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THE NAGALAND CO-OPERATIVE SOCIETIES ACT, 2017
(NAGALAND ACT No. 6 OF 2017)
Received the assent of the Governor on 9.6.17 and published in the
Nagaland Gazette extraordinary dated 17th July 2017.
An
Act
An Act to consolidate and amend the law relating to Co-operative Societies
within the territorial limit of the State of Nagaland, to facilitate the voluntary
formation and democratic functioning of Co-operative Societies as people's
institution based on Self-Help, Mutual-Aid and Sound Business Principles and, to
enable its members to promote their economic needs so as to bring about higher
standard of living for social betterment.
Preamble: Whereas it is expedient further to consolidate and amend the law
relating to Co-operative Societies in the State of Nagaland, to facilitate the
formation and working of Co-operative Societies in accordance with the relevant
Directive Principles of State policyenunciated in the Constitution of India. It is
hereby enacted by the Legislative Assembly of Nagaland as per the power
conferred upon it under entry 32 of List-11 of
7th
Schedule of the Constitution of
India in the year of the Republic of India as follows:
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GENERAL CONTENT
Preamble
1. Preliminary
2. Registrar and Registration of Co-operative Societies
3. Membership
4. Management of Co-operative
5. Management of Property and Funds
6. Regulation of cooperatives-(Audit, Inquiry ,inspection &Su rcharge)
7. Settlement of disputes
9. Recovery of sums due
10. Penalty
11. jurisdiction
12. Miscellaneous
Schedules
INDEX
Preamble
CHAPTER-1
PRELIMINARY
1. Short title, extent and commencement.
2. Definitions.
CHAPTER-11
REGISTRAR AND REGISTRATION OF CO-OPERATIVE SOCIETIES
3. The Registrar.
4. Co-operative Which may be registered.
5. Age, qualification of a member.
6. Conditions of registration.
7. Restriction on a acquisition of shares in a society.
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8. power of Registrar to decide certain questions.
9. Bye-Laws.
10. Application for registration.
11. Registration.
12. Certificate of registration.
13. Amendment of the Bye-Laws of a registered society.
14. Power of Registrar or affiliating society or financing bank to direct
amendmentof Bye-Laws or adoption of Rules of procedure.
15. Division and Amalgamation of societies
16. Location of Head Office.
17. Fees etc.
CHAPTER-ill
MEMBERSHIP
18. Eligibility of membership in Co-operative Society.
19. Disqualification of membership.
20. Admission on members.
21. Withdrawal of membership.
22. Cessation of membership.
23. Termination of membership.
24. Register of members.
25. Education of member etc.
26. Rights and liabilities of members of registered societies and exercise
and exercise of rights thereof.
27. Votes of members and manner of exercising vote.
28. Liabilities of past member and his estate.
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CHAPTER-1V
MANAGEMENT OF CO-OPERATIVE
29. Genaral Assembly
30. Matters to be dealt within the Annual General Meeting.
31. Term of the Board.
32. General Meeting.
33. Special General Meeting.
34. Quorum of Meetings of General Assembly.
35. Board.
36. President and Vice President of Co-operative Society.
37. Disqualification of the members of the Board and Administrative Council.
38. Powers and functions of the Board.
39. Annual General Meeting.
40. Eligibility fora Director in Co-operative Society.
41. Elections.
42. Term of Directors.
43. Board Meetings.
44. Decision by majorityof votes.
45. Minutes of proceedings of meetings.
46. Vacancies etc. not to invalidate proceedings.
47. Proceeding of meeting to be deemed to be good and valid.
48. Power to depute Government servant to manage the affairs of a Co-operative
society.
49. Chief Executive his powers and functions and staff.
50. Votes of members.
51. Loan to be utilised forthe purpose forwhich advanced.
52. Restrictions on transfer of share or interest.
53. Validity of transferor charge of share or interest.
54. Share or interest not liable to attachment.
55. Nomination of transferee.
56. Transfer or interest on death of member.
57. Disposal of shares or interest of ceased member.
58. Liability of member on winding up of society.
59. Restriction on transfer of possession of land help under a society.
60. Right of a registered societyto pay prior debts of a mortgagor.
61. Restriction on mortgaged property.
62. Barto certain claim.
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CHAPTER-V
MANAGEMENT OF PROPERTY AND FUNDS
63. Mobilization of funds
64. Restrictions on borrowings.
65. Restrictions on holding of equity.
66. Disposal of surplus.
67. Management of deficit.
68. Reserve and other funds.
69. Investment of funds outside the business.
70. Restriction on contribution to political parties or religious institutions.
71. Contribution to Co-operative Education Funds of the Slate Federal Co-
operative Union.
72. Restrictions of grant of loan.
73. Restriction on transaction with non-member.
74. Contributory Provident Fund.
75. Power of Government to give financial assistance.
CHAPTER-VI
REGULATION OF CO-OPERATIVE
(Audit, inquiry, inspection and surcharge)
76. Audit and powers of Auditors.
77. Power of the Registrar to have the accounts written up.
78. Nature of Audit.
79. Audit Report.
80. Rectification of defects in accounts.
81. Re-audit/Recasting of Audit Report.
82. Inquiry.
83. Inspection of a Co-operative.
84. Cost of Inquiry and Inspection.
85. Recovery of cost.
86. Initiation of Surcharge proceeding against delinquent officers or members by
Registrar.
87. Prohibition of use of word Co-operative and penalty.
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88. Offence.
89. Powerto enforce attendance.
CHAPTER VU
SETTLEMENT OF DISPUTES
90. Reference of dispute
91. Settlements of dispute.
CHAPTER-Vu
DISSOLUTION OF A SOCIETY
92. Cancellation of registration.
93. winding up, appointment of Liquidator and his powers and function.
94. Distribution of fund of a dissolved society.
95. Liquidation to deposit the books and submit a final report.
96. Disposal of surplus assets of liquidation Co-operative Societies.
97. Bar of suits or legal proceeding.
98. Final Accounts.
99. Bar of suit.
CHAPTER-IX
RECOVERY OF SUMS DUE
100. Recovery ofsums due enforcement ofobligations.
101. Charge and Surcharge.
CHAPTER-X
PENALTY
102. Punishment for false information, disobeying summon, order etc.
103. Punishment for disposing property in contravention of Section 61.
104. Penalty for certain performance of obligation.
105. Power to enforce performance of obligation.
106. Cognizance of Offence.
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CHAPTER XI
JURISDICTION
107. Indemnity.
108. Bar to jurisdiction-Civil.
109. Appeal of review.
110. Power of attachment of property.
111. Registrar to be Civil Court for certain purpose.
112. Recovery of Sums due.
113. Registrar may order a Meeting of Creditors.
CHAPTER XII
MISCELLANEOUS
114. Previous sanction of Reserve Bank of India or NABARD in certain matters.
115. Society to be a Body Corporate.
116. Register of members.
117. Entries in books of registered society shall be received as prima fade
evidence.
118. Savings of existing societies.
119. Acts of societies etc. Not to be invalidated by certain defects.
120. Power to order recoupment of expenditure.
121. Super-session of Board by Registrar.
122. Power to seize record of society.
123. Powers of the Managing Body of an Affiliating Society to enquire into the
affairs of a member society.
124. Limitation.
125. Information and returns to be filed with the Registrar.
126. Power to make Rules.
127. Repeal.
SCHEDULE-'A'
CO-OPERATIVE PRINCIPLES
SCHEDULE-'B'
Subject matter for specific consideration when framing Bye-Laws
SCHEDULE-'C'
CO-operative Demand Certificate granted under Section-112(l) of the Nagaland Co-
operative Societies Act 2017.
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CHAPTER-1
PRELIMINARY
1. Short title, extent and commencement:
(1) This Act maybe called the Nagaland Co-operative societies Act,2017.
(2) It extends to the whole of the territorial limits of the State of Nagaland.
(3) It shall come into force on such date as the State Government may, by
Notification in the Official Gazette, determine and different dates for
Enforcement of the different provisions of this Act may be determined
bytheState Government.
2. Definitions: in this Act, unless the context otherwise requires:
(1) "Act refers to the Nàgaland Co-operative Societies Act,2017.
(2) "Adrninistrator(s)"refers to persons or persons appointed by Registrar
by virtue of exercise of power conferred upon him/her and for the
purpose.
(3) "Affiliated Society" means the particular society which is a member of
the affiliated society.
(4) "Affiliated Society "means the registered society in which a particular
society becomes a member.
(5) "Area of Operation" means the area from which the membership is
drawn and Includes the territorial limit up to which a co-operative can
extend its activities as provided under Bye-Law.
(6) "Auditor" means departmental auditors and auditors other than
departmental auditor appointed by the Registrar.
(7) "Board" or "Managing Committee" means the Government Body of a
Co- operative by whatever name be called, to which the direction of the
affairs of the Co-operative is entrusted upon by the Bye-Laws of that
Co-operative.
(8) "Bonus" means payment made in cash or kind out of the profits of a co-
operative to a member or to a person who is not a member, on the basis
of his contribution (including any contribution in the form of labour or
service) to the business of the Co-operative.
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(9) "Bye-Laws" means Bye-Laws registered under this Act for the time
being in force and includes registered amendments of such Bye-Laws
and deemed amendment of Bye-Laws.
(10) "Charge" means the lawful conferment of preferential right of
enjoyment upon an entity over other rival claimants on the same
entity.
(11) "Co-operative Bank" means a society involved/engage in the business
of banking as defined in clause(6)of sub-section(1)of section 5 of the
Banking Regulation Act 1949 and includes any society which is
functioning or is to function as an Agriculture and Rural Development
Bank.
(12) "Co-operative Tribunal" means a tribunal constituted under Nagaland
Co-operative Societies Act or to be constituted by the Government in
consultation with High court under this Act to decide disputes to be
referred to under any of the provision of the Act.
(13) "Co-operative with limited liability" means a Co-operative having the
liability of its members limited to the extent of share capital held or
guarantee provided by such member or as provided by its Bye-Laws.
(14) "Co-operative with unlimited liability" means a Co-operative, the
members of which are, in the event of it being wound up, jointly and
severally liable for and in respect of its obligations and to contribute to
any deficiency in the assets of the Co-operative regardless of the value
of share capital held or extent of guarantee provided by concerned
member.
(15) "Co-operative Year" means the period beginning and ending on such
date as may be fixed by the Registrar for the purpose of drawing up the
Balance Sheet of registered societies and for all other purpose under
this Act.
(16) "Court" means the principal Civil Court of original jurisdiction in a
district, and includes the high Court and Supreme Court in exercise of
its original civil jurisdiction.
558
(17) "Decree" means a decision expressed in a suit conclusively determining
the rights of the parties to the dispute with regard to all or any of the
matters in controversy and such decision is given formal adjudication.
(18) "Deemed" means the intended act, purpose, requirement, need ,gets
its legal status on the expiry of time period or stipulation or condition
provided for taking such action or decision ,on such act, purpose
,requirement or need, etc.
(19) "Deficit" means the excess of expenditure over income arrived at, at
the end of a financial year ,after the payment of interests, if any, on
share capital.
(20) "Delegate" means a member nominated or authorized by a Co-
operative to represent its interests at the time of promotion of a
Federal or Central or Secondary Co-operative, and/or to take part at
meetings of such Federal or Central or Secondary Co-operative to
which the Co-operative is affiliated.
(21) "Deregistration" means the act of withdrawing or taking away the legal
rights Conferred upon a Co-operative for the purpose.
(22) "Director" means a member elected, nominated or co-opted in
accordance with the Law, Rules and provisions of Bye-Laws to the Board
of Management orthe Managing Committee
(23) "Dividend" means the amount paid out of the net profits of Co-
operative to a member in proportion to the share capital held by him.
(24) "Employee" means a person not being an office bearer, employed by
the registered Co-operative society on a salary or similar form of
remuneration other than advance, patronage, dividend or payment for
goods sold to or, through such society.
(25) "Expulsion" (of members) means the act of keeping away members by
force or authority who are found or to be found dishonest by engaging
themselves in doing acts which are detrimental or harmful to the
559
interest of the Co-operative or to its proper working or acts which
affect or affected the image/status and good will of Co-operative.
(26) "General Body" in relation to Co-operative" means a body consisting of
all its members.
(27) "General Meeting" or "General Body Meeting" means a meeting of the
General Body called and conducted in accordance with the provision of
this Act and the Bye-Laws of the Co-operative.
(28) "Government" or state Government refers to the Government of
Nagaland unless stated otherwise.
(29) "Managing Committee or Board of Directors" as the case maybe means
the body to which the management of the affairs of a registered society
is directly vested.
(30) "Member" means a person admitted to membership after registration
in accordance with the Bye-Laws and Rules of the Society and includes
a promoter.
(31) "Office" means an employee of a Co-operative society employed by the
Managing Committee of the Society/Board of Directors.
(32) "Office Bearer" means a member duly elected by the appropriate body
of a registered society according to its Bye-Laws to any office of such
society, including the office of the President, Chairman, Vice President,
Vice Chairman, Secretary, Managing Director and Treasurer provided
that any officer appointed by Government to hold charge of any office
of a registered society shall be deemed to be an Office Bearer unless
specifically stated to be contrary.
(33) "Primary Co-operative" means a Co-operative whose primary
members are Primarily individual eligible persons.
(34) "Promoter" means any eligible person or registered society signing the
application for registration of a society.
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(35) "Qualified" means possession of requisite qualification and experience
as Provided under Law, Rules, Regulations and Bye-Laws of Co-
operative.
(36) "Registrar" means a person appointed to perform the duties of a
Registrar of Cooperative Societies under this Act.
(37) "Arbitrator" means a person appointed under the provision of this Act
to decide any dispute referred to him.
(38) "Chief Executive" means the individual, in paid or honorary capacity,
nominated or elected or appointed by the Board from among
members, directors or other, in accordance with the Bye-Laws of the
society who shall perform such functions and responsibilities and
exercise such powers as specified in the Act, Bye-Laws and assigned by
the Board.
(39) "Representative General Body" in relation to a Co-operative, means all
the Member representatives authorized as per Bye-Laws to constitute
and discharge Such of the functions of General Body.
(40) "Representative General Body Meeting" means a meeting of the
representatives, Called and conducted in accordance with the
provisions of this Act and bye- Laws of the Co-operative.
(41) "Resolution" means a resolution of the General Body at a meeting
called for the Purpose which has the approval of more than half of all
the members of the Co- Operative with right to vote at the time of the
General Meeting, or of at least Two-thirds of members or any other
proportion with right of vote at the time of The General Meeting and
present in the General Meeting, whichever is specified.
