have assented to the change of liability.

(4) An amendment passed under sub-section (2) shall not take effect until-

(a) all claims of the members and creditors of the co-operative who have exercised the option under sub-section (2) have been met in full or otherwise satisfied; and

(b) notice of the amendment of the bye-laws of the co-operative and information of settlement of claims of members and creditors is sent to the Registrar and his acknowledgment is obtained.

(5) Subject to the provisions of sub-section (6), the liability of a past member or of the estate of a deceased member of a co-operative for the debts of the co-operative as they stood-

(a) in the 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 two years from such date.

(6) Where a co-operative is ordered to be dissolved under any provision of this Act, the liability of a past member or of the estate of a deceased member, who ceased to be a member or died during the period of two years immediately preceding the dale of order for dissolution, shall continue until completion of the entire liquidation proceedings, but such liability shall be limited only to the debts of the co-operative as they stood on the date of cessation of his membership or his death, as the case may be.

CHAPTER IV

Management

General body.- (1) There shall be a general body for every co-operative consisting of all the members of such co-operative.

(2) Where the general body of a co-operative decides that the size, spread or types of its membership requires a representative body of delegates for more effective decision making, its bye-laws shall provide for a smaller body called delegate general body elected from the members, in the annual general meeting in accordance with the bye-laws to exercise such powers and to discharge such duties of the general body as may be specified in the bye-laws.

(3) Unless the context otherwise requires, any reference in this Act to the general body shall apply to the delegate general body where it exists.

(4) Subject to the provisions of this Act and the bye-laws, the ultimate power of a co-operative shall vest in the general body.

(5) Any power, function or responsibility, falling within the scope of a co-operative as a corporate body, which has not been specifically entrusted by this Act or the bye-laws, to any authority of the co-operative, may be dealt with by the general body, on a reference by the board.

Functions, responsibilities and powers of general body.- (1) The following matters, among such officer matters as are considered necessary by the board, shall be dealt with by the general body at its annual general meeting, namely :-

(a) election, if fallen due, of the directors or delegates;

Explanation : - Election of the directors or delegates shall be deemed to have fallen due, if the term of such board or delegate general body comes to an end within a period of three months from the date of the annual general meeting.

(b) consideration of the long term plan and budget, when required;

(d) consideration of the annual report of activities for the previous financial year;

[(e) consideration of audited financial statements of accounts, the auditor's report relating to the previous financial year and compliance report along with the action taken on it;]

(f) consideration of the report on deviations, if any, from the approved budget relating to the previous financial year;

(g) disposal of surplus, if any, of previous financial year;

(h) management of deficit, if any, of previous financial year;

(i) creation of specific reserves and other funds;

(j) review of actual utilisation of reserves and other funds;

(k) review of the report on the attendance at meetings by directors;

(l) review of the use of the co-operative's services by the directors;

(m) review of remuneration paid to any director or member of any committee or internal auditor in connection with his duties in that capacity or his attendance at concerned meetings;

(n) review of quantum and percentage of services provided to non-members vis-a-vis services provided to the members;

(o) report of activities and accounts related to member education and director and staff training;

(p) consideration of any other matter which may be brought before the meeting of the general body in accordance with the bye-laws.

(2) The following matters, among such other matters as considered necessary by the board, or which are specifically assigned to the general body under any other provision of this Act, may be dealt with by the general body at its annual or any general meeting, namely :-

(a) amendments of bye-laws;

(b) removal of directors;

(d) partnership with other co-operatives;

(e) amalgamation, division, merger, transfer of assets and liabilities;

(f) dissolution of the co-operative;

(g) consideration of the Registrar's report of inquiry or reasons for the non-completion of the inquiry.

(3) If the bye-laws of a co-operative provide for election of all or more directors on territorial basis, such director shall be elected from the areas, in a meeting of the members of that area in accordance with the provisions of the bye-laws on a date prior to that of annual general meeting. The result thereof shall be affixed on the notice board of the head office of the cooperative and also at the place of the annual general meeting prior to the commencement of the proceedings of the annual general meeting.

General meetings.- (1) The board may, at any time, call a general meeting of the members of the co-operative :

Provided that one such meeting known as annual general meeting shall be held within one hundred and fifty days of the closure of the financial year to consider or to approve, among other matters, the returns to be filed with, and the information to be furnished to (he Registrar.

(2) The board shall call a special general meeting and shall be bound to do so within thirty days of the date of receipt of a written requisition-

(a) signed by not less than twenty-five per cent of the members having right to vote; or

(b) from the Registrar.

(3) Such requisition shall contain the reasons why the meeting is felt necessary and the proposed agenda, and no subject other than the subjects included in the proposed agenda shall be discussed at the special general meeting.

(4) If the board fails to hold an annual general meeting under sub-section (1) or a special general meeting on requisition under sub-section (2) within the period specified therein all directors shall cease to be directors on the date of expiry of the said specified period.

(5) All directors shall cease to be directors on the dale of the annual general meeting, if the audited annual financial statement of accounts and annual report of activities for the previous financial year were not sent to each member along with the notice to attend the annual general meeting under the certification of posting at which the report and accounts are to be considered by the general body.

(6) Any meeting of the general body may, with the consent of the majority of the members present, be adjourned from time to time to a later hour on the same day or to any other date, but no business other than that left over at the adjourned meeting shall be transacted at the next meeting :-

A notice of such adjournment posted in the head office of the cooperative on the day on which the meeting is adjourned shall be deemed sufficient notice of the next ensuring meeting.

(7) The quorum for a general meeting shall be specified in the bye-laws, but shall not be less than ten per cent of the members eligible to vote at the general meeting.

(8) If at any time in a meeting there is no quorum the presiding authority shall adjourn it to such time or date as it thinks fit and announce the same at once; and the business set down for the meeting shall be brought forward at the subsequent meeting whether at such meeting there is a quorum or not.

(9) No business other than the business fixed for the original meeting shall be transacted at such subsequent meeting.

(10) A notice of such adjournment posted in the head office of the co-operative on the day on which the meeting is adjourned shall be deemed sufficient notice of the next subsequent meeting.

(11) The quorum for a delegate general body meeting shall not be less than twenty-five per cent of the delegate eligible to vote at the delegate general meeting. If at any time in the meeting of delegate general meeting, there is no quorum, the procedure laid down in sub-sections (6) to (10) shall be followed.

(12) At the meeting to the general body, the President, if present, shall prescribe. If the President is absent from the meeting of the general body the Vice President shall preside. If both the President and Vice President are absent from the meeting of the general body, the members present shall choose one of them to preside.