(42) "Rules" means Rules made under this Act by the Government.
(43) "Schedule" means the schedule" appended to his Act.
(44) "Society" in this Act means a registered Co-operative Society.
561.
(45) "Supersession" means the Act of removing or unseating or dissolving or
replacing the duly and democratically elected management committee
from its functions and operations, in the larger interest of members of
Co-operative, public or Co-operative movement, for managing the
affairs of Co-operative, prejudicial to the interest of members Co-
operative or detrimental to the business or general affairs and growth
of Co-operative.
(46) "Surcharge" means the addition or omission done in the preparation
and maintenance of accounts for which credit should have been made
and involve amounts in official books of accounts not approved by the
auditor which amounts are recoverable from such of the persons
including officials and employees of Co-operative Society responsible
for spending or incurring such expenditure.
(47) "Surplus" means the excess of income over expenditure, arrived at, at
the end of the financial year after making or making provision for the
payment of interest on share capital, tax, if any and before the payment
of surplus refund, and allocation of reserves and other funds.
(48) "Working Capital" means fund at the disposal of a Co-operative
inclusive of paid-up share capital, funds built out of profits, and money
raised by borrowing and by any other source.
(49) "Winding up or Dissolution" means the act of enabling or allowing an
institution activity, subject or thing coming to an end in normal course
or bringing or forcing an end to such an institution activity, subject or
thing in larger interest of member, public or Co-operative or Co-
operative Movement.
(50) Works and Expressions not defined in this Act but defined in the Rules
shall bearthe meaning as defined in the Rules.
562
CHAPTER II
REGISTRAR AND REGISTRATION OF
CO-OPERATIVE SOCIETIES
3. The Registrar:
(1) The State Government may appoint a person from the State Co-
operative cadre to be a Registrar of Co-operative Societies for the State
or any portion of it for the registration, supervision, assistance, counsel
and for the all round development of the Co-operative Movement in
the State with such other powers and responsibilities as may be
provided under this Act or Rules or Bye-Laws framed there-under.
(2) The State Government may also appoint any other person or persons to
assist the Registrar belonging to State Co-operative cadre and may be
general or special order in writing, delegate to any such person or
persons or any of the powers and responsibilities of the Registrar under
this Act.
4. Co-operative which maybe registered:
(1) A society whose objective is to promote the economic interest or
general welfare of its members or of the public in accordance with the
Co-operative Principles laid down in Schedule A or a society
established with the objective of facilitating the operations of any
society may be registered underthIs Act with limited liability.
(2) No society shall be registered if in the opinion of the Registrar, its
declared objects are unlikely to be achieved or if it is likely to be
economically unsound or if it may have an adverse effect upon any
registered society or the Co-operative Movement as a whole.
4. Co-operative Bankto be eligible Co-operative Bank:
A Co-operative Society registered as a Co-operative Bank underthis Act
shall be eligible to be a Co-operative Bank within the meaning of clause
(g) of Section 2 of the Deposit Insurance and Credit Guarantee
Corporation Act, 1961 and shall be bound bythe following-
563
a) If so required by the Reserve bank in the public interest or for
preventing the affairs of the Co-operative Bank being conducted in a
manner detrimental to the interest of the depositors or for securing the
proper management of the bank, an order shall be made for the
supersession of the committee of management or other managing
body (by whatever name called) of the Co-operative Bank and the
appointment of an administrator therefore for such period or periods
not exceeding five years in the aggregate as may from time to time
specified by the Reserve Bank.
b) An order for the winding up of the Co-operative Bank or an order
sanctioning a scheme of compromise or arrangement or of
amalgamation or reconstruction or an order for the supersession of the
committee of management or other managing body (by whatever
name called) of the Co-operative Bank and the appointment of an
administrator therefore made with the previous sanction in writing or
on the requisition of the Reserve Bank shall not be liable to be called in
question in any manner.
The Liquidator or the insured Co-operative Bank or the transferee Co-
operative Bank, as the case may be, shall be undef an obligation to
repay the corporation in the circumstances to the extend and in the
manner referred to in Section 21 of the Depositor Insurance and Credit
Guarantee Corporation Act, 1961.
5. Age, qualification of a member:
No person may be an individual member of a registered society if he is
less than eighteen years of age; provided that the Bye-Laws of a society may
prescribe a higher minimum age.
6. Conditions of registration:
(1) A primary Co-operative may be registered with a minimum of 25
eligible persons drawn from or belonging to different families either
with limited or unlimited liability.
564
(2) A Co-operative, other than Primary, maybe registered with a minimum
of five members which are already registered Co-operatives.
(3) The word "Limited" shall be the last word in the name of every society
with limited liability registered underthis Act.
7. Restriction on acquisition of shares in a society:
(1) No member of a registered society shall hold more than such portion of
the share capital of the society as maybe prescribed by the Rules, or the
Bye-Laws of the society.
(2) No member shall be allowed to acquire an additional share until he has
paid in full the value of the whole or that portion of his share holding
which he is required to pay in accordance with the Bye-Laws of his
society.
8. Powers of Registrar to decide certain questions:
All disputes regarding memberships for the purpose of the formation,
registration or continuance of a society under this Act shall be decided by the
Registrar.
9. Bye-Laws:
(1) A Co-operative shall frame their own Bye-Laws and the affairs of the Co-
operative Society 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 Society shall be regulated by its Bye-Laws.
(3) The Bye-Laws may contain such matters as decided by the General
Assembly and shall be specific and confined only to the matters
provided in Schedule 'B'. However, the Bye-Laws of a society shall in no
case supersede the provisions of the Act.
565
10. Application for registration:
(1) An application for registration shalt be made to the Registrar in the
prescribed form.
() The application shall be signed-
(a) in the case of society of which no promoter is a registered society, by at
least twenty five eligible persons; and
(b) in the case of a society of which at least one promoter is a registered
society, by a duty authorized person on behalf of such registered society
and at least one other individual promoter or one other duly authorized
person on behalf of another registered society.
(3) The application shall be accompanied by three copies of the proposed
Bye-Laws of the society signed on behalf of the promoters by the
president of the Inaugural General Meeting. Promoters by whom or on
whose behalf such application is made shalt furnish such information in
regard to the society asthe Registrar may require and they shall be
liable to the full extent of the share money which they have undertaken
to subscribe with effect from the date of registration of the society.
11. Registration:
(1) The Registrar shall decide all questions as to whether the application
complies with the provisions of this Act and Rules there under and
whether the objects of the society are in accordance with Section 4.
(2) When he is satisfied that the application is in order under sub-section
(1) and the Society and Bye-Laws are not contrary thereto, he may
register the Society and Bye-Laws, provided that the Registrar shall
have powersto registerthe Bye-Laws with such modifications as he
thinks are necessary to bring about uniformity in the main with
provisions of the Bye-Laws of societies which have similar objects or
functions.
566
(3) The Registrar shall endorse the Bye-Laws in token of registration. Each
Society shall have a copy of its Bye-Laws so endorsed.
(4) If the Registrar refuses to register a society or an amendment of the
Bye-Laws of a registered society he shall record his reasons in writing
and communicate these reasons and his decision to the promoters or
the Secretary of a registered society by a registered letter to their office,
The Registrar may at anytime review his orders in this respect.
12. Certificate of registration:
A certificate of registration signed by the Registrar shall be issued to
the Society and shall be conclusive evidence that the Co-operative Society
therein mentioned is a Co-operative Society duly registered under this Act
and that its Bye-Laws are as attached to the certificate, unless it is proved
that the registration of the Society has been cancelled or that amended Bye-
Laws have been registered or that the society's copy of the Certificate or Bye-
Laws has been tampered with.
13. Amendment of the Bye-Laws of registered Society:
(1) No amendment of the Bye-Laws of a registered Society, whether byway
of addition, alteration, omission, recession or charge of name shall be
valid until Such amendment has been registered under this Act.
(2) Every proposal for such amendment shall have to be approved by a
resolution at a meeting of the General Assembly in accordance with the
Bye-Laws of the Society and be forwarded within a month from the
date of the resolution to the Registrar and if the provisions RegVtrar is
satisfied that the proposed amendment is not contrary to the
provisions of this Act or Rules, he shall, unless for reasons to be
recorded in writing he considers fit to refuse, register the
amendment.
(3) When the Registrar registers an amendment of the Bye-Laws of a
registered Society, he/she shall issue to the society a copy of the
567
amendment certified by him/her, which shall be a conclusive evidence
that the same has been duly registered, unless it is proved that the
registration of the society has been cancelled or that further
amendments have been registered or that the society's copy of the
amendments have been tampered with, the amendment shall be
binding upon the society with effect from the date of registration.
14. Power of Registrar or affiliating society or financing bank to direct
amendment of Bye-Laws or adoption of Rules of Procedure:
When it appears to the Registrar that an amendment of the Bye-Laws of
a registered society is necessary in the interest of such society or of the
Co-operative Movements as a whole or for the purpose of bringing
about uniformity in the main with the provisions of the Bye-Laws of the
societies which have similar objects or functions, he/she may, by an
order in writing, direct the society to amend its Bye-Laws in accordance
with the amendment drafted and forwarded to the society by him/her
within such time as he/she may specify in the order.
(ii) If the society fails to make such amendment within the time specified,
the Registrar shall, after giving the society an opportunity of
representing its case, make such amendment himself/herself and
register the same the Registrar shall then forward a copy thereof to the
society together with a certificate signed by him/her which shall be
effective as prescribed in Section 13 (3).
(iii) The Registrar shall not register any amendment of the Bye-Laws of a
society, whether under this section or Section 13 of this Act, without
the consent of the Government, if the effect of such amendment is to
lessen the degree of control of the Government or of the Registrar as
already provided for in the Bye-Laws.
(iv) The Registrar may require any registered society to frame Rules of
procedure under its Bye-Laws to govern any parts of its business and to
send such Rules to him/her for prior approval.
568
(2) (i) When it appears to an affiliating society or a financing bank that an
amendment of the Bye-Laws of a registered society which is a member
of such society or debtor of financing bank is necessary in the interest of
the society it may suggest to the affiliated society or the debtor society,
as the case may be, to make such amendment within such time as it
may specify. The affiliating society, or the financing bank shall forward
to the affiliated society, or the debtor society, as the case may be, a draft
of the suggested amendment of the Bye-Laws.
(ii) If the society fails to make the amendment within the time specified in
the affiliating society or the financing bank may forward to the
Registrar for amendment; and the Registrar, if satisfied that the
amendment is necessary in the interest of the society and not contrary
to the provisions of this Act or the Rules may thereupon after giving an
opportunity of showing cause to the society concerned against the
proposed amendment register the amendment and forward to the
society a copy thereof together with a certificate signed by him/her.
The certificate shall be conclusive evidence that the amendment has
been registered and such amendment shall thereupon be binding upon
the society and its members.
(iii) If the Registrar considers that the amendment referred to in clause (ii)
above is not acceptable, he/she shall submit a report to the
Government.
(iv) An affiliating society or a financing bank or the registered society if
aggrieved by the decision of the Registrar may make an appeal to the
Government. The orders of the Government on such appeal shall be
final.
(v) The State Government may out of its own motion or the Registrar
subject to such direction as may be given by the Government, amend
Bye-Laws of any society orgroup of societies in the interest of the public
service.
569
15. Division and Amalgamation of societies:
1. (i) Any registered society may, at a meeting of its General Assembly
specially called for the purpose, resolve to divide into two or more
societies. At least fifteen clear days' notice of such meeting with the
agenda shall be given to its members together with a copy of the
proposed resolution.
(ii) Such a resolution shall contain the proposal as to how to divide the
assets and liabilities of the society among the newly proposed
societies, their areas of operation and the members who will constitute
each of the newly proposed societies with draft of new Bye-Laws.
(iii) A copy of the resolution shall be sent to the Registrar within thirty days
of its adoption and subject to the Registrar's non-interference within
thirty days of the dispatch to him/her of the resolution, the resolution
shall be circulated amongthe members and creditors of the society.
(iv) Notwithstanding any Bye-Laws to the contrary, any member of the
society, and notwithstanding any agreement to the contrary, any
creditor of the society may, by notice given to the society within thirty
days of the receipt of the resolution, intimate in case of a member
his/her intention not to become a member of any of the societies, and
in case of a creditor his/her intention to demand a return of the amount
due to him/her.
(v) After the expiry of ninety days from the aforesaid resolution, a meeting
of the General Assembly shall be convened for finally deciding the
resolution. At least fifteen clear days' notice with the agenda of
meeting shall be given to all members of the society.
(vi) If the General Assembly decides by a three-fourth majority finally to
divide the society and if the Registrar approves of the decision, the
members, who will constitute each of the newly proposed societies
subscribingto the new draft Bye-Laws shall apply to the Registrar under
Section 10 for registration of the new societies and the Registrar shall
register the society under Section 11.
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(vii) The Registrar shall not register the new societies if the application for
registration is not accompanied by a certificate of re-payment of share
capital to members and certificate of satisfaction of claims to creditors
referred to in clause (iv).
(viii) From the date on which the new societies are registered under clause
(vi) the registration of the old society shall be deemed to have been
cancelled.
(ix) The registration of the new societies shall be a sufficient conveyance to
the vest the assets and liabilities of the original society according to the
aforesaid resolution in the new societies.
(2) (I) Two or more registered societies may, at a meeting of their respective
General Assemblies specially convened for the purposed, by giving at
least fifteen clear days' notice to the respective members of the
societies, resolve to amalgamate into one society by adopting common
Bye-Laws.
(ii) A copy of such resolutions of each society shall be circulated forthwith
among all members and creditors thereof.
(iii) Notwithstanding any Bye-Laws to the contrary, any members of any
such societies and notwithstanding any agreement to the contrary, any
creditor of any such societies, may within a period of thirty days from
the receipt of the aforesaid resolution, intimate his/her intention not to
become a member of the new society, in the case of a member, and to
demand a return of the amount due to him/her, in case of a creditor.
(iv) After the expiry of ninety days from the date of the aforesaid
resolution, a joint meeting of the members of such societies shall be
convened to decide finallythe aforesaid resolution.
(v) At least fifteen clear days' notice shall be given to all the members of
the societies. If at such meeting the aforesaid resolution is confirmed by
a majority of three-fourths of the members of each society present and
the common Bye-Laws are accepted with or without any alterations,
the Registrar shall be moved by an application under Section 10 for
571
registration and he/she shall register the new society under Section 11
if he/she approves.
(vi) The Registrar shall not register the new society if the application for
registration is not accompanied by a certificate of repayment of share
capital to members and a certificate of creditors referred to in clause
(iii).
(vii) From the date on which the new society is registered the registration of
the old societies shall be deemed to have been cancelled.
(viii) The registration of the new society shall be a sufficient conveyance to
vest in all the assets and liabilities of the original societies.
(3) (a) Notwithstanding anything contained in sub-sections (1) and (2) of this
section if the Registrar is of opinion that, for reasons of ensuring
economic liability of any registered society or societies or avoiding over
lapping or conflict of jurisdictions of registered societies in any area or
in order to secure proper management of any co-operative society or in
the public interest or in the interest of the Co-operative Movement in
the State as a whole, or in the interest of the depositors and the Co-
operative Banking System in the State as a whole, it is necessary to
divide, amalgamate or merge fully or partially any such society or
societies with any specified society, he/she may, by an order published
in the Official Gazette make a scheme for Division, Amalgamation or
Merger, with prior approval of the State Government.
16. location of Head Office:
(1) Every Co-operative Society shall specify the full address of its head
office in its Bye-Laws.
(2) The Board may subject to approval of the General Assembly change the
address of its head at any time and shall make such amendment in its
Bye-Laws as per provision laid down in Section 13.
572
17. Fees etc:
(1) The registration fees of which the Registrar may prescribe and may be
revised from time to time, shall have to be deposited by the purposed
society.
(2) Subject to the provisions of Sub section (3) of Section 76 and sub-
section (3) and (6) of Section 82 respectively, the Registrar may by an
order prescribe a scale of fees to be paid by a Co-operative Society for
various services rendered by him/her under this Act.
CHAPTER III
MEMBERSHIP
18. Eligibility of membership in Co-operative Society:
1. Any person who needs the services of a Co-operative Society and
expresses his/her willingness to accept the responsibilities of
membership, meets such other conditions as may be specified in the
Bye-Laws of the Co-operative Society and is in a position to use the
service of the Co-operative Society may seek membership and if the Co-
operative Society is in a position to extend its service to the applicant, it
admit as a member.
2. Every applicant for membership and every member of a Co-operative
Society shall keep each Co-operative Society of which the person is a
member informed of membership in other Co-operative Society and in
case of conflicting membership, the Board may, by resolution, refuse
admission under Section 19 or terminate from membership under
Section 23, 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/she
should not be refused admission.
573
19. Disqualification of membership:
No person shall be eligible for admission as a member and a member
shall cease to be a member of a Co-operative Society if he/she incurs
disqualification of Membership prescribed in the Bye-Laws.
20. Admission on members:
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/she is eligible for
membership under Section 18 or refuse admission to the applicant if
he/she is not eligible for membership under Section 19 and
communicate the same to the applicant by post or by hand.
2. Where admission for membership is refuse under sub-section (1), the
decision with the reason thereof shall be communicated to such
applicant within ninety days from the date of application. If nothing is
communicated within the period of ninety days specified above the
admission shall be deemed to have been accepted bythe Board.
3. where an application has been refused by the Board the applicant may
appeal to the General Assembly within a period of sixty days from the
date of receipt of the order of the refusal. The decision of the General
Assembly shall be final and binding on all concerned parties.
Provided that no decision of refusal of admission shall betaken by the General
Assembly without givingthe applicant an opportunityof being heard.
21. Withdrawal of membership:
1. Subject to the provisions of sub-section (2) of Section 67, a member
may, at any time after expiry of one year from the date of accepting
membership, withdraw from membership in a Co-operative Society in
accordance with the procedure laid down in Bye-Laws.
574
2. The withdrawal from membership shall not require the person to fulfil
such obligations as were undertaken or assumed as a member, under
the provisions of the Act the Bye-Laws or any Agreement.
22. Cessation of membership:
1. if any person having been admitted as a member of a Co-operative
Society 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 Society.
2. Every Co-operative Society shall inform in the event of receipt of
information 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.
23. Termination of membership:
1. The Board may, by resolution passed by the three fourth majority of the
Directors present and voting at a meeting held for the purpose,
terminate the membership o a member if he/she:-
a) Intentionally does any act likely to injure the credit ability of the Co-
operative Society or bring it to disrepute, or
b) wilfully deceives the Co-operative Society; or
c) Has acted adversely to the objects or his/her act is detrimental to the
interest of the Co-operative Society; or
d) persistently makes default in payment of his/her dues or fails tc comply
with the provisions of the Bye-Laws; or
e) Having been admitted as a member subsequently becomes a member of
any other society having common objective Co-operative functioning
within the jurisdiction of the Co-operative Society of which he/she is a
member; or
f) Does not use the service of the Co-operative Society or he/she ceases
to be a resident of the Area of Operation of the Society.
575
Provided that no such resolution shall be passed without giving the
member concern 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 General Assembly within thirty days of the receipt of
such resolution.
3. No member of a Co-operative Society whose membership has been
terminated Under sub-section (1) shall be eligible for readmission as a
member of the Co-Operative Society for a period as may be specified in
the resolution but not Exceeding five years, subject to the condition
that his/her conduct during the Period of expulsion sufficiently justified
his/herfair conduct in the event of his/her enrolling membership again.
24. Register of members:
1. Every Co-operative Society shall maintain a register of members. The
name of every person admitted as a member of the Co-operative
Society shall be entered in the register along with such particulars as
may be deemed necessary bythe Board.
2. The name of a person-
I) whose admission is refused under sub-section (2) of Section 20; or
ii) who has withdrawn from membership under Section 21; or
iii) who ceased to be a member under Section 22; or
iv) whose membership has been terminated under Section 23 shall be
deleted from the register of members.
Provided that the name of the name of the person referred to in clause
(i) or clause (iv) shall not be deleted from the register of members till
expiry of 30 days from the date of the decisions of the Board or Annual
General Meeting, as the case may be, and in case an appeal is preferred
under sub-section (2) of Section 23 as the case may be.
576
The register maintained under sub-section (1) shall be prima fade
evidence of the date on which any person was admitted to the Co-
operative Society as a member and of the date on which he/she ceased
to be a member.
25. Education of member etc:
Every Co-operative Society shall include a certain amount in its budget
annually, as provision for expenses on education of member and potential
member, education and training of staff and directors for the development
of their Co-operative Societies in accordance with the Co-operative
Principles specified in Schedule 'A' and practises of co-operation, besides
contributing at least 1% of profit or an amount specified by the Registrar in
case of societies earning net profit, to State Co-operative Union for Co-
operative Education and Training.
26. Rights and liabilities of members of registered societies and exercise of
rights thereof:
1) Every member of a registered society and every ex-officio member of
the Administration Council or Managing Body of such society, unless
under some temporary disqualification shall have the right to attend
any Genera Meeting of the society and to exercise vote at such.
meeting.
2) No member of a Co-operative Society shall exercise the right of a
member including right to vote unless he/she has made such payment
to the Co-operative Society in respect of membership or has acquired
and continues to have such interest in the Co-operative Society as may
be specified in the Bye-Laws.
3) The Chief Executive of every Co-operative Society within twent'j days of
closure of the previous Co-operative Year, 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 Society for
information of all the members and any members not satisfied with
specific instances of the inclusion or non-inclusion of members in the
577
lists, may appeal to the Board within ten days from the date of the
affixing of the lists on the notice board for re-examination of the
records, and the Board shall within forty days of closure of the previous
Co-operative Year, review the lists, finalise it and have it affixed on the
notice board of the head office of the Co-operative Society.
Provided that a member who is an employee or member of employees
union of such society shall not be entitled to vote-
At the election of a member of the Board of such society,
In any General Meeting convened for framing the Bye-Laws of such
society or any amendments thereto.
4) In the case of equality of votes the Chairperson shall have a casting
vote.
27. Votes of member and manner of exercising vote:
.11 In Primary Co-operative Societies, irrespective of the shares held in the
society and subject to temporary disqualification, each member shall
have equal voting right (one member one vote). SimHarly in case of
Secondary Co-operative Society shall have same voting rights (one
representative one vote). Every member of Co-operative Society or the
representative referred herein shall exercise his/her 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 further that the condition of one year membership shall not
apply to the members who join at registration or at any time after
registration of a Co-operative Society but before the first day of the next
Co-operative Year.
2) Every member of a Co-operative shall exercise his/her vote in the
manner specified in the Bye-Laws.
578
28. Liabilities of past member and his/her estate:
The liability of a past and of the estate of a deceased member of the
debt of a registered society as they existed at the date of his/her ceasing to
be a member on his/her death, as the case may be, shall continue for a period
of five years from the said date.
CHAPTER-IV
MANAGEMENT OF CO-OPERATIVE
29. General Assembly:
1) The General Assembly of a Co-operative Society shall consist of all the
members of such Co-operative who are eligible to vote at the Genera
Meeting of the society.
2) (a) Every member of a Registered Society and every ex-officio member
of the Administrative Council or Managing Body of such society, unless
under disqualification, shall have the right to attend any Genera
Meeting of the society and to exercise his/hervote at such meeting.
Provided that the Bye-Laws of a registered society may prescribe:
(i) That a Registered Society affiliated to such society may have more than
one representative entitled to vote at Genera Meeting of the society;
and
(ii) That only one third of the members of the General Assembly, excluding
ex-officio members, may be individual members and the other two
thirds being representatives of affiliated societies.
(b) If the number of individual members exceeds one third of the total
membership of the society, the individual members shall elect as a
special meeting to be called by Secretary of the society not more than
thirty days before the Annual General Meeting in the manner
prescribed in the Bye-Laws to represent in the Annual General Meeting,
those individual members, who has the representative of the body of
579
individual members shall form the one third membership of the
General Assembly for the purpose of voting at the Annual or other
meetings of the General Assembly during the ensuring year. Only such
elected representatives shall have the right to attend and vote at such
General Assembly.
3) If the General Body of Co-operative Society decides that the size, area
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.
4) Subjects to the provisions of this Act and the Bye-Laws, the ultimate
power of a Co-operative Society shall vest in the General Body. The
supreme authority shall however vest with the State Government or
the Registrar of Co-operative Societies, as the case may be, during the
pendency of any loan or service to the society from the Government.
5) Any power, function or responsibility, falling within the Co-operative of
the Society as a corporate body, which has not been specifically
entrusted by this Act or the Bye-Laws to any authority of the Co-
operative of the Society may be dealt with by the General Body or by
the State Government during the pendency of any loan or services to
the society from the Government.
30. Matters to be dealt within the Annual General meeting:
1) The following matters in addition to others as are considered necessary
by the Board shall be dealt with by the Annual General Meeting,
namely:
a) Election of the Directors or delegates if fallen due;
b) Consideration of the long term plan and budget, when required;
c) Consideration of the annual operational plan and budget for required;
580
d) Consideration of the annual report of activities for the previous
financial year including provisional financial statements of accounts if
not audited;
e) Consideration of the audited financial statement of accounts and the
auditors report relating to the previous financial year or years;
1) 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 otherfunds;
j) Review of actual utilization of reserves and otherfunds;
k) Review of the report on the attendance at meeting by directors;
I) Review of the use of the co-operative Societies services by the
Directors;
m) Appointment of internal auditor, fixation of enumeration paid to any
Director or member of any committee internal auditor in connection
with his / her duties in that capacity or his/her attendance at concern
meetings;
n) Review of quantum and percentage of service provided to non
members vis-a-vis services provided the members;
o) Report of activities and accounts related to education of members and
Director and Staff training;
p) Consideration of any other matter which may be bought before the
meeting of the general Body in accordance with the Bye-Laws;
q) Expulsion of members;
r) Disposal of appeals;
s) Formation of code of conduct for the members of Board of Directors
and officers appointed bythe Board.
2) The following matters among such other matters as considered
necessary bythe Board orwhich are specifically assigned to the General
581
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 and election of new Director;
c) Membership of the co-operative Society in Secondary co-operative
Society;
d) Partnership with other co-operative Societies;
e) Amalgamation, Division, merger, transfer of assets and Liabilities;
f) Dissolution of the co-operative Society;
g) Consideration of the Registrar's report of inquiry and action taken
thereon or reasons for the non-completion of the enquiry.
3) If the Bye-Laws of the co-operative Society provides for election of one
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 provision 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 co-operative Society and also at the place of
the Annual General Meeting prior to the commencement of the
proceedings of the Annual General Meeting.
4) All Directors shalt cease to be Directors on the date of the Annual
General Meeting, if the Annual financial statement of accounts and
annual report of activities for the previous financial year were wilfully
not prepared before 15 days of the Annual General Meeting for
inspection of the members or for placing before the Annual General
Meeting.
31. Term of the Board:
The term of the Board shall be three co-operative years.
32. General meeting:
The Board may, at anytime, call a General Meeting of the members of the Co-
operative Society. However, one General Meeting in every Co-operative Year
must be convened by the Board.
582
33. Special General Meeting:
1) The Board may call a Special General Meeting and shall be bound to
do so within forty five days of the date of receipt of a written
requisition.
a) Signed by not less than twenty five percent of the members having right
to vote; or
b) From the Registrar.
2) 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 addenda shall be discussed at the
special General Meeting.
3) If the Board fails to hold a special General Meeting on requisition under
sub-section (1) of any of the annual General Meeting under section 32
within the period specified therein all Directors shall cease to be
Directors on the date of expiry of the said specified period.
4) Any meeting of the General Assembly other than the special General
Meeting 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 has may be provided in this Bye-Laws, 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 notice board of the head
office of the co-operative societies on the same day on which the
meeting is adjourned shall be deemed sufficient notice of the next
adjourned meeting.
34. Quorum of meetings of General Assembly:
1) The quorum for a meeting of the General Assembly shall be specified in
the Bye-Laws, but shall not be less than fifty percent of the members
eligible to vote at the meeting.
2) If within one hour from the time fixed for meeting of the General
Assembly a quorum is not present, the meeting shall stand adjourned
583
ordinarily to the same day in the next week at the same time and place.
But the Chairman of the meeting may, however, decide to adjourn the
meeting to a later date not later than fifteen days or as may be specified
in the Bye-Laws of the society.
Provided that a meeting of the Special General Assembly called on the
requisition of members under sub-section (1) of section 33 shall not be
adjourned but dissolved.
3) 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.
4) No business other than the business fixed for the original meeting shall
be transacted at such subsequent meeting.
5) A notice of such adjournment posted in the notice board of the head
office of the Co-operative Society on the day on which the meeting is
adjourned shall be deemed sufficient notice of the next subsequent
meeting.
6) The quorum for a Delegate General Body Meeting shall not be less than
twenty five percent of the delegate eligible to vote at the Delegate
General Body Meeting. If at any time in the meeting of delegate
General Body Meeting there is no quorum, the procedure laid down in
sub-section (1)to (5) shall be followed.