Board of Directors.- (1) There shall be a Board of Directors for the management of every co-operative registered under this Act. The Directors shall be elected in accordance with the provisions of the bye-laws. Subject to the provisions of sub-section (4) of Section 30 the management of every co-operative constituted in accordance with the provision of this Act and the bye-laws shall vest in a board :

Provided that in the case of a co-operative newly registered under this Act, the persons who have signed the application for the registration of the co-operative may appoint a promoter board, for a period not exceeding one year from the dale of registration, to direct the affairs of the co-operative and it shall cease to function as soon as a regular board is constituted in accordance with the provisions of this Act and the bye-laws :

Provided further that in the case of a Co-operative Society registered under the; Co-operative Societies Act and the elected members of its board, whose term has not expired at the time of registration of co-operative under Section 5 shall be deemed to be the promoter board, with the same term and responsibilities as in the first proviso for a period not exceeding one year from the date of registration.

(2) The promoter board appointed under the first provision to sub-section (1) or deemed to be promoter board under the second proviso thereto, as the case may be, shall conduct the election of directors within the period mentioned therein.

(3) Every director while exercising the powers and discharging duties shall :-

(a) act honestly and in good faith and in the best interests of the co-operative; and

(b) exercise such due care, diligence and skill as a reasonably prudent person would exercise in similar circumstances.

(4) A director who is guilty of misappropriation, breach of trust or dishonestly resulting in loss or shortfall in revenue of the co-operative shall be personally liable to make good that loss or shortfall, without prejudice to any criminal action to which the director may be liable under any law.

President and Vice-President of co-operative.- (1) There shall be a President and a Vice President in a co-operative to be elected by the board from amongst its directors in accordance with the provisions of the bye-laws. The term of President and Vice-President elected by the board shall be coterminous with the term of the Board. The board shall at the time of election of President and Vice-President also elect representative who shall represent it in other co-operative and the representative so elected shall not be withdrawn by the board till the next elections of the board.

(2) Any casual vacancy in the office of the President or Vice-President or representative shall be filled in by the board in accordance with the provisions of the bye-laws and the President or Vice-President or representative so elected shall hold office for the unexpired term of his predecessor.

(3) The Vice-President may resign his office at any time by notice in writing to the President and the President may resign his office at any time by notice in writing to the Vice President.

(4) The board may by a resolution passed by three-fourth majority of the directors present and voting at a meeting held for the purpose, remove the President or Vice-President on any of the grounds mentioned in sub-section (1) of Section 24. Such meeting shall not be presided by the President or Vice-President against whom such resolution is to be considered.

(5) The President or Vice-President as the case may be, aggrieved by the resolution passed under sub-section (4) may appeal to the Arbitration Council within thirty days from the date of passing of such resolution whose decision thereon shall be final.

(6) In the event of the occurrence of any vacancy in the office of the President by reason of his death, resignation or removal, or otherwise, the Vice-President shall act as President until the date on which a new President elected in accordance with the provisions of this Act and the bye-laws to fill such vacancy.

(7) When the President is unable to discharge his functions owing to absence, illness, or any other cause, the Vice-President shall discharge the functions of the President until the date on which the President resumes his duties.

(8) The Vice-President shall, during and in respect of, the period while he is so acting as, or discharging the functions of, President, have all the powers of the President.

Functions, responsibilities anti powers of board.- The board shall discharge such functions, perform such duties and responsibilities and exercise such powers as may be specified in the bye-laws and in accordance with the terms, conditions and procedure laid down therein and in particular the board shall have the following powers, functions and duties, namely :-

(a) to interpret the organisational objectives, to set up specific goals to be achieved towards such objectives, and to make periodic appraisal of operations;

(b) to nominate, elect or appoint and remove the Chief Executive;

(d) to finalise long-term perspective plan, annual plan and budget, and to direct the affairs of the co-operative in accordance with the plan and budget approved by the general body;

(f) to authorise acquisition and disposal of immovable property;

(g) to frame, approve and amend regulations relating to services, funds, accounts and accountability, and information and reporting systems;

(h) to elect President, Vice-President and representative in accordance with the provisions of the bye-laws;

[(i) to prepare the annual financial statement of accounts;

(j) to file returns and information in accordance with the provisions of sub-sections (1) and (2) of Section 52;

(k) to convene annual general meeting or special general meeting under. Section 32;

(l) to prepare the business policy for co-operative and to conduct the work in accordance with the business policy;

(m) to consider the audit report of accounts of the previous financial year and to take action on its recommendations and to submit the compliance report along with the details of action taken before the annual general meeting.]

Eligibility for directorship in co-operative.- In addition to such other conditions as may be specified in the bye-laws, a member of a co-operative shall be eligible for being chosen as a director of the co-operative, if:-

(i) such member has the right to vote in the affairs of the cooperative; and

(ii) such member has patronised the services of the co-operative during the previous financial year to the extent and in the manner specified in the bye-laws; and

(iii) such member has no pecuniary interest in any subsisting contract made with, or work being done for, the co-operative except as otherwise specified in the bye-laws; and

(iv) the period of three years has lapsed from the date such member ceased to be a director for the following reasons :-

(a) non-conduct of annual general meeting or special general meeting under sub-section (4) of Section 32;

(b) non-submission of annual report of activities, audited annual financial statement of accounts or auditor's report to the general body under sub-section (5) of Section 32; or

(d) absence from board meetings under sub-section (7) of Section 39.

Elections.- (1) It shall be the responsibility of the incumbent board to conduct elections of directors, delegates to the delegate general body and representatives if fallen due within the meaning of explanation to clause (a) of sub-section (1) of Section 31.

(2) The elections shall be conducted in the manner specified in the bye-laws, before the expiry of the term of office of the outgoing directors, delegates or representatives as the case may be.

(3) Where a board fails to conduct election of the directors or delegates or representatives, as the case may be before the expiry of the term of their office in accordance with the bye- laws, all directors shall cease to be directors on the date of the annual general meeting at which the elections were due.

(4) The elections of directors, and delegates shall take place at the annual general meeting.

(5) Where a board fails to conduct elections before the expiry of the term of the directors or delegates or representatives, or, where there are no directors remaining on the board, a minimum of 25% of total members of the cooperative may jointly convene a general meeting, or request the Registrar to convene a general meeting for constituting an ad hoc board for the specific purpose of conducting elections and to perform all functions of the board during the interregnum except those functions as prescribed by the general body.

(6) The term of the ad hoc board so constituted shall not exceed three months and the ad hoc board shall cease to function as soon as a regular board is constituted in accordance with the bye-laws.

(7) The directors shall hold office for the period for which they were elected and the newly elected directors shall assume office on the date of expiry of said period.

(8) The director shall not be eligible, if so specified in the bye-laws, for re-election.

(9) Where there are vacancies in the office of the directors and where there are not sufficient number of directors to constitute a quorum for board meetings, the remaining directors shall, notwithstanding anything contained in this Act or the bye-laws, call a general meeting for the purpose of electing directors to fill the vacancies for the unexpired term of the board.