7) At the meeting of the General Assembly, the president shall preside. If
both the President and the Vice-President are absent from the meeting
of the General Assembly, the members present shall choose one of
them to preside over the meeting.
35. Board:
1) There shall be a Board for the management of every Co-operative
Society registered under this Act. The Directors shall be elected in
accordance with the provisions of the Bye-Laws. The management of
584
every Co-operative Society constituted in accordance with the
provisions of this Act and the Bye-Laws shall vest in the Board.
Provided that in the case of a Co-operative Society newly registered
under this Act, the persons who have signed the application for the
registration of the Cooperative Society may appoint a promoter board
for a period not exceeding one year from the date of registration to
direct the affairs of the Co-operative Society and it shall cease to
function as soon as regular Board is constituted in accordance with the
provisions of this Act and the Bye-Laws.
2) The Promoter board appointed under the proviso to sub-section (1)
shall conduct the election of Directors within the period mentioned
therein.
3) Every Director while exercising the powers and discharging duties shall
act honesty and in good faith and in the best interests of the Co-
operative Society and exercise such care, diligence and skill as a
reasonably prudent person would exercise in similar circumstances.
A Director who is guilty of misappropriation, breach of trust or
dishonest resulting in loss or shortfall in revenue of the Co-operative
Society and is found guilty after an inquiry or Inspection under Section
82 and Section 83 or after Audit under Section 76 shall be personally
liable to make good that loss or shortfall without prejudice to any
criminal actionto which the Director maybe liable under any law.
36. President and Vice President of Co-operative Society:
1) There shall be a President and Vice-President in a Co-operative Society
to be elected by the Board from amongst its Directors n acco:lance
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.
2) Vacancy in the office of the president or Vice-President shall be filled in
by the Board in accordance with the provisions of the Bye-Laws and the
President or Vice-President so elected shaH hold office for the
unexpired term of his predecessor.
585
3) The Vice President may resign his/her office at any time by notice in
writing to the president and the President may resign his/her office at
any time by notice in writing to the vice President. Such resignation
shall take effect from the date of its acceptance by the Board.
4) The Board may, by a resolution passed any three-fourth majority of the
Directors present and voting at a meeting held for the purpose, remove
the President or Vice President. Such meeting shall not be presided
over 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, if aggrieved by the
resolution passed under sub-section (4) may appeal to the Registrar
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/her death, resignation or removal or
otherwise, the Vice President shall act as President until the date on
which a new President is 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/her functions owing to
absence, illness or otherwise the Vice President shall discharge the
functions of the President until the date on which the President
resumes his duties.
37. Disqualification of the members of the Board and Administrative Council:
A member shall not be eligible for being chosen or for being appointed
as a member of the board or administrative council of a society or another
societyto which the society is affiliated if such member-
a) Is adjudged by a competent courtto be insolventor of unsound mind;
b) Has been punished with imprisonment for an offence involving moral
turpitude or criminal activities;
c) Is concerned or participates in the profit of any contract with the
society;
586
d) In a credit society, failed to pay in three consecutive years immediately
preceding the election at least an amount equivalent to any instalment
fixed for repayment of any loan or advance or credit or become
defaulter to any other Co-operative Society;
e) Has acted in a manner prejudicial to the interest of the Co-operative
Society in particular orthe Co-operative Movement in general.
38. Powers and functions of the Board:
The powers shall discharge such functions, perform such duties 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:-
1) To interpret the organizational objectives to set up specific goals
towards achieving such objectives and to make periodic appraisal of
operations;
2) To nominate, elect or appoint and remove the Chief Executive provided
he/she is not Government appointee;
3) To make provisions for the matters mentioned in 5ection49 in respect
of the staff of a Co-operative Society;
4) To finalize long term perspective plan, annual plan and budget and to
direct the affairs of the Co-operative Society in accordance with the
plan and budget approved by the General Body;
5) To arrange forfunds;
6) To authorize acquisition and disposal of immovable property;
7) To frame, approve and amend regulations relating to services fund
accounts and accountability and information and report systems;
8) To elect President and Vice-President in accordance with the provisions
of the Bye-Laws;
9) To prepare the Annual Financial Statement of Accounts;
10) To hold Annual General Meeting in stipulated time; and
11) To remove President or Vice President in accordance with sub-section
(4) of Section 36.
587
39. Annual General Meeting:
A General Meeting to be termed as Annual General Meeting of the
General Assembly of a registered Co-operative Society shall be held at least
once in every Co-operative Year within a period of 120 days from the date of
expiry of every Co-operative Year. The Board shall automatically stand
dissolved for not holding Annual General Meeting in accordance with the
provisions of the Act and Bye-Laws within 120 days from the date of expiry of
every Co-operative Year.
40. Eligibility for a Director in Co-operative Society:
Subject to such other conditions as may be specified in the Bye-Laws a
member of a Co-operative Society shall be eligible for being chosen as a
Director of the Co-operative Society, if-
1) Such member has the right to vote in the affairs of the Co-operative
Society;
2) Such member has patronised the services of the Co-operative Society
during the previous financial year to the extend and in the manner
specified in the Bye-Laws and has attended at least two Annual General
Meetings in the previous five years;
3) Such member has no pecuniary interest in any subsisting contract
made with, or work being done for the Co-operative Society except as
otherwise specified in the Bye-Laws.
4) The period of three years has elapsed from the data such member
ceased to be a Director forthe following reasons:-
a) Not conducting or wrongly conducting the Annual General Meeting
under Section39 or Special General Meeting under sub-section(3) of
Section 33 and Board meetings under sub-section (3) of Section 43;
b) Non submission of Annual Report of activities, Annual Financial
Statement of Accounts to the General Body;
c) Non conducting the meeting of the Board under sub-section (3) of
Section 43 delegates or representative under sub-section (3) of Section
41;
588
d) Absence from Board Meetings under sub-section (7) of Section 43;
e) Automatic dissolution under sub-section (3) of Section 41;
f) For failure to take follow up action on Audit Report as specified in
Section 80.
5) Such members are free from default of any payment due to the society.
41. Election:
1) It shall be the duty of the incumbent Board to prepare the voters list with
eligible members and to conduct elections of Director, Delegates to the
Delegate General Body and representative of the society if fallen vacant.
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.
Where a Board fails to conduct elections of the Directors or Delegates
as the case may be, before the expiry of the term of their office in
accordance with the Act and Bye-Laws, all Directors shall cease to be
Directors on the expiry of the period specifies in Section 39.
4) The elections of Director and Delegates shall place at the Annual
General Meeting.
5) Where a board fails to conduct elections before the expiry of term of
the board or delegates or where there are no Directors remaining on
the Board, the Registrar shall convene a General Meeting by appointing
an officer of the Co-operative Department for constitution of Board
within ninety days from date of such appointment and to perform all
functions of the Board during the said period on ninety days at the cost
of the Society.
6) 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.
7) The Directors shall not be eligible for re-election, if so specified in the
Bye-Laws.
589
8) Where there are vacancies in the office of the Directors and where
there are no sufficient number of Directors to constitute a quorum for
Board Meeting, 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 un-
expired term of the Board. However, the Board may co-opt maximum
three eligible members for constituting quorum.
9) Notwithstanding anything contained in this Act, no person shall be
eligible to hold at the same time, office of a Chairperson or President,
Vice chairperson or Vice President in the Board of more than two Co-
operative Societies.
42. Terms of Directors:
1) The term of office of the Directors shall be three Co-operative Years.
2) The term of representative of an Affiliated Society shall be co-terminus
with the term of Board of such Co-operative Society;
Provided that the said representative shall cease to be a representative
if the Board of the Society which he/she represents is dissolved,
Provided further that a Director representing a Credit Society or a
finance society to a higher tier of such society shall be disqualified to
continue in the Board in the event of the society which he/she
represents commits default in repayment for a period exceeding 90
days.
3) 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/her predecessor.
43. Board meetings:
1) A meeting of the Board may be called at any time by the President or
Chairman as the case may be, and in the event of his/her being
incapable of acting, then by the Vice President or Vice Chairman 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.
590
2) The President or Chairman and in the event of his/her being physically
incapable of acting, the Vice President or Vice Chairman may,
whenever he/she thinks fit, called as 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 lessthan one third of the Directors of the Board; or
b) From the Registrar; or
c) From the Auditor.
Such requisition shall contain the reasons as to why the meeting is felt
necessary and the purpose agenda and no subject other than the
subjects included in the purposed agenda shall be discussed at the
Special Meeting of the Board.
3) If the President or Chairman, Vice President or Vice Chairman, 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/she shall cease to be President or
Chairman, Vice President or Vice Chairman as the case may be, on the
date of expiry of the said specified period. In which the case the
remaining board members shall elect a new President or Chairman,
Vice President or Vice Chairman as the case may be, from among
themselves.
4) A person who ceases to be the President or Chairman, Vice President or
Vice Chairman as the case may be, under sub-section (3) shall, not be
eligible to hold the office of President or Chairman, Vice President or
Vice Chairman as the case may be, for a period of three years from the
date of such cessation.
5) The quorum for a meeting of a Board shall be such as may be specified
in the Bye-Laws but shall not be less than fifty percent of the total
number of the Directors of the Board.
6) Subject to this provision of this Act, the procedure to convene and
conduct the meeting of the Board shalt be such as may be specified in
the Bye-Laws.
591
7) If a Director fails to attend three consecutive meetings of the Board
without the permission of the President or Chairman he/she shalt cease
to be a Director from the date of the fourth meeting.
8) The State Government and Registrar my appoint nominee to the Board
or any sub-committee of a Co-operative Society on its own motion
when the Government has subscribe more than 50% of the paid-up
share capital or when there is provision of Government nominee in its
Bye-Laws.
9) The financial institution may also appoint its nominee when
participates in its capital by way of share or other financial assistance as
per the Bye-Laws of the Co-operative Society.
44. Decision by majority of votes:
Except as otherwise provided under this Act, or the Bye-Laws, all
questions brought before any meeting under this Act shall be decided by the
majority of the votes of the members present and in the case of any equality
of votes the presiding authority of the meeting shall have a second or casting
vote. Provided that in case of equality of votes at the election of the
President or Chairman, Vice President or Vice Chairman, Directors or
Delegates, the Presiding Authority shall not exercise his/her casting vote and
the resultshall bedecided by lot.
45. Minutes of proceedings of meetings:
1) Every Co-operative Society shall record in the minutes books, in the
official language of its station or in English or in any other language
prescribed in the Bye-Laws, proceedings of every General Meeting,
Delegate General Body Meeting and Board meeting and the names of
the members or delegates present there at and shall be confirmed at
the same orthe next meeting. The proceedings of all General Meetings
and Special General Meeting of every Co-operative Society complete in
all respects as provided in the Act and Bye-Laws shall be sent to the
Registrar within fifteen days from the date of completion of such
meeting with due acknowledgement. The Registrar shalt give his/her
approval on the resolutions within fifteen days of receipt of the
proceedings shall be deemed to have been approved.
592
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 president the said meeting or in the event of his/her
death, unwillingness or incapacity to sign the minutes within the time
required by the Chief Executive of the Co-operative Society for the
purpose of submission of proceedings for approval and which shall be
confirmed in the following meeting;
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) In the matter of inclusion of any matter in the minutes of General
Meeting or Board Meeting, which in the opinion of the Chairman of the
meeting-
a) Is or could reasonably be regarded as defamatory of any person;
b) Is irrelevant or immaterial to the proceedings; or
c) Is detrimental to the interest of the society, the Chairperson shall
exercise discretion in regards to inclusion or deletion in the minutes on
the grounds specified above.
46. Vacancies etc., not to invalidate proceeding:
No act proceeding of the Co-operative Society, Board of any office
constituted or Appointed under this Act shall be questioned on accounts of
any vacancy in the Membership or any defect in the election or qualification
of the president or Chairman, Vice President or Vice chairman, Director,
Delegated or Representative or Any defect or irregularity in such act or
proceeding not affecting the merit of the case.
47. 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 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. However, the proceedings of the Annual General Meeting and all
General Meetings shall require approval of the Registrar as provided under
Section 45.
593
48. Power to depute Government servant to manage the affairs of a Co-
Operative Society:
The State Government may depute department officials to the service
of the Co- Operative Society for the purpose of managing the affairs of the
Co-operative Society Who shall exercise such powers and such duties as may
be determined by the State Government.
49. Chief Executive, his/her powers and functions and staff:
1) (a) there shall be a Chief Executive, by whateve.r designation called of
every Co-operative Society to be appointed by the board or by the
State Government and shall be a full time employee of such Society;
(b) The Chief Executive shall be the ex-officio member of the Board;
(c) Where the State Government stands guarantee for repayment of any
loan secured from any financial institution the Chief Executive may be
appointed by the State Government and salary and allowances payable
to and otherterms and conditions of service including pension, gratuity
and other benefits of the Chief Executive shall be prescribed by the
Government;
(d) Notwithstanding anythingcontained in any law inforce or Bye-Laws of
the society, the chief executive appointed by the Government shall
have full administrative control over the employees of the society in all
matters including transfer, posting and disciplinary action. However, in
case of dismissal of employees approval of the Board shall be
necessary.
2) The Chief Executive shall be under the general superintendence,
direction and control of the Board and exercise the following powers
and the functions, namely:
a) Day to day management of the business of the Co-operative Society;
b) Operating the accounts of the Co-operative Society and be responsible
fOr making arrangements for safe custody of cash;
c) Signing on the documents for and on behalf of the Co-operative
Society;
594
/
ci) Making arrangements for the proper maintenance of various books
and records of the Co-operative Society and for the correct
preparation, timely submission of periodical statements and returns in
accordance with the provisions of this Act, the rules and the Bye-Laws;
e) Convening meetings of the General Body of the Co-operative Society,
the Board and the Executive Committee and other committee or sub-
committee constituted under provisions of this Act and Bye-Laws and
maintaining proper records for such meetings;
f) Making appointments to the post in the Co-operative Society in
accordance with the Bye-Laws
g) Assisting the Board in the formulation of policies, objectives and
planning;
h) Furnishing to the Board periodical information necessary for appraising
the operations and functions of the Co-operative Society;
I) To sue or be sued on behalf of the Co-operative Society;
.1) Present the draft annual report and financial statements for the
approval of the board within thirty days of closure of the Co-operative
Year;
k) Performing such other duties and exercising such powers as may be
specified in the Bye-Laws of the Co-operative Society;
I) In case of dispute between the Chief Executive and the Board in any
matter, the decision of the Registrarshall be bindingon the both.
3. Subject to other Laws regulating employer/employee relations all
employees of a Co-operative Society shall be appointed, regulated and
removed by and be accountable to authorities within the Co-operative
Society inaccordance with the service conditions approved by the
board. Provided that in case of Co-operative Societies where State
Government holds more than fifty percent of Share Capital or
guarantees repayment of loan secured from any financial institution,
any upward revision of pay and allowances of staff, shall require prior
approval of the State Government. The controlling authority of all staff
shall be the Chief Executive of the society.
595
50. Votes of members:
1) Irrespective of the shares he/she holds in the society and subject to any
temporary disqualification from voting which maybe prescribed in Bye-
Laws and to the provision of Section 27 relating to voting by
representatives, a member of a registered society shall have one vote
only in the affairs of the society.
Provided that in the case of an equality of votes the President or
Chairman at any meeting shall have a second or casting vote subject to
the provision as laid down in Section 44.
Provided further that the Bye-Laws of a Society may provide for more
than one vote in the case of an affiliated society.
2) Either the President or Chairman or the Chief Executive of a registered
Society which is a member of another registered Society, as may be
decided by Board shall represent the Society in the affairs of such other
society as its representative.
Provided that the Annual General Meeting of the Society may
nominate any other member otherthan President or Chairman or Chief
Executive to represent the Society.
3) Voting by proxy shall not be allowed.
4) Notwithstanding anything contained in this Act, a Registered Society
may by specified provisions made in its Bye-Laws, admit certain class of
members without any voting right.
51. Loan to be utilised for the purpose for which advanced:
The loan advanced by a Registered Society to a member thereof shall be
utilised by him/her for the purpose for which it was advanced and for no
other purpose. The Society shall have power to recover the advance as
prescribed if the member does not so utilise it.
52. Restriction on transfer of share or interest:
The transfer or change of the share or interest of a members in the
capital of a Registered Society shall be subject to such conditions as to
maximum holding as maybe prescribed.
596
53. Validity of transfer or charge of share or interest:
Except otherwise provided in this Act, no transfer or charge of his/her
share or interest by a member of a Society with unlimited liability shall be
valid unless-
a) He/she has held such share or interest for not lessthan one year; and
b) The transferer or mortgager is either a member of such society or a
person where application for membership has been accepted.
54. Share or interest not liable to attachment:
Notwithstanding anything contained in any other law for the time
being in force and subject to the provision of Section 56, the share or interest
of a member in the capital of a registered society or in any fund shall not be
liable to attachment or sale under any decree or order of a court in respect of
any debt or liability incurred by such member nor be subject to any claim bya
receiver.
55. Nomination of transferee:
If the Bye-Laws of a registered society so permit, any member of the
society may, in accordance therewith, nominate a person in whose favour
the society shall dispose off the shares or interest of such member on his/her
death.
56. Transfer of interest on death of member:
When a member of a Registered Society dies, his/her shares and
interest in the society shall, subject to the provisions of this Act, be
transferred
a) To the person, if any nominated in accordance with the provision of
Section 55; or
b) If there is no such nominee or if the nominee is not available, or is
difficult to be ascertained by the Managing Body or if for any other
cause such transfer cannot be made without unreasonable delay, the
transfer of interest on death of a member shall be made to the person
as may appear to the Managing Body to be the legal heir or legal
representative of the deceased member, provided that ninety days
have elapsed from the date of the member's death and no new claim
shall be entertained afterthe said period of ninety days.
597
57. Disposal of shares or interest of ceased member:
When a member of a registered society is expelled or withdraws or
otherwise ceases to be a member under this Act, Rules or Bye-Laws, his/her
share or interest shall be transferred to his/her nominee or to another
eligible person and the value thereon, determined in accordance with rules,
shall be paid to such ceased members if his/her share or interest is not
forfeited under the provisions of this Act, Rules or Bye-Laws or he/she is
insane to any person appointed to manage his/her properties under the
Indian Lunacy Act, 1912, provided that if there is no eligible transferee and if
the Bye-Laws of the society so provide, the value of his/her share or interest
determined in accordance with the Bye-Laws shall be paid to him/her or, if
he/she is insane to any person appointed to manage his/her properties
under the Indian Lunacy Act, 1912,
58. Liability of member L -winding upof society:
The members of a registered society shalt, in the winding up of the
society, jointly and severally liable to contribute towards any deficiency in
the assets of the society-
a) In the case of a society with unlimited liability, without limit; and
b) In the case of a snciety with limited liability, subjectto such limitation of
amount as may be provided in the Bye-Laws.
59. Restriction on transfer of possession of land held under a society:
1) Notwithstanding anything in any other law for the time being in force, a
member of a registered society the object of which is to develop Co-
operative or collective farming, shall not be entitled to transfer his
possession or interest in any land held by him/her under the society
except to the society or with the previous approval of the managing
body and in accordance with its Bye-Laws, to a member thereof or to a
person who will be admitted as a member of the society.
2) On the death of such a member his/her possession of an interest in any
such land held by him/her under the society shall come to his/her
nominee in accordance with the provisions of Section 56 or to the first
eligible heir according to seniority in age willing to become of the
society.
598
3) If no nominee or heir becomes a member the possession of an interest
in any such land of the deceased shall vest in the society which shall pay
to the nominee or the heir a sum equivalent to the value of the share
and interest of the deceased member and any other sum due from the
society as determined inaccordance with this Act or Rules framed there
under, after deducting all dues of the deceased member owing to the
society.
4) If there is no person qualified to succeed to the share or interest of the
deceased member, the society shall pay to his/her heir, executor or the
legal representative, as the case may be, a sum equivalent to the value
of the share and interest of the deceased member as determined in
accordance with the Rules, after deducting the dues of the deceased to
the society.
5) When in any other case, a member ceases to be a member of such
society under this Act, Rules or Bye-Laws his/her possession of and
interest in any such land held by him/her under the society shall come
to the society. If the Bye-Laws allow and if the share and interest of the
members is not fortified under this Act or Rules framed there under the
society shall pay to the ceased member a sum equivalent to the value of
the share and interest of such member and other sum due to him/her
from the society after deducting his/her debts to the society, if any.
6) No land under a registered society specified in sub-section (1) by a
member there of, or vested under sub-section (2) in the heir nominee
of such member shall be attachable in any suit or proceeding for the
recovery of any debt other than a debt due to the society or to a
memberthereof.
7) No land shall vest in such a society by reasc of the provisions of this
section unless it is owned by the society or has been leased to the
society and if the society holds the land by lease or contract the land
shall vest in the society only during the pendency of lease or contract.
60. Right of a registered Society to pay prior debts of a mortgagor:
1) Where a mortgage is executed in favour of a registered society for
599
payment of prior debts or part thereof, the mortgagor secured on the
mortgaged property, the registered society may notwithstanding
under the provisions of Section 83 and 84 of the Transfer of Property
Act 1882 by notice in writing and served by registered post with
acknowledgement due, require any person to whom any such debt is
due to receive payment of such debt or part thereof from the society at
its registered office within such period as may be specified in the notice.
2) The person on whom such notice is served shall be bound to receive
payment of the amount offered by the society but where there is
disagreement or dispute between the mortgagor and such person as
regard to the amount of the debtor where the society tenders less than
the agreed amount of debt such person from enforcing his/her right to
recover the balance amount claimed by him/her.
3) If any such refus 1 to receive such notice or such payment, such debtor
part thereof, as the case may be, shall cause to carry interest from the
expiry of the period specified the notice and the property mortgaged
under sub-section (1) shall be deemed to have been freed from the
encumbrance of iuch prior mortgage.
61. Restriction on mortgaged property:
1) Where land is mortgaged to a registered society, the mortgagor shall
not be entitled without the approval of the society to transfer or
mortgage as equity of redemption or to create a charge upon or lease
out such property duringthe pendency of the mortgage.
2) If the mortgaged property at anytime is wholly or partially destroyed or
the security rendered becomes insufficient due to fall in value orfor any
other reason and the mortgagor having been given a reasonable
opportunity by the society for providing further sufficient security to
cover the loan for repaying the loan with interest or such portion of the
loan as may be determined by the supervisory, managing or controlling
body and the mortgagor having failed to provide such security or repay
such portion of the loan, the whole of the loan or such uncovered
portion shall be deemed to fall due at once and recoverable through a
Co-operative Demand Certificate.
600
3) Notwithstanding anything contained in the transfer of Property Act,
1882, the mortgaged property, in case of default of payment of
mortgaged money of any part thereof, may be sold by the society as
prescribed by Rules in addition to any other remedy available without
the intervention of court if expressly conferred by the mortgaged deed.
Provided that the society serves a notice in writing by registered post
demanding payment of the mortgage money with interest or part
thereof upon the mortgagor or, any person having an interest in or
charge upon the mortgaged property of the equity of redemption who
has previously notified the society of such interest or charge in writing
or any surety, and if default has been made in payment of the loan or
part thereof for three months after such service of notice.
Provided further that any partly aggrieved by an action taken by a
registered society under this section may make an appeal to Registrar
within thirty days from the date of the sale and his/her decision shall be
final.
62. Bar to certain claim:
All payment and transfer made by a registered society under this
Chapter shall be valid and effectual against any demand made upon the
society by any other person.
CHAPTER-V
MANAGEMENT OF PROPERTY AND FUNDS
63. Mobilization of funds:
1. A Co-operative may raise funds in the shape of equity, capital, deposits,
debentures, loans and other contributions from its members to such
extent and under such conditions as maybe ecified in the Bye-Laws.
2. A Co-operative society may borrow funds from non-members:
individuals and institutions including Government to such extent and
such conditions as may be specified in the Bye-Laws.
601
64. Restriction on borrowings:
A registered society may receive deposits and may borrow from its
members and from persons who are not members to such extent and on
such conditions as may be provided in the Act and Bye-Laws.
Provided that no Co-operative Society shall, by accepting deposits or
loans or in any other way, incur liabilities exceeding 25 times the sum of the
paid up share capital and the accumulated reserved fund during any
financial year.
Provided further that while calculating the total sum of subscribed share
capital and accumulated reserved fund, the accumulated losses shall be
deducted.
65. Restrictions on holding of equality:
A member of a Co-operatives hall at no time hold more than one tenth
of the paid up equity capital of the Co-operative or as prescribed in the
registered Bye-Laws.
66. Disposal of Surplus:
(1) In any financial, accounting or Co-operative Year a Co-operative shall,
out of the surplus arising from transactions held with members in that
year, make ,deferrecl payment to members as patronage rebate at an
amount more than twenty percent but less than fifty percent of such
surplus and make interest payment on share capital at a rate not
exceeding the prevailing rate of interest available to depositors in the
concerned Co-operative Bank.
2) The balance surplus accruing from members and the entire surplus
accruingfrom transactions held or entered with others, shall be utilised
in the following manner:
a. not less than twenty five percent shall be transferred to a statutory
reserve fund;
b. not less than twenty percent shall be transferred to a separate reserve
for meeting unforeseen losses;
C. where the Co-operative is a member of the State Co-operative Union,
not exceeding three percent may be transferred in the manner
602
prescribed to a Co-operative Education Fund' maintained by the Co-
operative Union;
d. bonus shall be paid to employees in accordance with the decision of the
General Body;
e. not less than twenty percent shalt be transferred to an equity
redemption fund by such Co-operative who already have Government
equity participation;
f. not less than five percent may be transferred towards a common good
fund whose purpose is approved by the General Body;
g. Not more than five percent may be paid contribution for any purpose
connected with the development of the Co-operative Movement;
h. the balance shall be transferred to such other funds and reserves as
created by the General Body;
i. surplus accruing as a result of servicing persons other than members
shall not be divisible amongst members and may be utilized in the case
of other than Credit Co-operative towards equity participation of
potential members and towards 'Credit Equalization Fund' in the case
of Credit Co-operatives
(3) No Dividend, Bonus, Patronage Dividend or Rebate shall be paid
without the previous sanction of the Registrar and on the Certificate
Statutory Audit Report approved in the Bye-Law.
67. Management of Deficit;
(1) Where a Co-operative has an operational deficit in any given year, the
Board of Directors shalt plays before the General body the amount of
deficit along with reason for incurringsuch deficit.
(2) No member shall be permitted to withdraw from the membership of a
Co-operative Societies without paying his share towards clearing the
deficit, if any.
68. Reserves and other funds;
(1) A Co-operative may create statutory and non statutory reserve and
other funds for the promotion of objects of the Co-operative.
(2) Reserve and other fund shall be used for the purpose for which they
were created whenever found necessary but otherwise may be use in
the business of the Co-operative.
603
69. Investment of funds outside the business:
The funds that are not needed for use by a Co-operative may be
invested or deposited outside its business:
(a) in any Federal Co-operative of which it is a member;
(b) in any District Central or State Co-operative Bank and in the absence of
both the Banks, in any Urban Co-operative Bank; or
(c) in a local Co-operative or Nationalise Bank;
(d) in the equities of any other Co-operative; or
(e) in any of the securities specified in section 20 of the Indian Trust Act,
1882; or
(f) in the local Postal Savings Bank.
70. Restriction on contribution to political parties or religious institution:
No Co-operative shall make any contribution either in money or kind,
either directly or indirectly to any organisation that has an object in
furtherance of interests of any political party or of any religious faith.
71. Contribution to Co-operative Education Fund of the State Federal Co-
operative Union:
(1) Every Co-operative shall contribute annually towards the Co-operative
Education fund maintained by the State or Federal Co-operative Union
by whatever description be called, by virtue of power conferred upon
the Co-operative under Section 66(2) (c) as per the rate prescribed by
the State Government and different rates may be prescribed for
different types and classes of Co-operatives depending upon their
financial conditions, strengths, status or position.
(2) The rate, so levied, in any case shall not be less than one percent and
more than three percent of the total net profit earned by the Co-
operative as provided under Section 66(2) (c).
(3) In the event of any Co-operative intending to pay more than three
percent may do so, but only with the prior approval of Registrar.
604
(4) Every Co-operative shall pay its contribution to the above said
Education Fund within ninety days after the closure of the financial
year.
(5) Where any Co-operative which failed to pay the contribution to the
Education Fund as specified in sub-section (4), the amount of such
contribution due shall be recoverable as arrears of land revenue.
(6) The Federal Co-operative or Co-operative Union as the case may be, in
such cases, may submit a report containing the details and particulars
of the defaulting Co-operatives to the Registrar and the Registrar in
turn after making an enquiry in this regard shall grant a certificate for
recovery of the said amount due as arrears of land revenue.