Term of Directors.- (1) The term of office of the directors, or where the bye-laws provide for retirement of director by rotation, the term of office of the individual directors shall be for such period as specified in the bye-laws, which shall not exceed five years from the date on which first meeting of the board is held.

(2) The term of representative elected by the board shall be coterminous with the term of the board for which representative is elected :

Provided that the representative of a board shall continue to hold his office only till expiry of the term of the board of which he is a member.

(3) For removal of doubt it is hereby declared that where the term of office of the director is changed by amending bye-laws, the changed term shall apply only to the director elected after such amendment for the constitution of new board.

(4) Any casual vacancy in the office of the director shall be filled in accordance with the provisions of the bye-laws and the director so elected shall hold office for the unexpired term of his predecessor.

Board meetings.- (1) A meeting of the board may be called at any time by the President and in the event of his being incapable of acting then by the Vice President but at least four meetings of the board shall be held in a financial year, and the period between two consecutive meetings shall not exceed one hundred and twenty days.

(2) The President and in the event of his being physically incapable of acting then the Vice-President may, whenever he thinks fit, call a special meeting of the board and shall be bound to do so within fifteen days of the date of receipt of a written requisition-

(a) signed by not less than one-third of the directors on the board; or

(b) from the Registrar; or

such requisition shall contain the reasons why the meeting is felt necessary and the proposed agenda and no subject other than the subjects included in the proposed agenda shall be discussed at the special meeting of the board.

(3) If the President or Vice-President, as the case may be, fails to hold the meeting of the board under sub-section (1) or the special meeting of the board under sub-section (2) within the period specified therein, he shall cease to be President or Vice-President, as the case may be on the date of expiry of the said specified period.

(4) A person who ceases to be the President or Vice-President, under sub-section (3) shall not be eligible to hold the office of President or Vice-President, as the case may be, for a period of three years from the date of such cessation.

(5) The quorum for a meeting of the board shall be such as may be specified in the bye-laws but shall not be less than fifty per cent of the total number of directors on the board.

(6) Subject to the provisions of this Act, the procedure to convene and conduct the meetings of the board shall be such as may be specified in the bye-laws.

(7) If a director fails to attend three consecutive meetings of the board without the permission of the President he shall cease to be a director, from the date of the third meeting.

Decision by majority of votes.- Except as otherwise provided by this Act, or the bye-laws, all questions brought before any meeting under this Act shall be decided by majority of the votes of the members present and in the case of an equality of votes the presiding authority of the meeting shall have a second or casting vote :

Provided that in the case of equality of votes at the election of the President, Vice-President, Director, delegate or representative, the presiding authority shall not exercise his casting vote and the result shall be decided by lot.

Minutes of proceedings of meetings.- [Every co-operative shall, in its minute book, record, in Hindi or in any other language prescribed in the bye-laws, the minutes of all proceedings of every general meeting, delegate general body meeting and Board meeting and the names of the members, delegates or directors present thereat and shall confirm it at the same or ensuing meeting and it shall he the responsibility of the Chief Executive of co-operative to send the copy thereof within fifteen days of every such meeting to all delegates or members or directors, as the case may be.]

(2) The minutes so recorded shall be signed-

(a) in the case of a general meeting or delegate general body meeting, by the person who presided the said meeting, or in the event of his death or incapacity to sign the minutes within the time required, by the person who presides the following meeting wherein the minutes are confirmed; and

(b) in the case of a board meeting, by the person who presided the said meeting or by the person who presides the following meeting, wherein the minutes are confirmed.

(3) The minutes of a general meeting shall be deemed to have been confirmed on the thirtieth day of its dispatch to all members, if no comments are received from members within that time :

Provided that where comments have been received from members, corrections, if any, may be made to the minutes by the President, and the revised, minutes shall be confirmed by the person who presides the following meeting of the general body.

Vacancies etc. not to invalidate proceedings.- No act or proceeding of the co-operative or of board or of any officer constituted or appointed under this Act shall be questioned on account of any vacancy in the membership or any defect in the election or qualification of the President, Vice-President, Director, delegate or representative or any defect or irregularity in such act or proceeding not affecting the merit of the case.
Proceeding of meeting to be deemed to be good and valid.- Unless contrary is proved every meeting of the general body or the board shall be deemed to have been duly convened and held and, all members of the meeting shall be deemed to have been duly qualified when the minutes of the meeting have been signed in accordance with the provisions of this Act.
Staff.- Subject to other laws regulating employer, employee relations all employees of a co-operative shall be appointed, regulated and removed by and be accountable to authorities within the co-operative in accordance with the service conditions approved by the board.

CHAPTER V

Finance

[45. Mobilisation of Funds. - (1) A co-operative may raise funds in shape of equity capital from its members to such extent and under such conditions as may be specified in the bye-laws.

(2) A co-operative may raise funds from its members in shape of deposits and loans to such extent which shall not be more than 25 times of the share capital and reserve fund.

(3) A co-operative may borrow funds only from any Scheduled Bank or financial institution as defined in the Reserve Bank of India Act, 1934 (No. 2 of 1934) or Co-operative Bank or Regional Rural Bank as defined in the Banking Regulation Act, 1949 (No. 10 of 1949) and to such extent and under such conditions as may be specified in the bye- laws.

(4) A co-operative shall not accept any deposits from non-member or institutions and shall not perform any work relating to banking business unless such co-operative has obtained licence under the Banking Regulation Act, 1949 (No. 10 of 1949).]

Deployment of funds and profits.- (1) The funds mobilised by a co-operative shall be primarily for the furtherance of its objectives.

(2) No part of the funds of a co-operative other than the net profits shall be paid by way of bonus or dividend or otherwise distributed among its members.

(3) A co-operative may out of its net profits in any year, pay on the paid up share capital of members a dividend at a rate fixed by the general body in the annual general meeting.

(4) Such of its funds as are not needed for use in its business, a co-operative may invest or deposit, outside its business, in any non-speculative manner.

Disposal of surplus.- (1) The surplus, if any, arising out of the business of a co-operative in a financial year may be used in one or more of the following purposes :-

(a) towards a deficit cover fund;

(b) to be distributed as surplus refund among its members;

(d) towards reserves and funds constituted in accordance with the bye-laws;

(e) to provide common services to its members;

(f) to provide rewards or incentives to staff;

(g) towards payment of bonus under the Payment of Bonus Act, 1965 (No. 21 of 1965) to the employees;

(h) towards payment of taxes;

(i) towards writing off bad debts and losses not adjusted;

(j) towards, such purposes as may be specified in the bye-laws.

(2) Surplus arising out of the business of a co-operative shall be fully disposed of at the annual general meeting in which the audited annual financial statement of accounts for the year in which the surplus arose is presented for the consideration of the general body.

Management of deficit.- (1) The deficit, if any arising out of the operation of the business of a co-operative during any given financial year, shall be fully settled by debiting a part or whole of the deficit to the deficit cover fund, if any, or as charge, among its members :

Provided that nothing in this sub-section shall preclude a co-operative from also proceeding against its directors or staff for recovery of amounts contributing to the deficit, where such deficit is the result of deviation from the approved plan or budget, and where such deviation does not receive the approval of the general body, or is the result of gross negligence or mismanagement :

Provided further that where such amounts are recovered, the general body may resolve to credit a part or whole amount to the deficit cover fund or to the account of each member in proportion to the deficit charge levied on him.

(2) No member shall be permitted to withdraw from the membership of the co-operative without paying his share towards clearing the deficit, if any.

Operation of special funds.- (1) A co-operative may create reserves and such other funds as are in the interest of members or the co-operative and which are specified in the bye-laws :

Provided that where a contributory provident fund is created for the benefit of employees, such fund-

(a) shall not be used in the business of the co-operative;

(b) shall not form part of the assets of the co-operative;

(d) shall be administered in such manner as may be provided in the bye-laws.

(2) The funds so created may be used in the business of the cooperative. but in any financial year if the fund is not applied in part or whole for the purpose for which it was created, the co-operative shall credit to the account of such fund an annual interest on the amount of balance of such fund at a rate not less than the rate paid by Scheduled banks on long-term fixed deposits, debiting such interest as operational expenditure.

CHAPTER VI

Accountability

Accounts, records and documents to be maintained.- (1) Every co-operative shall keep at its head office, the following accounts, records and documents, namely :-

(a) a copy of this Act with amendments made therein from time to time;

(b) copies of other laws and regulations to which the co-operative is a subject;

(d) a copy of the regulations framed under clause (g) of Section 35 and amendments made therein from time to time;

(e) the minutes books;

(f) account of all sums of money received and expended by the co-operative and their respective purposes;

(g) account of all purchases and sales of goods by the co-operative;

(h) account of the assets and liabilities of the co-operative;

(i) a list of members, their fulfilment of responsibilities over the previous financial year, their eligibility to exercise their rights for the current twelve month period updated within sixty days of closure of the financial year; and

(j) all such other accounts, records and documents as may be required by this Act or other laws and regulations or bye-laws of the co-operative :

Provided that where a co-operative has branch offices, summarised statements of accounts relating to such branch office, shall be available at the head office for each quarter of financial year, within fifteen days of the end of that quarter.

(2) The books of account and records shall be opened to inspection by any director during office hours of the co-operative.

(3) The copies of this Act, bye-laws, regulations, minutes book of the general body, voters list and such account and records of transactions that relate to a member shall be made available to any member during office hours of the co-operative.

(4) The books of accounts relating to a period of at least eight years before the current financial year together with supporting records and vouchers shall be preserved unless otherwise require for a longer period.

Audit.- (1) A co-operative shall get its accounts audited by a Chartered Accountant as defined within the meaning of the Chartered Accountants Act, 1949 (No. 38 of 1949) or by any other auditor authorised by the Registrar.

(2) A co-operative, at its annual general meeting, shall resolve to appoint an auditor. The resolution shall be valid for the period ending on the close of the next succeeding annual general meeting.

(3) The remuneration of an auditor may be fixed by the general body or, if not so fixed, by the board.

(4) An auditor shall cease to hold office-

(a) on his resignation; or

(b) on his removal from office under sub-section (6); or

(5) The resignation of an auditor becomes effective on the date the resignation in writing is received by the co-operative, or on the date specified in the resignation whichever is later.

(6) The general body may, by special resolution, remove an auditor from office.

(7) An auditor, who-

(a) resigns; or

(b) receives a notice or otherwise learns of a general meeting called for the purpose of removing him from office; is entitled to submit to the general body a written statement giving the reasons for his resignation or the comments on the proposed removal as the case may be.

(8) A vacancy occurred on account of death, resignation, removal or otherwise shall be filled in by the general body. An auditor appointed to fill a vacancy shall hold office for the unexpired term of his predecessor.

(9) The auditor shall be given notice of every general meeting and, at the expense of the co-operative, shall be entitled to attend and be heard thereat on matters relating to his duties as auditor and their exercise as auditor.

(10) Where one-tenths of members of a co-operative give written notice, of not less than ten days before a general meeting to the auditor or a former auditor, to attend the meeting at the expense of the co-operative and answer questions relating to his duties and their exercise as auditor. A copy of the notice shall concurrently be given to the co-operative.

(11) It shall be the duty of the board to ensure that annual financial statements of accounts are prepared and presented for audit within forty-five days of closure of the financial year.

(12) Upon the reasonable demand of the auditor, the present or former directors, members, managers or employees of the co-operative shall-

(a) provide access to such records, documents, books, accounts, vouchers, papers, securities, cash and other properties belonging to or in the custody of the co-operative; and

(b) furnish such information and explanations, as are, in the opinion of the auditor, necessary' to enable him to make the examination and report, and as the present or former director, members, managers or employees are reasonably able to furnish.

(13) It shall be the duty of the auditor to ensure that audited annual financial statements of accounts and his audit report are furnished to the cooperative within forty-five days of the submission of annual financial statements of accounts to him by the board.

(14) The auditor's report shall-

(a) state whether the auditor has obtained all the information and explanations which to the best of his knowledge and belief were necessary for the purpose of the audit;

(b) state whether the balance sheet of co-operative and income and expenditure account dealt with by the report are in agreement with the books of accounts;

(c) indicate the basis on which each asset and liability was valued, and mention specifically any change in the manner in which such valuation was done in the financial year under examination and its effect on surplus or deficit;

(d) indicate the amount of surplus earned or deficit incurred from provision of services to non-members as distinct from surplus earned or deficit incurred because of services to members or in normal course of business;

(e) indicate every deviation in actual expenses and income from the estimated expenses and income, in the approved budget;

(f) state whether or not any of the directors had at any time during the financial year under review, become ineligible under this Act to continue in office as a director; and

(g) state whether the decisions on disposal of surplus or assessment of deficit, of the general body, at its previous annual general meeting were implemented correctly and completely or not.

[(h) State whether the loss incurred in the business of the co-operative is the result of gross negligence or serious irregularities.] '

Returns to be filed with Registrar.- (1) Every year, within thirty days of the holding of the annual general meeting, the board shall file the following returns with the Registrar, namely :-

(a) annual report of activities;

(b) annual financial statements of accounts as audited with auditor's report, thereon;

(c) statistical statement indicating name of the co-operative; core services offered by the co-operative to its members; total number of members as on the last day of the financial year; total liabilities expressed as (i) funds from members, and surpluses; (ii) funds from other external sources as on the last day of the financial year; quantum in rupees of services provided (i) to members, and (ii) to non-members; and surplus or deficit at the end of financial year; and

(d) annual disposal of surplus or management of deficit.