72. Restrictions on grant of loan:
(1) A Co-operative, other than a Co-operative Bank, shall not grant loans to
members on the security of their share or on the security of a non-
member.
(2) A Co-operative may, however, grant loans to depositors on the security
of their deposits.
73. Restriction on transaction with non-member:
The transaction of a Co-operative held or to be held with a non-
member shall be subject to such conditions, prohibitions and restrictions, if
any, as may be specified in its Bye-Laws.
74. Contributory Provident Fund:
(1) A Co-operative having members or class of employees more than the
limit prescribed under the Employees Provident Fund and
Miscellaneous Provisions Act 1952, for the purpose shall maintain the
Employees Contributory Provident Fund for the benefit of its
employees and all contributions made by employees and Co-operative
shall be credited to a separate account.
(2) The quantum of money standing in the credit of any contributory
provident fund established by a co-operative under sub-section (1)
shall not
605
(a) be used in the business of Co-operative;
(b) form part of assets of Co-operative;
(c) be liable to attachment or be subject to any other process of any court
or other authority.
75. Power of Government to give financial assistance:
Notwithstanding anything contained in any other law for the time
being in force, the State Government may on the request of the Co-operative
Society, supported by a resolution passed by the General Assembly of the
Co-operative Society, grant loans to take shares or guarantee the principal or
the interest or both in respect of debentures issued by any co-operative
society or give financial assistance in any otherform to any registered society
which puts forward a satisfactory scheme for the utilization of the funds so
raised, the State Government may recover from any society out of its net
profit in anyyear all L..3ny or any part of such financial assistance.
CHAPTER-VI:
REGULATION OF CO-OPERATIVES
(Audit inquiry, inspection and surcharge)
76. Audit and powers of Auditors:
(1) The Registrar shall audit or cause to be audited by some person
authorized by him/her by general or special order in writing in this
behalf, the accounts or every Registered Society and Society under
liquidation at least once in every year.
(2) The Registrar or the person authorized by him/her in this behalf shall at all
reasonable times have free access to the books, accounts, documents,
securities, cash and other properties belonging to or in the custody of the
society and may summon any person in possession or responsible for the
custody of any such books, accounts, documents, securities, cash or
other properties to produce the same and furnish such information in
regard to the transactions and working of the society at any convenient
place or at the Headquarters of the Society or any Branch thereof by the
same means and, so far as may be, in the same manner as provided in the
Code of Civil Procedure 1908 (v of 1908)
606
(3) In respect of every audit of the accounts, a Registered Society shall pay
such Audit Fee as may be prescribed and such fee shall deemed to be
outstanding dues from the society.
(4) The Registrar may also appoint a Qualified Auditor other than
Department Auditor and the remuneration for which shall be fixed by
the Registrar.
(5) The Registrar may in such Co-operatives which are substantially funded
by the Government or Government undertakings or financial
institutions in public interest, if found necessary and appropriate may
order to direct for the conduct of Internal Audit or ICost Audit or
performance Auditor Special Auditor TEST Auditor any other Audit for
such Co-operative.
77. Power of the Registrar to have the accounts written up:
If at the time of the audit the account of a registered society are not
complete, the Registrar or with his/her sanction, the audit officer may cause
the accounts to be written up at the expense of the society. Such expenses
shall, at the first instance be met from the grant under the head
"Contingencies" by the Registrar and shall be reimbursed later on from the
society concerned along with auditfee.
78. Nature of Audit:
1) TheAudit shall include among others:
a) A verification of the cash balance and securities;
b) A verification of the balance at the credit of the depositors and
creditors and the amounts due from the debtors of the society;
c) An examination of overdue debts, if any;
d) The valuation of the Assets including Stock .rifications and Liabilities
of the Society;
e) An examination of the statement of accounts and balance sheets to be
prepared by the managing body of the society in such forms as may be
prescribed;
f) A certificate of the realised profits; and
607
g)
Any other relevant matter.
2) The auditors' report among others shall include:-
a) Statement whether the auditor has obtained all the information and
explanations which to the best of his/her knowledge and belief were
necessary forthe purpose of the audit;
b) State whether the Balance Sheet of the co-operative society and the
Income and Expenditure Accounts dealt with by the report are in
agreement with the books of accounts;
c) Statement indicating the basis on which assets and liability was valued
and mentioned specifically and change in the manner in which such
valuation was done in the financial year under examination and its
effect On surplus and deficit;
d) Statement indicating 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 service to members in normal
course of business;
e) Statement indicating every deviation in actual expenses and income
from the estimated expenses and income in the approved budget;
f) Statement 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) Statement whether the decision 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.
79. Audit Report:
The Audit Officer shall within a fortnight from the date of completion of
Audit, submit to the registered society and to the Registrar together with the
Statement of Accounts Audited, Audit report including a statement of-
a) Every transaction, which appears to him/her to be contrary to Law or to
the Rules or Bye-Laws;
608
b) Every sum which ought to have been brought but has not been brought
into account;
c) Amount of deficiency or loss which appears to have resulted from any
negligence or misconduct that requires further investigation;
d) Any money or property belonging to the society which appears to have
been misappropriatedor fraudulently retained by any person;
e) Any of the assets which appears to him/her to be a bad or doubtful;
f) Any irregularity in maintaining the account; and
g) Any other relevant matter under section 78.
80. Rectification of defects in accounts:
1) If the result, finding or outcome of the audit held or conducted,
discloses defects in the constitution, financial conditions and working
of any co-operative, such co-operative shall explain the defects or
irregularities identified, observed or pointed by the auditor to the
Registrar within a period of sixty days and take appropriate steps to
rectify such defects and remedy the irregularities pointed out by
Registrar and shall submit an action taken report to the Registrar within
the time stipulated therein or 90 days whichever is earlier.
2) The Registrar may inter-alia, direct or order the co-operative or its
Officers to take such other actions as may be specified in the order or
direction to remedy the defects within the time specified therein or
thirty days or whichever is earlier.
The non-compliance of the above shall disqualify the Board in office
after expiry of three months period.
81. Re-audit/Recasting of Audit Report:
If the Registrar on appeal or on inquiry and details checking of accounts
satisfies himself/herself that the audited accounts need recasting of re-
audit, he/she shall give an order for such re-casting or re-audit, provided that
no such recasting or re-audit shall be taken up after three years from the date
of acceptance of Balance Sheet by the General Assembly and their Annual
609
General Meeting. If re-casting or re-casting is re-audit to be undertaken due
to non-compliance of the procedure of audit, the cost of re-casting or re-
audit shall be recovered from the auditor auditing the accounts in addition to
facing disciplinary action under the Nagaland Government Services and
Conduct Rules or action under the appropriate law as the case may be. If the
same has to be undertaken due to non-furnishing of adequate records,
reports, etc. The cost of such re-casting or re-audit shall be recovered from
the respective Office Bearer or officer of the society. He/she will also be
liable to disciplinary action under appropriate Law, Rules applicable for the
purpose. The cost of the re-audit or re-casting of Audit Report shall be
determined by the Registrar.
82. Inquiry-.
(1) The Registrar either suo-moto (or based on an application made by a
co-operative, or not less-than one third members of the management
committee or not less than one tenth of total number of members of
co-operative, or creditors or debtors or depositors) may hold an
enquiry himself/herself or order or direct, some other person, to hold
an inquiry on his/her behalf into the constitution, working financial
condition and status of a co-operative.
(2) The Registrar before directing or ordering the conduct of an inquiry in a
co-operative, shall provide an adequate opportunity to such Co-
operative for making representation on the subject matter and if not
satisfied with the reply given by the co-operative, may order or direct
the conduct of inquiry on aspects identified by Registrar on issues
raised in the application, as the case may be.
(3) In the event of an inquiry demanded by persons or authorities specified
under sub- section (1), the Registrar may order or direct the conduct of
an inquiry only after the receipt of required fee (as prescribe by the
registrar) deemed sufficient enough to conduct and complete the
inquiry from person or authorities who demanded conduct of such an
inquiry.
(4) The inquiry ordered or directed shall be completed within a period
specified in the order and in any case, such period shall not exceed
ninety daysfrom the date of the order or direction of inquiry.
610
(5) The Registrar while holding an inquiry or persons authorized by
Registrarto hold such an inquiry shall have;
(a) free access to the books of accounts, documents, securities, cash or
other properties of Co-operative;
(b) power to summon persons in possession or responsible for the custody
of documents specified under sub-section 5(a)
(6) The Registrar, within a period of thirty days from the date of completion
of inquiry, shall communicate the result or findings of such inquiry
report to:
(a) the applicants or persons who demanded such an inquiry;
(b) the Co-operative;
(c) the persons or authorities, if any, named therein in the application for
the conduct of Inquiry;
(d) the financial institution or funding agency or authority;
(e) any member or person on payment of fee prescribed by the Registrar.
(7)
The Registrar shall power to withdraw any inquiry from the authorised
persons or authorities to whom it has entrusted and hold the inquiry
either himself/herself or entrust the task to any other persons or
authorities as he/she deems fit.
(8) The Co-operative Society concerned shall, on receipt of the report,
place it before the next Generation Meeting or in a Special General
Meeting to take such action thereon as the General Body may think fit,
which may include removal of all or any directors and election of new
directors or any other action on any employees as required.
(9) A copy of the report shall be supplied to any other member of the Co-
operative Sociçty, on payment of such fee as determined by the
Registrar.
83. Inspection of a Co-operative:
(1) The Registrar either suo-moto (or based on an application made by a
Co-operative, or not less than one third members of the management
committee or not less than one tenth of total number of members of
611
co-operative, or a creditor or debtor or depositors) may hold an
inspection him/her or order or direct, sum other person to hold an
inspection into the constitution, working financial condition and status
of a Co-operative.
(2) The Registrar, before directing or ordering the conduct of an inspection
in a Co-operative, shall provide an adequate opportunity to such co-
operative for making representation on the subject matter and if not
satisfied with the reply given by Co-operative may order or direct for
the conduct of inspection on aspects identified by the Registrar or on
the issues raised in the application, as the case may be.
(3) In the event of an inspection demanded by persons or authorities
specified under sub-section (1), the Registrar may order or direct the
conduct of inspection only after the receipt of required fee deemed
sufficient enough to conduct and complete the inspection from
persons or authorities who demanded conductof such an inquiry.
(4) The inspection ordered or directed shall be completed within a period
specified in the order or direction and in any case such period shall not
exceed ninety days from the date of the order or direction of such
inspection.
(5) The Registrar while holding an inspection or persons authorised by
Registrarto hold such an inspection shall have:
(a) free access to the books of accounts, documents, securities, cash or
other properties of the Co-operative;
(b) power to summon persons in possession or responsibility for the
custody of documents specified under sub-section 5(a).
(6) The Registrar, within a period of thirty days from the date of completion
of inspection, shall communicate the result or findings of such
inspection report to:
(a) the applicants or persons who demanded such an inspection;
(b) the Co-operative;
(c) the persons or authorities, if any, named therein in the application for
conduct of inspection;
612
(d) the financial institution or funding agency or authority;
(e) any member or persons, on payment of fee prescribed by the Registrar.
(7) The Registrar shall have power to withdraw any inspection from
authorised persons or authorities to whom it was entrusted and hold
the inspection either himself/herself or entrust the task to any other
persons or authorities as he/she deems fit.
(8) The Co-operative Society concerned shall on receipt of the report,
place it before the next Annual General Meeting or Special Annual
General Meeting with action taken report and to take such action
thereon as the General Body may think fit, which may include removal
of all or any directors or any other action on employee as required.
(9) A copy of the report shall be supplied to any member on requisition and
on payment of fees to be determined bythe Registrar.
84. Cost of Inquiry and Inspection:
(1) Whereas an Inquiry is held under Section 82 or an Inspection is carried
out under Section 83, the Registrar may apportion the cost of Inquiry or
Inspection as the case may be between the Co-operative, Members,
Creditors or Debtors or Depositors demanding such an Inquiry or
Inspection and Officers of Co-operative. The members and officers, for
purposes of this section shall not only include present members and
officers but also former officers and past members.
(2) The Registrar, before apportioning cost of Inquiry or Inspection as the
case may be, as referred under sub-section (1) shall provide a
reasonable opportunity of hearing to the co-operative or other persons
such as Creditors, Debtors or Depositors liable to pay such costs.
(3) While apportioning the cost of Inquiry or Inspection, the Registrar shall
record in writing the reasons, grounds or basis on which the cost were
apportioned either proportionately or disproportionately.
(4) Any sum awarded byway of cost under this section shall be recoverable
as the fees for Inquiry or Inspection in the manner of realization of
Audit Fees orthrough a Co-operative Demand Certificate.
613
85. Recovery of cost:
The cost awarded under Section 84 maybe recovered on an application
made by the Registrar to the Magistrate having jurisdiction over the place
where the persons against whom the cost recoverable resides or carries on
business or trade or property of such person is situated and such Magistrate
shall recover the same as if it were a fine imposed by himself/herself.
86. Initiation of Surcharge proceeding against delinquent officers or members
by Registrar:
(1) Whereas the Registrar is satisfied either on the basis or as a result of
Audit Report made under section 76 or an Inquiry Report made under
Section 82 or an Inspection Report made under Section 83 or winding
up of Co-operative under section 93, that any person who has been
entrusted with or taken part in the organization or management of a
Co-operative o vho is or has at any time been an Officer or Employee
of a Co-operative, has made payment contrary to the provisions of this
Act, Rules or Bye-Laws or caused any loss, damage to or deficiency in
the assets of co-operative by breach of trust or wilful negligence or has
misappropriate'i or fraudulently retained any money or other property
belonging to the Co-operative, the Registrar may on his/her own
motion or on the application made by Management Committee,
Auditor, Liquidator, or any Creditor, may frame charge against such
persons and inquire himself/herself, or direct any authorized person in
writing, to inquire into the conduct of such persons and after providing
a reasonable opportunity to reply or answer the charges framed to the
concerned persons, may make an order directing him/her or them to
repay or return the money or restore property with interest as
determined by Registrar or to pay compensation with regard to the
misappropriation, misapplication, retention, misfeasance or breach of
trust as the Registrar may determine.
(2) The person or such persons or concerned persons referred under sub-
section (1), shall not only include present members or officers or
employees or board members, etc. but also include past, or deceased,
legal heirs or representatives, members or employees or board
members respectively.
614
(3) The act of framing charges, conduct and completion of proceedings
referred under sub-section (1) shall be completed within three years
from the date of submission of reports of audit, inquiry, inspection or
date of the order of winding up of co-operative.