(2) Alongwith the returns specified in sub-section (1), every co-operative shall furnish the following information to the Registrar, namely :-

(a) the date of the annual general meeting at which the returns to be filed with the Registrar were considered or approved;

(b) the total number of members on the rolls of the co-operative who were eligible to vote on the date of such annual general meeting;

(d) list of names of directors, their addresses and their terms of office;

(e) name and address of the auditor appointed for auditing the current financial year's accounts; and

(f) any other relevant and specific information required by the Registrar to enable him to decide whether the co-operative has conducted its affairs in accordance with the co-operative principles mentioned in Schedule A and the provisions of this Act and the bye-laws.

[(3) If the returns and information as specified in sub-sections (1) and (2) are not filed with or furnished to the Registrar within the period specified in sub-section (1), the Registrar may, by an order, impose penalty of not exceeding ten thousand rupees, on the Board which was responsible, after giving the Board a reasonable opportunity of being heard and all the Directors of the Board shall be jointly liable for such penalty.]

Inquiry.- (1) The Registrar shall on the application of a [principal co-operative]to which the co-operative concerned is affiliated, or of a creditor to whom the co-operative is indebted, or of not less than one-third of the directors, or of not less than one-tenth of the members, hold an inquiry or cause an inquiry to be made into any specific subject or subjects relating to any violation of any of the provisions of this Act or bye-laws.

(2) The Registrar shall order an inquiry only after the receipt of a fee, as determined by him from the applicant or the applicants. The fee should be sufficient to meet the costs of the inquiry to be conducted.

(3) The inquiry shall be completed within a period of sixty days from the date of order of the inquiry :

Provided that was the inquiry cannot be completed within a period of sixty days the reasons thereof shall be recorded in writing.

(4) The Registrar shall,-

(i) within a period of thirty days from the date of the completion of the inquiry, communicate the report of the inquiry';

(ii) within a period of fifteen days from the date of expiry' of the period mentioned in sub-section (3) communicate the reasons for the non-completion of the inquiry along with the period not exceeding thirty days which is likely to be taken for completion of inquiry in case the inquiry cannot be completed within the period mentioned in sub-section (3)-

(a) to the co-operative concerned; and

(b) (i) to the applicant [principal co-operative]; or

(ii) to the applicant-creditor; or

(iii) to the person designated by the applicant-directors, or

(iv) to the person designated by the applicant-members, as the case may be.

(5) The co-operative concerned shall, on receipt of the report, place it before the next general meeting to take such action thereon as the general body may think fit.

(6) A copy of report shall be supplied to any person, on payment of fee as determined by the Registrar.

CHAPTER VII

Offences

Prohibition of use of word "co-operative".- (1) No person other than a co-operative registered under this Act and a person or his successor in his interests of any name or title under which he traded or carried on business at the dale on which this Act come into force, shall without the permission of the State Government, function, trade or carry on business under any name or title of which the word "co-operative" or its equivalent in any Indian language forms part.

(2) livery person who is a member of a co-operative formed in contravention of sub-section (9) of Section 4 and every person contravening the provisions of sub-section (1) shall be punishable with a fine which may extend to live hundred rupees and in the case of a continuing offence with further fine of two hundred rupees for each day on which the offence is continued after conviction therefor.

Offences.- (1) A person who makes or assists in making a report, return, notice or other document required by this Act to be sent to the Registrar or to any other person that-

(a) contains an untrue statement of a material fact; or

(b) omits to state a material fact required in the report or necessary to make a statement contained in the report not misleading in the light of the circumstances in which it was made, shall be guilty of an offence and shall on summary conviction, be punishable-

(i) in the case of an individual, with a fine which may extend to rupees [ten thousand] or with imprisonment for a term which may extend to three months or with both;

(ii) in the case of a person other than an individual, with a fine which may extend to rupees ten thousand.

(2) (a) If the person commits an offence under sub-section (1) is a cooperative which is a body corporate, the co-operative as well as every person in charge of and responsible to the co-operative for the conduct of its business at the time of commission of the offence shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly.

(b) Notwithstanding anything contained in clause (a) where an offence has been committed by a co-operative and it is proved that the offence has been committed with the consent or connivance of, or that the commission of the offence is attributable to any neglect on the part of any director, manager, secretary or other officer of the co-operative, such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be punishable with a fine of [ten thousand] rupees or with imprisonment for a term which may extend to ninety days or with both.

(3) No person shall be guilty of an offence under sub-section (1) or sub-section (2) where the untrue statement or omission-

(a) was unknown to him, and

(b) in the exercise of reasonable diligence, could not have been known to him.

(4) Every person who-

(a) without reasonable cause, contravenes a provision of this Act for which no penalty is otherwise provided; or

(b) fails to file or furnish return or to give any notice, or to send any document required by the provisions of this Act;

shall be guilty of an offence and shall, on summary conviction, he punishable with a fine which may extend to [ten thousand] rupees.

[(4-A) Every person who-

(a) destroys, mutilates or alters any book or securities, or is privy to the making of any false or fraudulent entry in any register, book of account or document belonging to the co-operative; or

(b) invests fund of co-operative other than as provided in this Act and the bye-laws, shall be guilty of an offence and shall on conviction be punishable with imprisonment which may extend to three months or with fine which may extend to ten thousand rupees or with both.]

(5) Where a person is convicted of an offence under this Act, the Court may, in addition to any punishment imposed, order the person to comply with the provisions of this Act for the contravention of which he has been convicted.

(6) No prosecution for an offence under this Act shall be commenced after five years from the date when the subject matter of the complaint arose.

(7) No civil remedy for an act or omission under this Act is suspended or affected by reason that the act or omission is an offence under this Act.

[55A. Cognizance of offences. - (1) No Court inferior to that of a Magistrate First Class shall try any offence under this Act.

(2) No Court shall take cognizance of any offence punishable under this Act except on a report in writing of the facts constituting such offence by the Registrar or by a person specially authorised by him in this behalf.]

CHAPTER VIII

Disputes

Disputes.- (1) If any dispute touching the constitution, management or business of a co-operative arises-

(i) (a) among members, past members or persons claiming through member, past member or deceased member; or

(b) between a member, past member or a person claiming through a member, past member or deceased member and the co-operative, its board, director, office-bearer or liquidator, past or present; or

(c) between the co-operative and its board and any past board, any director office-bearer, or any past director, past office-bearer, or the nominee, heir, or legal representative of any deceased director or deceased office-bearer of the co-operative.

shall be referred to the Arbitration Council;

(ii) between the co-operative and any other co-operative or between a co-operative and liquidator of another co-operative or any other Individual or institutions shall be referred to the Cooperative Tribunal.

Explanation : - For the purposes of this sub-section, a dispute shall include-

(a) a claim by a co-operative for any debt or other amount due to it from a member, past member, the nominee, heir or legal representative of a deceased member, whether such debt or other amount due be admitted or not;

(b) a claim by surety against the principal debtor where the co-operative has recovered amount from the surety in respect of any debtor or other amount due to it from the principal debtor as a result of the default of the principal debtor whether such debt or other amount due be admitted or not;

(c) a claim by a co-operative against a member, past member or the nominee, heir or legal representative of a deceased member for the delivery of possession to the co-operative of land or other immovable property resumed by it for breach of the conditions of assignment or allotment of such land or other immovable property;

(d) any dispute arising in connection with the election of directors or delegates or representatives or President or Vice-President of the co-operative :

Provided that no dispute under this clause shall be entertained during the period commencing from the announcement of the election programme till the declaration of the results.

(2) If any question arises whether a dispute referred to the Arbitration Council under this section is a dispute touching the constitution, management or business of the co-operative, such question shall be decided by the Arbitration Council.

(3) The Arbitration Council shall on deposit of fees prescribed in the bye-laws decide the dispute in accordance with the provisions of this Act and the bye-laws. Pending final decision on the dispute, the Arbitration Council may make such interlocutory orders it may deem necessary in the interest of justice.

(4) Every order or decision made under this section, shall be executed by the Civil Court having jurisdiction, as if such order is a decree of that Court, on a certificate issued by the Arbitration Council.

(5) Notwithstanding anything contained in sub-section (4), and without prejudice to any other mode of recovery which is being taken or may be taken, the Arbitration Council may, on the application made by the co-operative for the recovery of arrears of any sum advanced by the co-operative to any of its members, and on its furnishing a statement of accounts in respect of the arrears and after making such inquiry as such Council deems fit, issue a certificate for the recovery of the amount stated therein to be due as arrears.

(6) A certificate issued by the Arbitration Council under sub-section (5) shall be final and conclusive proof of the arrears stated to be due and the certificate shall be executed by the Chief Executive in the manner specified in the bye-laws.

(7) A person aggrieved by the order of the Arbitration Council may appeal to the Co-operative Tribunal within forty-five days from the date of passing the order :

Provided that no appeal under this sub-section shall be admitted unless twenty-five per cent of the decreed principal amount is deposited in such manner as the Co-operative Tribunal may prescribe by regulations.

Constitution of Arbitration Council.- (1) The bye-laws shall provide for the constitution of an Arbitration Council consisting of three members, possessing such qualifications as may be prescribed by bye-laws appointed by the general body from among its members or others, whose term of office shall be of the same duration as that of the directors.

(2) The Arbitration Council shall follow such procedure and exercise such powers for settlement of disputes as may be prescribed by the Co-operative Tribunal.

CHAPTER IX

Dissolution

Dissolution of co-operative by members.- (1) A co-operative may, by special resolution, authorise its own dissolution. A notice of the general meeting called for the purpose shall also be sent by registered post with an invitation to attend, to the Registrar, to creditors, if any, to any [principal co-operative]to which the co-operative is affiliated, and to any co-operative with which a partnership contract has been entered into.

(2) The invitee under sub-section (1) shall have the right only to make a presentation to the general body, if he wishes to do so, on the issue of the proposed dissolution.

(3) Within fifteen days of such authorisation for dissolution, the co-operative shall send to the Registrar a copy by registered post of the authorisation to dissolve the co-operative.

(4) The authorisation approved under sub-section (1) shall set out-

(a) the assets and liabilities of the co-operative;

(b) the claims of creditors;

(d) the nature and extent of the members' interest in the co-operative;

(e) the name and address of the liquidator appointed by the cooperative.

(5) When the Registrar receives the special resolution passed under sub-section (1)-

(a) where he is satisfied that the co-operative has no assets or liabilities, he shall dissolve the co-operative, delete its name from the register of co-operatives and issue a certificate of dissolution of such co-operative; or

(b) he shall, within thirty days of the date of receipt of such resolution, cause at the expense of the co-operative a notice of the special resolution to be published once in the Gazette and once a week for two consecutive weeks in a newspaper published or distributed in the district where the head office of the cooperative is located.

(6) In the case of dissolution, he Registrar may require, till the certificate of dissolution is issued by him, from the liquidator appointed by the co-operative or from any other person who is required to furnish information, a periodical return showing :-

(a) the progress of dissolution;

(b) the distribution of any undistributed surplus or reserve; and

Dissolution of co-operative by Registrar.- (1) Where the Registrar has reason to believe that a co-operative-

(a) has not commenced business within two years after the date shown on its certificate of registration; or

(b) has not carried on business for two consecutive years;

he shall send to the co-operative a letter by registered post, inquiring whether the co-operative is carrying on business.

(2) Where the Registrar-

(i) does not, within thirty days of the date of sending a letter under sub-section (1), receive a reply to the letter, he shall within fifteen days after the expiry of said thirty days, send to the co-operative a letter stating that:-

(a) a letter was sent to the co-operative under sub-section (1);

(b) no reply to the letter has been received by him within thirty days from the date of sending it;

(ii) receives a reply from the co-operative that it is not carrying on business; or

(iii) docs not, within thirty days from the date he sent a letter under this sub-section receive a reply to that letter;

he shall publish (he notice in the newspaper and send to the co-operative a notice that, at the expiry of thirty days from the date of the notice, the co-operative shall, unless cause is shown to the contrary, be dissolved and have its name deleted from the register of co-operatives.

(3) On the expiry of thirty days from the date of issue of the letter under sub-section (2), the Registrar shall, unless cause to the contrary is previously shown by the co-operative :-

(a) where he is satisfied that the co-operative has no assets or liabilities, dissolve the co-operative, delete its name from the register of co-operatives and issue a certificate of dissolution of such co-operative; or

(b) appoint a liquidator under Section 60 to wind up the affairs of the co-operative.

(4) Where a co-operative fails to file returns and furnish information, as required by Section 52, even after a lapse of two hundred and forty days from the close of the financial year, the Registrar shall send a requisition under sub-section (2) of Section 32 to the board to call a special general meeting for the purpose of considering the annual returns to be filed with, and the information to be furnished to the Registrar.

(5) Where the board fails to call a special general meeting within the period specified in sub-section (2) of Section 32, the Registrar may at the cost of the co-operative call the special general meeting notwithstanding anything contained in this Act :-

(a) to review the affairs of the co-operative; and

(b) to ascertain whether the general body desires to continue the co-operative.