(4) The Registrar or persons authorized by hi/her in this regard may also
provide for the payment of total cost or part thereof and direct that
such costs shall be recovered as arrears of land revenue from such
persons against whom such orders have been passed.
87. Prohibition of use of word Co-operative and Penalty.
1) No person other than a Co-operative Society registered under this Act
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 languages from a part.
(2) Every person who is a member of a Co-operative Society formed in
contravention of Section 4 and section 6 of this Act and every person
contravening the provisions of sub-section (1) shall be punishable with
a fine of not less than five thousand rupees or as the Registrar deem fits
for and in the case of a continuing offence with further fine of five
hundred rupees for each month on which the offence is continued after
conviction thereof.
88. Offence:
1) A person who makes or assists in making a report, return notice or
other documents required under this Act to be punished or sent to the
Registrar or to any other person that-
a) Contains an untrue statement of a material; or
b) Omits to state a material fact required the report or makes a
statement contained in the report 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 case of an individual, with imprisonment for a term which may
extend to ninety days or with a fine not less than ten thousand rupees
or both;
615
In the case of juristic person other than an individual, with a fine not
less than ten thousand rupees or as the Registrar may deem fit.
2) (a) If the person committing an offence under sub-section (1) in a co-
operative society which is a body corporate, the Co-operative Society
as well as every person in charge of and responsible to the Co-operative
Society 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 Society and it is proved
that the offence has been committed with the consent of and
connivance of or that the commission of the offence is attributable to
any neglect on th part of any Director, Manager, Secretary or other
Officer shall also be deemed to be guilty of that offence and shall be
punishable with imprisonment for a term which may extend to ninety
days orwith fine ofthreethousand rupees 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 not known to him/her; and
(b) After exercising reasonable diligence fact could not have been
known to him/her.
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 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, be punishable with a fine
not less than five thousand rupees or as the Registrar may deem fit.
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/she
has been convicted.
616
6) No prosecution for an offence under this Act shall be commenced after
years from the date from 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.
89. Power to enforce attendance:
The Registrar or persons authorised by him/her while conducting an
Inquiry Section 82, an Inspection under Section 83 or surcharge proceedings
under Section 86, shall have the power to summon and enforce attendance
of any person or to compel the production of documents or other materials
objects in the same manner and procedure as provided under the Code of.
Civil Procedure 1908.
CHAPTER VII
SETTLEMENT OF DISPUTES
90. Reference of dispute:
Any dispute touching the business of a registered society other than a
dispute regarding disciplinary action taken by a society against the employee
society, or of the Liquidator of a society shall be referred to the Registrar for
decision, if the parties thereto are among the following:-
a) The society, its past or present controlling or managing body any past or
present officers, agent or employee or the liquidator of the society; or
b) Member, past member or persons claiming through a member past
member or deceased member of the society; or
c) A surety of a member, a past member or aeceased member of the
society; or
d) Any other registered society or the Liquidator of the society;
e) A registered society and financing Bank.
617
91. Settlements of dispute:
1) The Registrar shall on receipt of a reference under Section 90-
a) Decide the dispute himself/herself or authorities any other
Government Officer to decide the dispute; or
b) Refer it for disposal to an Arbitrator appointed by the Registrar or to
three Arbitrators, one to be nominated by each of the parties to the
dispute and the third who shall be nominated by the Registrar to act as
Chairman. Where any party to the dispute fails to nominate an
arbitrator within fifteen days after the communication of this notice,
the Registrar may himself/herself make the nomination. No legal
practitioner may be nominated as an Arbitrator by any party to a
dispute or bythe Registrar;
c) An Arbitrator appointed under the previous sub-clause shall be
governed by the Indian Arbitration Act, 1940, with such statutory re-
enactment or modification thereof as shall from time to time be made.
2) The Registrar may withdraw any reference of such dispute referred to
under sub-section (1) and may deal with it himself/herself under the
said sub-section.
3) Where the Registrar is satisfied that a party to any reference made to
him under Sec 90 with intent to defeat or delay the execution of any
decision that may be passed thereon-
a) Is about to dispose of the whole or any part of his property; or
b) Is about to remove the whole or any part of his property from the local
limits of the jurisdiction of the Registrar.
The Registrar may direct the conditional attachment of the said
property or such part thereof as he/she deems necessary and such
attachment shall have the same effects as if it had been made by a
competent Civil Court.
618
CHAPTER- VIII
DISSOLUTION OF A SOCIETY
92. Cancellation of registration:
(1) If the Registrar, on receipt of an application made upon resolution
adopted in a meeting of the General Assembly by a three-fourth
majority of the members present in the meeting, provided that the
notice of dissolution was included in the circulated agenda or the
meeting, is or opinion that the society ought to be dissolved, he/she
may by an order in writing, cancel the registration of the society.
(2) The Registrar, after an inquiry has been held under Section 82 or after
the inspection has been made under Section 83 may cancel the
registration of a Society which:-
(i) has not commenced working; or
(ii) has ceased working; or
(iii) has ceased to comply materially with any condition as to registration in
this Act, Rules or Bye-Laws; and
(iv) In his/her opinion ought to be dissolved.
(3) A copy of the order cancelling the registration of a society shall
forthwith be published in the Official Gazette by a notice, which shall be
communicated to the society and to the affiliating society concerned by
registered post. The notice shall contain the name of the Liquidator
appointed under Section 90 who shall take full charge of the society
forthwith and shall require all claims against the said society to be
made to the liquidator within two months of the publication of the
notice. All liabilities recorded in the account books of the society be
deemed ipso facto to have been so claimed.
(4) When the cancellation of the registration of the society takes effect, the
society shall cease to exist as a corporate body, but shall vest in the
liquidator.
619
(5) Any member of the society may, within two months from the date of
publication of the order of cancellation, appeal to the State
Government from such order.
(6) Where no appeal is presented within two months from the publication
of an order for cancelling of the society, the order shall take effect on
the expiry of the period.
(7) When an appeal is presented within two months of an order of
cancellation, the order shall not take effect until it is confirmed by the
State Government and such confirmation is communicated to the
society by registered post.
93. Winding up, appointment of Liquidator and his powers and function:
(1) When an order of cancellation of the registration of a society is made by
the Registrar under Section 92, he/she may appoint any person to be
the Liquidator of the society and may remove such person and appoint
another in his/her place.
(2) The Liquidator appointed under Sub-section (1) shall have power from
the data office appointment to take immediately position of all assets,
properties, effects and actionable claims of the society or to which the
society is entitled and all books, records, cash and other documents
pertaining to the business of the society and an the interest of the
society shall hold charge of the society notwithstanding the provisions
of Section 92 provided that no steps shall be taken for the winding up of
the society during the pendency of any stay order.
(3) The Liquidator shall, under the general control of the Registrar, have
power, so far as is necessary for the winding of the society, on behalf of
the society to carry on the business thereof and to do all acts and
execute all documents necessary to search winding up, and in
particular shall exercise the following powers:
620
(a) To institute, compromise and defend suits and other legal proceedings
on behalf of the society;
(B) To make any compromise or arrangement with any person between
whom and the society there exists any dispute;
(c) To determine the debts to the society by a member, past member or
estate nominees, heirs or legal representatives of deceased members;
(d) To determine from time to time the contribution to be made or remaining
to be made by the members, past members or by the estate or nominees,
heirs or legal representatives of deceased members or by any officers or
former officers, to the assets of the society and to determine the debt due
from such members or person and the cost of liquidation;
(e) To calculate the cost of liquidation and determine by what persons and
in what proportion they are to borne;
(f) To investigate all claims against the society band subject to the
provisions of this Act to decide questions of priority arising between
claimants;
(g) To pay claims against the society including interest up to date of
cancellation of registration according to their respective priorities, if
any, in full or rateably as the assets including the reserve fund of the
society, permit; the surplus, if any, remaining after payment of claims
being applied in payment of interest from the date of such cancellation
atthe rate fixed by him but not exceeding the contract rate in any case;
(h) To take steps to recover dues according to the provisions of Section 100,
if necessary; and
(i) To dispose of the surplus, if any, remaining after paying the claims
againstthe society in accordance with Section 94.
(4) Subject to the provisions of this Act and Rules made their under, a
Liquidator appointed under Section 93 (1) shall, in so far as such powers
are necessary for carrying out the purpose of this section, has the
power to summon and enforce the attendance of witnesses and to
621
compel the production of any Books, Accounts, Documents, Securities,
Cash or other properties belonging to or in the custody of the society by
the same means and so far as maybe in the same manner as is provided
in the case of a Civil Court under Code of Civil Procedure, 1908.
(5) Notwithstanding anything contained in any law for the time being
enforce, if any landed property is held by a Liquidator as such the title
over the land shall be completed as soon as the mutation of the name
of his office is effected and no Court shall question the title on the
ground of dispossession, want of possession or physical delivery of
possession.
94. Distribution of fund of a dissolved society:
On dissolution of a society the reserved fund and any undisbursed cash
in hand shall be applied to discharging liabilities of the society and the
repayment of the share capital. Any sum that may remain maybe applied to
such object of local d public utility as may he selected by the members of
the dissolved society and approved by the Registrar. If, within three months
of the notice published in the Official Gazette under Section 95, notifying the
closing of the liquidation proceedings of the society, the members fail to
select any object as aforesaid, the Registrar shall, with the approval of the
Government, applying the fund to such local public utility as may be
determine by him/her or credit the remaining some to the reserve fund of a
society to be formed to replace the dissolvedthe society or if there be no
such society to any other disserving society existing within the same area of
operation and having objectives similar to those of the dissolved society or if
there be no such society to any other registered society in Nagaland as may
be determined by the Registrar.
95. Liquidator to deposit the books and submit a final report:
When the affairs of a registered society has been wound up, the
Liquidator shall make a report to the Registrar, who, when satisfied shall
order the liquidation proceeding to be closed and direct the Liquidator to
622
deposit the records whatsoever the Registrar thinks fit and the Registrar shall
issue a notice in the Official Gazette, notifying the closing of the liquidation
proceedings of the society.
96. Disposal of surplus assets of liquidation Co-operative Societies.
After all the liabilities including the paid up share capital of a wound up
Co-operative Society 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, to the Co-operative Development Fund.
97. Bar of suits or legal proceeding:
When an order to wind up the Co-operative Society has been made or
the Liquidator has been appointed as suit or other legal proceeding relating
to business of such Co-operative Society shall be proceeded with or insisted
against the Liquidator as such or against the Cooperative Society or any
member thereof except with the leave of the Registrar and subject to such
conditions as he/she may impose.
98. FinalAccounts:
(1) A Liquidator shall pay the costs of liquidation out of the property of the
Co-operative Society and shall pay or make adequate provision for all
claims against the Co-operative Society.
(2) Subject to the provision of Section 60 after paying or making adequate
provision for all claims against the Co-operative Society, the Liquidator
shall apply to the Registrar for approval of his/her final accounts and for
permission to distribute in cash or in kind the remaining property of the
Co-operative Society in accordance with the Bye-Laws.
(3) Where the Registrar approves the final accounts rendered by a
Liquidator under sub-section (2), he/she shall
(a) Issue direction with respect to the custody or disposal of the
documents and records of the Co-operative Society; and
(b) Discharge the Liquidator.
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(4) Where the Registrar discharges a Liquidator under sub-section (3) the
Registrar shall dissolve the Co-operative Society, issue a certificate of
dissolution and delete its name from the Registrar of Co-operative
Societies.
(5) The Co-operatives Society ceases to exist on the date shown in the
certificate of Dissolution, which shall not be later than eight years after
the appointment of the Liquidator.
99. Bar of Suit:
Save in so far as is expressly provided in this Act, no Civil Court shall take
cognizance of any matter concerned with the winding up or dissolution of a
society under this Act and when a Liquidator has been appointed no suit,
order or legal procedings shall lie or be proceeded with against him except
by leave of the Registrar and subject to such terms as he may impose.
CHAPTER-IX
RECOVERY OF SUMS DUE
100. Recovery of sums due and enforcement of obligations:
(1) Notwithstanding anything contained in this Act, the Registrar or such
other persons as may be authorized in this behalf, may, on his/her own
motion when the interest of the Government is involved or on the
written requisition of a registered society, an affiliating society or
finance bank for the recovery of any loan or any other sum due by a
defaulting member after due inquiry as he/she may deem fit and after a
reasonable opportunity of being heard, grant a Co-operative Demand
Certificate for recovery of any amount found to be due.
(2) (a) If any instalment of loan or interest payable by a member of a Co-
operative Society or any part of such instalment has remained
unpaid for more than 30 days from the date on which it fell due,
the Board may, in attention to any other person authorize for the
recovery or such instalment or part thereof, recover the
instalment or such part thereof by distrain and sale of the produce
of the charged land includingthe standing crop;
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(b) On receipt of such application the Registrar or the person
authorized by him/her may, notwithstanding anything contained
in the Transfer of property Act, 1882, take action in the manner
has prescribed for the purpose of distraining and selling such
produce.
Provided that no distrain shall be made after the expiry of twelve
months from the date on which the instalment fell due;
(c) The value of the property distrained shall be, as nearly as possible
equal to the amount due and the expenses of the clistrained and
the costs of the sale.
101. Charge and Surcharge:
(1) Where, as the result of an audit under Section 76 or an inquiry under
Section 82 or an inspection under Section 83 or a report made in the
course of the Winding up of a registered society, it appears to the
Registrar that any member, officer or employee pass or present, of the
society has at any time within a period of four years prior to the date of
such Audit, Inspection, Inquiry or report, as the case may be,
(a) Intentionally, whether individually or as an assenting members of any
managing or others controlling body made or authorized any payment
or granted any loan which is contrary to the provision of the Act or to
the Rules or Bye-Laws or failed to take timely steps to recover any loan
at the due date or it was being improperly utilized; or
(b) was grossly negligent in respect of any loss or deficiency;
(c) Failed to bring into account any sum which ought to have been brought
into account; or
(d) Misappropriated or fraudulently retained any property of the society; or
(e) Committed breach of trust in relation to the society, the Registrar may
inquire into the conduct of such officer or members of the managing or
other controlling body.
625
(2) The Registrar may similarly inquire into the conduct relating to the
affairs of the society or of any member, officer or employees, past or
present, of a registered society on the application of the present
controlling or managing body of the society or liquidator, or any
creditor is affiliated or any contributory.