(6) Where :

(a) a quorum of members is not present at a special general meeting called under sub-section (4) or sub-section (5); or

(b) the general body fails to pass a resolution to the effect that :-

(i) the co-operative is to carry on business;

(ii) the board shall present, within sixty days from the date of the special general meeting, to the general body the annual returns to be filed with, and the information to be furnished, to the Registrar; and

(iii) the co-operative shall file the returns with, and furnish the information to the Registrar within ninety days from the date of the special general meeting; or

(c) the co-operative fails to file the returns with, and furnish the information to the Registrar within ninety days from the date of the special general meeting;

the Registrar shall-

(i) if he is satisfied that the co-operative has no assets or liabilities, dissolve the co-operative, delete its name from the register of co-operatives and issue a certificate of dissolution of such co-operative; or

(ii) appoint a liquidator under Section 60 to wind up the affairs of the co-operative.

Appointment of Liquidator.- Where a co-operative is to be dissolved and no liquidator is appointed by the general body, the Registrar shall appoint any person as a liquidator to wind up the affairs of the co-operative.
Disputes of Liquidator.- A liquidator on his appointment shall:-

(a) immediately give notice of his appointment :

(i) in the case of a liquidator not appointed by the Registrar; to the Registrar; and

(ii) to each claimant and creditor known to the liquidator;

(b) immediately publish notice of his appointment in the Gazette and once a week for two consecutive weeks in a newspaper published or distributed in the district where the head office of the co-operative is located and take reasonable steps to give notice of the liquidation in every jurisdiction where the cooperative carries on business;

(i) indebted to the co-operative, to render an account and pay to the liquidator at the time and place specified in the notice any amount owing;

(ii) possessing property of the co-operative, to deliver it to the liquidator at the time and place specified in the notice; and

(iii) having a claim against the co-operative, whether liquidated, unliquidated, future or contingent, to present particulars of the claim in writing to the liquidator at the time and place specified in the notice within the period specified in such notice which shall not exceed sixty days from the dale of first publication of the notice;

(d) take into his custody and under his control all the property and actionable claims to which the co-operative is or appears to be entitled and shall take such steps as he may deem necessary or expedient to prevent loss or deterioration of or damage to such property, effects and claims;

(e) open and maintain a trust account for the moneys of the cooperative;

(f) keep accounts of the moneys of the co-operative received and paid out by him;

(g) maintain separate lists of the members, creditors and other persons having claims against the co-operative;

(h) where at any time he determines that the co-operative is unable to pay or adequately provide for the discharge of its obligations, apply to the Registrar or general body, as the case may be, for directions; and

(i) deliver to the Registrar or general body, as the case may be, periodically as the Registrar or general body may require, financial statements of the co-operative in such form the liquidator considers proper or that the Registrar or general body may require.

Powers of liquidator.- (1) The whole of the assets of a co-operative in respect of which an order for winding up has been made shall vest in the liquidator appointed under Section 60 from the date the order takes effect.

(2) The liquidator may-

(a) retain lawyers, accountants, engineers, appraisers and other professional advisors;

(b) institute and defend suits and other legal proceedings on behalf of the co-operative by the name of his office;

(d) sell by public auction or private sale any property of the co-operative;

(e) do all acts and execute any documents in the name and on behalf of the co-operative;

(f) borrow money on the security of the property of the cooperative;

(g) settle or compromise any claims by or against the co-operative; and

(h) do all other things that he considers necessary for the liquidation of the co-operative and distribution of its property.

(3) Where a liquidator has reason to believe that any person has in his possession or under his control, or has concealed, withheld or misappropriated any properly of the co-operative, he may apply to the Court for an order requiring that person to appear before the court at the time and place designated in the order and to be examined.

(4) Where the examination under sub-section (3) discloses that a person has concealed, withheld or misappropriated property of the co-operative or has in possession or under his control the property of the co-operative, the Court may order that person to restore the property or pay compensation to the liquidator on behalf of the co-operative.

(5) No liquidator shall purchase, directly or indirectly, any part of the stock-in-trade, debts or assets of the co-operative.

(6) Where an order of winding up of co-operative is set aside in appeal the property, effects and actionable claims of the co-operative shall revest in the co-operative.

Disposal of surplus assets of liquidated co-operatives.- After all the liabilities including the paid up share capital of a wound up co-operative have been met, the surplus assets shall not be divided among its members but they shall be applied to any object described in the bye-laws and when no object is so described to any object of public utility determined by the general body meeting.
Bar of suits or legal proceedings.- When an order to wind up the co-operative has been made or the liquidator has been appointed no suit or other legal proceeding relating to business of such co-operative shall be proceeded with or instituted against the liquidator as such or against the co-operative or any member thereof except with the leave of the Registrar and subject to such conditions as he may impose.
Final accounts.- (1) A liquidator shall pay the costs of liquidation out of the property of the co-operative and shall pay or make adequate provision for all claims against the co-operative.

(2) Subject to the provisions of Section 63 after paying or making adequate provision for all claims against the co-operative, the liquidator shall apply to the Registrar for approval of his final accounts and for permission to distribute in case or in kind the remaining property of the co-operative in accordance with the bye-laws.

(3) Where the Registrar approves the final accounts rendered by a liquidator under sub-section (2), he shall :-

(a) issue directions with respect to the custody or disposal of the documents and records of the co-operative; and

(b) discharge the liquidator.

(4) Where the Registrar discharges a liquidator under sub-section (3), the Registrar shall dissolve the co-operative, issue a certificate of dissolution and delete its name from the register of co-operatives.

(5) The co-operatives ceases to exist on the date shown in the certificate of dissolution, which shall not be later than two years after the appointment of the liquidator.

CHAPTER X

Miscellaneous

Previous sanction of Reserve Bank of India or NABARD in certain matters.- Notwithstanding anything contained in Sections 5, 11, 12, 13, 14, 58 and 59 of this Act, in the case of a co-operative bank or an urban co-operative bank, no [x x x]transfer, division, amalgamation, merger or dissolution shall take place save with the previous sanction in writing of Reserve Bank or National Bank for Agriculture and Rural Development as the case may be.
Certain provisions of Co-operative Societies Act to apply.- The provisions of Sections 17-A and 17-B of the Madhya Pradesh Co-operative Societies Act, 1960 (No. 17 of 1961) shall mutatis mutandisapply to all co-operative banks.

Explanation: - For the purposes of this section, a "Co-operative Bank" means a co-operative registered under this Act, which is doing the business of banking as defined in clause (b) of sub-section (1) of Section 5 of the Banking Regulations Act, 1949 (No. 10 of 1949).

Removal of difficulty.- (1) If any difficulty arises in giving effect to the provisions of this Act, the State Government may pass such order not inconsistent with the provisions of this Act as it may deem necessary to remove such difficulty :

Provided that no such order shall be passed after the expiry of the period of two years from the date of coming into force of this Act.

(2) The order passed under sub-section (1) shall be laid on the table of the legislative assembly.

Right to information.- Any member or creditor having interest in the affairs of the co-operative may seek information relating to any transaction of the co-operative and for that purpose may be provided a certified copy of any document within one month from the date of receipt of the application relating to such transaction on payment of such fee as may be specified in the bye-laws.
Bar of jurisdiction of Courts.- (1) Save as provided in this Act, no Civil or Revenue Court shall have any jurisdiction in respect of-

(a) the registration or conversion of a Co-operative or of an amendment of a bye-law;

(b) any matter concerning the winding up and the dissolution of a Co-operative.

(2) While a co-operative is being wound-up, no suit or other legal proceedings relating to the business of such co-operative shall be proceeded with, or instituted against, the liquidator as such or against the co-operative or any member thereof except by leave of the Registrar and subject to such conditions as he may impose.

(3) Save as provided in this Act, no order, decision or award made under this Act shall be questioned in any Court on any ground whatsoever.

Indemnity for acts done in good faith.- No suit, prosecution or other legal proceedings shall lie against the Registrar or any person subordinate to him or acting under this authority, in respect of anything done or purporting to have been done by him in good faith under this Act.

Schedule A

The Statement of Co-operative Identity

Definition.- A co-operative is an autonomous association of persons united voluntarily to meet their common economic, social and cultural needs and aspirations through a jointly owned and democratically controlled enterprise.
Values.- Co-operatives are based on the values of self-help, self-responsibility, democracy, equality, equity, and solidarity. In the tradition of their founders, co-operative members believe in the ethical values of honesty, openness, social responsibilities, and caring for others.
Principles.- The co-operative principles are guidelines by which co-operatives put their values into practice.

1st Principle : Voluntary and Open Membership

Co-operatives are voluntary organisations, open to all persons able to use their services and.willing to accept the responsibilities of membership, without gender, social, racial, political, or religious discrimination.

2nd Principle : Democratic Member Control

Co-operatives are democratic organisations controlled by their members, who actively participate in setting their policies and making decisions. Men and women serving as elected representatives are accountable to membership. In primary co-operatives, members have equal voting rights (one member, one vote) and co-operatives at other levels are also organised in a democratic manner.

3rd Principle : Member Economic Participation

Members contribute to, and democratically control, the capital of their co-operative. At least part of that capital is usually the common property of the co-operative. Members usually receive limited compensation, if any, on capital subscribed to as a condition of membership. Members allocate surpluses for any of the following purposes :

Developing their co-operative, possibly by setting up reserves, part of which at least would he indivisible, benefiting members in proportion to their transactions with the co-operative; and supporting other activities approved by the membership.

4th Principle : Autonomy and Independence

Co-operatives are autonomous, self-help organisations controlled by their members. If they enter into agreements with other organisations, including Governments or, raise capital from external sources, they do so on terms that ensure democratic control by their members and maintain their co-operative autonomy.

5th Principle : Education, Training and Information

Co-operatives provide education and training for their members, elected representatives, managers, and employees so they can contribute effectively to the development of their co-operatives. They inform the general public-particularly young people and opinion leaders-about the nature and benefits of co-operative.

6th Principle : Co-operation among Co-operatives

Co-operatives serve their members most effectively and strengthen the co-operative movement by working together through local, national, regional, and international structures.

7th Principle : Concern for Community

Co-operatives work for the sustainable development of their communities through policies approved by their members.

Schedule B

Subject matter for specific consideration when framing bye-laws

Identity of the co-operative :

(a) the name of the co-operative;

(b) the village/town/city where the head office of the co-operative is to be located;

(d) the area of operation from where the membership is to be drawn.

Aim and services :

(a) the aim of the co-operative explicitly stated as a common need of the members which the co-operative aims at fulfilling;

(b) key service and support services to members to fulfil the common need stated in the aim;

Membership :

(a) eligibility, ineligibility for obtaining membership;

(b) eligibility, ineligibility for continuing membership;

(d) procedure for withdrawing membership;

(e) procedure for termination of membership;

(f) circumstances under which membership ceases;

(g) procedure for cessation of membership.

Member rights and obligations :

(a) the rights of members;

(b) manner of fixation of minimum performance expected annually of each member vis-a-vis use of services, financial commitment, participation in meetings, and adherence to bye-laws, in order to be eligible to exercise the rights of membership including the right to vote;

(d) the consequences of default in payment of any sum due by a member.

General body :

(a) the role of the general body, and of the delegate general body, if any, and subjects which must be dealt with by the general body, and by the representative general body, if any;

(b) the manner and frequency of convening general meetings, the mode of communication of the intimation of these meetings and quorum required;

Board of directors :

(a) the size and composition of the board of directors;

(b) eligibility, ineligibility for becoming director;

(d) the procedure for election including the appointment of election officer, removal of directors, the election of the President, Vice President, and representative and filling of casual vacancy;

(e) the terms of office of the directors;

(f) the frequency of board meetings;

(g) the manner of convening board meetings, and quorum;

(h) the functions, responsibilities and powers of the board;

(i) the minutes of proceedings of board meetings;

(j) the functions, responsibilities and powers of the directors.

Chief Executive and staff :

(a) the person to sue or be sued on behalf of the co-operative;

(b) the manner of appointment and removal of chief executive;

Finances :

(a) the financial year which the co-operative wishes to adopt;

(b) the manner of appointment of auditors and their duties;

(d) the nature and amount of equity capital, if any, of the co-operative;

(e) the maximum capital which a single member can hold;

(f) the types and extent of funds to be raised;

(g) the purposes for which the funds raised by the co-operative may be applied;

(h) the debt-equity ratio that the co-operative wishes to maintain at all times, and the maximum external debt that a co-operative wishes to permit itself at any point of time;

(i) procedure for transfer of shares or interest by a member;

(j) procedure for redemption of shares by the co-operative;

(k) procedure for transfer or payment of interest on death of member;

(l) the nature and extent of the liability of the members for the debts contracted by the co-operative;

(m) the nature and extent of the liability of the directors for the debts contracted by the co-operative;

(n) the manner of disposal of funds if under liquidation.

[Principal co-operatives]:

(a) the rights, if any, which the co-operative wishes to confer on any [principal co-operative] of which it is a member, and the circumstances under which these rights may be exercised by such secondary co-operative;

(b) the procedure for appointing and changing representative to [principal co-operative].

Other matters :

(a) the manner of making or amending bye-laws;

(b) the manner of constitution and functioning of Arbitration Council along with the qualifications of the members for settlement of disputes;

(d) the language in which the affairs of the co-operative are to be conducted;

(e) refunding of loan, guarantee, share capital, grant or subsidy received from Government;

(f) other matters which the provisions of this Act requires to be provided by bye-laws.