(3) Upon such inquiry given such member, officer or employee an
opportunity of being heard and in the case of payment made contrary
to the provision of this Act or Rules or Bye-Laws after affording such
member, officer or employee time to recover the amount of such
payment from the payee and credit it to the funds of the society, if such
member, officer of employee fails to recover the amount then the
Registrar may by an order in writing require such member, officer or
employee to pay such sum with interest at such rate as the Registrar
may direct the society by way of compensation in respect of such
payment or loss or to restore such property as the Registrar thinks fit,
and to pay such sum as the Registrar may fix to meet the cost of the
proceeding under this section.
(4) Any award made by the Registrar under sub-section(3) shall be reduced
to the form of a Co-operative Demand Certificate by the officer
authorized to issue such certificates.
(5) This section shall apply notwithstanding that such member, officer or
employee may be his act or omission have incurred in addition to
criminal liability under this Act or any other law for the time being in
force.
CHAPTER-X
PENALTY
102. Punishment for false information, disobeying summons, order etc.:
If a registered society or an officer or member thereof or any Liquidator:-
626
(a) wilfully make a false return or furnishes false information or wilfully
neglects or refuses to do any act required by this Act or any Rules or
Bye-Laws or does anything contrary to this Act or any Rules, or Bye-
Laws orfails to submit returns, or
(b) Any person wilfully or without reasonable excuse disobeys any
summons, requisition or lawfully written order issued under the
provisions of this Act or does not produce documents or cash balance
of society or does not furnish any information lawfully required from
him by a person authorized in this behalf under the provisions of this
Act or fail to maintain up-to-date account, record and other documents
of the society required to be maintained by him under this Act or Rules
or Bye-Laws, he shall be punishable with a fine of not less than five
thousand rupees or any higher amount fixed by the Registrar and in
case of a continuing offence a furtherfine of fifty rupees for each day on
which the offence are continued after conviction thereof.
103. Punishment for disposing property in contravention of Section 61:
Any member, past member or the nominee, heir or legal representative
of a deceased member removing or otherwise disposing of any property on
which a registered society holds a charge under Section 61 with intend to
defraud the society or with such intents doing any other act to the prejudice
of the society's charge shall be punishable with a fine not less than five
thousand rupees or as the Registrar may deem fit.
104. Penalty for certain misdemeanours:
Where it appears to the Registrar, that any person has contravened the
provisions of this Act or Rules or Bye-Laws.
(a) By sitting or voting or exercising his right as members, or as a member
of any managing or controlling body, or voting in the affairs of a
registered society as a representative of another society which is a
member of such society, when such person was not entitled so to sit,
vote or exercise such rights, as the case may be; or
(b) By utilizing a loan for a purpose different from that for which it was
granted; the Registrar may, after affording such person an opportunity
to be heard by an order in writing, direct him to pay to the assets of the
627
society by way of penalty such sum not less than five thousand rupees
orasthe Registrar may deem fit.
105. Power to enforce performance of obligation:
Notwithstanding anything contained in this Act, where any registered
society is require to take any action under the Act, the Rules or Bye-Laws and
such action is not taken within the time provided in this Act, the Rules or Bye-
Laws or within such times as the Registrar may specify by a notice in writing
where no time is so provided, the Registra.r may call upon any officer of the
society whom he/she considers to be responsible for carrying out the
directions, and after giving such officer an opportunity to be heard may
require him to pay to the assets of the society such sum not less than rupees
five thousand or as the Registrar may deem fit for each day until the
Registrar's directions are carried out.
106. Cognizance of Offence:
(1) No court inferior to that of a Magistrate of the first class shall try any
offence under this Act.
(2) No prosecution for an offence under this Act shall be instituted without
the previous sanction of the Registrar.
(3) Offence under this Act maybe tried summarily.
CHAPTER Xl
JURISDICTION
107. Indemnity:
No suit, proceeding or prosecution whatsoever shall lie against the
Registrar or any person acting on his/her authority, or against any Liquidator
in respect of anything done or purporting to the done in good in good faith
under this Act.
108. Bar to jurisdiction- Civil:
(1) Save as provided in this Act, no Civil or Revenue Court shall have any
jurisdiction in respect of-
(a) Registration of a society or its bye-laws or amendments of Bye-Laws; or
628
(b) The dissolution of a managing or controlling body and the management
of the affairs of the society on dissolution thereof; or
(c) Any dispute referred to the Registered; or
(d) Any matter in relation to the winding up and dissolution of a registered
society.
(2) Save as provided in this act, no order, decision or award under this Act,
or working of the affairs of a registered society shall be liable to be
challenged, set aside, modified, revised declared void in any court on
any ground whatsoever.
109.Appeal of review:
(1) Except where otherwise expressly provided to the contrary an appeal
shall lie to the Registrar from the decisions made under this Act or Rules
framed there under by any Government Officer, Liquidator appointed
under Section 93.
(2) The Registrar may review any order passed by him/her at any time
within sixty days from the communication of such order.
(3) Save as otherwise provided in this Act all Rules, no appeal shall lie to the
State Government against any order of the Registrar, except on a
question of law, and provided such appeal is preferred within sixty days
of the communication of such order.
(4) Any appellate authority and the Registrar in case or review may pass
any stay order pending any appeal or review before such an authority
and may award costs against any party appealing or petitioning for
review if such appeal are reviewed petition is considered false,
vexatious or frivolous by the authority concerned.
(5) Notwithstanding anything contained in this Act where, with the
previous sanction in writing or in requisition by the Reserve Bank of
India, a Corporative Bank-
(a) isbeingwoundup;or
629
(b) in respect of which a scheme of amalgamation or reorganisation is
given effect, no appeal thereof shall lie or be permissible without the
sanction or requisition of the Reserve Bank and that shall not be liable
to be called in question.
110. Power of attachment of property:
Where the Registrar of such Gazetted Officer as may have powers
delegated to him/her under section 100 is satisfied that any person
holding property within its jurisdiction with intent to defeat or delay
the execution of any order, under a Co-operative Demand Certificate
for recovery of dues, or with intent to avoid payment of dues from such
person under this Act, Rules or Bye-Laws-
(a) Is about to d nose of the whole or any part of such property; or
(b) Is about to remove the whole or any part of such property from the
local limits of the jurisdictions of the Registrar or of such Gazetted
Officer, may uiless adequate security is furnished, as he/she may
require, direct the conditional attachment of the said property or such
part thereof as he/she thinks necessary, notwithstanding that the
claimant or owner of the property may reside elsewhere, and such
attachment shall have the same force and effect as it had been made by
a competent Civil Court and shall continue in force until withdrawn or
cancelled.
111. Registrarto be Civil Court for certain purpose:
The Registrar or any person empowered by him/her in this behalf shall
be deemed, when exercising any power under this Act for the recovery of any
amount by attachment or sale without attachment of any property or when
passing any orders on any implication made to him/her for such recovery or
to take any step in aid of such recovery, to be a Civil Court for the purpose of
Article 182 of the First Schedule tothe Indian Limitation Act, 1908.
112. Recovery of Sums due:
(1)
All dues recoverable under this Actor Rules framed thereunder shall be
reduced to the form of a Co-operative Demand Certificate as in
630
Schedule 'c' over the signature of the Registrar or of such Gazetted
Officers as may have powers delegated to them by the Registrar in this
behalf and shall be recovered as an arrear of land revenue and shall be
paid to the certificate holder or his/her authorised nominee. Such
certificate shall be in the name of the claimant and shall be delivered to
him/her.
(2) Notwithstanding anything contained in subsection (1), all the said dues
shall also be recoverable as public demand on a written requisition
send to the certificate officer in the prescribed form over the signature
of the Registrar or of such Gazetted Officer or Officer of a Co-operative
Society as may have powers delegated to him by the Registrar in this
behalf.
(3) For the purpose of this section a member of an Affiliated Society shall
be deemed to be a member of the Affiliated Society and loans due to
the affiliated society shall be deemed also to be loan due to Affiliating
Society to the extent that loans from the Affiliating Society to the
affiliated society are outstanding and cannot be recovered from the
affiliated society provided that not more than one demand certificate
may be executed against a single loan.
(4) A copy of the Co-operative Demand Certificate prepared under this
section shall be served in the manner prescribed upon the person from
whom the amount is due.
(5) On receipt of a copy of the Co-operative Demand Certificate, the
person from whom the amount is due shall pay the same within a
period of thirty days from the date of service of the certificate.
Provided that the period during which the payment is to be made may
be extended by the Registrar for a period not exceeding thirty days for
reasons to be recorded in writing.
(6) Any person violating the provisions of sub-section (5) above shall, on
conviction be punished with imprisonment of either description which
may extend to six months or with a fine not less than five thousand
rupees or as the Registrar may deem fit for or with both.
631
113. Registrar may order a Meeting of Creditors:
(1) Notwithstanding anything contained in this Act, where a compromise
or arrangement is proposed between a registered society and its
creditor or creditors or any class of them the Registrar, upon an
application made by a registered society or by Liquidator, in case of a
society in respect of which an order has been passed for the winding up
thereof, or by a creditor or creditors or any class of creditors may order a
meeting of the creditors.
(2) If a majority number of creditors or the class of creditors, as the case
may be representing claims to three-fourths of the debts due by the
society to the creditor or class of creditors, at a meeting agree to any
compromise or arrangement and if the Registrar agrees to such
compromise Ct arrangement and gives his/her sanction then the
compromise or the arrangement shall be binding on all the creditors or
class of creditors and also on the order has been passed for the winding
up thereof, and on all persons who may be required by the Liquidator to
contribute to th ' assets of the society.
CHAPTER XII
MISCELLANEOUS
114. Previous sanction of Reserve Bank of India or NABARD in certain matters:
Notwithstanding anything contained in Sections 12, 13, 14, and 15, in
the case of a Co-operative Bank or an Urban Co-operative Bank, no
conversion, transfer, division, amalgamation merger dissolution shall take
place save with the previous sanction in writing of the Reserve Bank of India,
the National Bank of Agriculture and Rural Development Bank, as the case
may be. Once a banking license is cancelled by the concerned authority, it is
mandatory on the part of Registrar of Co-operative Societies to send it into
liquidation.
115. Society to be a Body Corporate:
Every registered Co-operative Society shall be deemed to be body
corporate by the name under which it is registered, with perpetual
succession and a common seal, and with power to hold property, to enter
632
into contracts, institute and defend suits and other legal proceedings and to
do all things necessary for the purpose for which it was constituted.
116. Register of members:
Any register or list of members or share kept by any registered society shall
be prima fade evidence of any of the following particulars entered therein-
(a) The date on which the name of any person was entered in such register
or list as memberand
(b) The date of which any such member ceased to be a member.
117. Entries in books of registered society shall be received as prima facie
evidence:
1) A copy of any entry in a book of a registered society, regularly kept in the
course of business shall, if certified by the Chairman or Secretary of the
society, be received in any suit or legal proceedings as prima facie
evidence of such entry and shall be admitted as evidence of the
matters, transactions and accounts therein recorded in every case
where, and to the same extent as the original entry itself is admissible.
2) No Officer or Liquidator of a registered society and no Officer in whose
office the books of a registered society are deposited after liquidation
shall in any legal proceedings to which the society or the Liquidator is
not a party, be compelled to produce any of the society's books the
contents of which can be proved under sub-section (1) orto appear as a
witness to prove the matters; transaction and accounts therein
recorded unless specially so directed by an order of the court of the
Arbitrator.
118. Savings of existing societies:
1) Every society existing at the commencement of the Act which has been
registered under the Assam Co-operative Society Act, 1949, law shall
be deemed to be registered under this Act, and its Bye-Law shall, in so
far as they are not inconsistent with the provisions of this Act, continue
in force until altered or rescinded and shall to such extent be deemed to
be registered under this Act.
633
2) All appointment, Rules and orders made, notification and notices
issued, all transaction entered into and all suits and other proceedings
instituted under the said Act shall continue and shall, so far as may be
deemed to have been respectively made, issued entered into or
instituted underthis Act.
119.Acts of societies etc. Not to be invalidated by certain defects:
1) No Act of a Registered Society or of a Managing or Controlling body or
of any Officer or Liquidator done in good faith in pursuance of the
business of the society shall be deemed to be invalid by reason only of
some defect subsequently discovered in the organisation of the society
or in the constitution of any such body or in the appointment or
election of the Officer or Liquidator or on the ground that such officer
or Liquidator was disqualified for appointment.
2) No act done in good faith by any person appointed under this Act shall
be invalid merely by reason on the fact that his appointment has been
cancelled or in consequence of any order subsequently passed under
this Act.
3) The Registrar shall decide whether any act was done in good faith in
pursuance of the business of society.
120. Power to order recoupment of expenditure:
Notwithstanding anything contained in any other law for the time
being in force the State Government may, by a general or special order,
require every registered society or a class of registered societies to make
contribution of such sum annually to be fixed by the Registrar towards the
recoupment of administrative expenditure incurred by the Government in
respect of Inspection, Supervision and Guidance of a society or class of
societies or of any service to such society or class of societies.
121. Super-session of Board by Registrar:
If in the opinion of the Registrar the Board of a Co-operative Society is
persistently making default or is negligent in the performance of the duties
imposed on it by this Act or the Rules or the Bye-Laws or has committed any
634
act which is prejudicial to the interest of the society or its members, or has
omitted or failed to comply with any directions given to it or that there is
stalemate in the constitution or functions of the Board, the Registrar shall
cause an Inquiry under Section 82 or an Inspection under Section 83 and
after giving the society an opportunity to state its objections, if any and after
considering the objections, if received forward the Inquiry/Inspection report
to the society for placing the report before the Annual General Meeting if
due within 60 days from the date of receipt of the report by the society, or at
a Special General Meeting to be convened specially for considering to take
actions as suggested in the report under sub-section (5) of Section 82 and
sub-section (4) of Section 83. If no action as stated above is taken by the
society within the stipulated period the Registrar shall by an order in writing
supersede the Board and appoint one or more administrators or an ad-hoc
committee from the department to manage the affairs of the society for such
period not exceeding three months as may be specified in the order which
period may at the discretion of the State Government be extended from time
totime.
Provided that the total period of extension in any case shall not exceed
six months, such appointed person shall call a special General Meeting and
shall elect a new Board within the above period.
122. Power to seize records of society:
1) If the Registrar or any person authorised by him/her in this behalf while
making Audit, Inspection, Inquiry or Supervision as the case may be
believe or has reason to believe that the registered society is not
keeping or maintaining the accounts, books and records of the society
properly or finds or reasonably suspects gross negligence of duties
misappropriate or misuse of fund of the society irregularity in recording
Proceeding or keeping accounts or books he/she shall have power to
take possession of any or all books, registers or documents, cash in
hand oraccounts books of the society and remove such seized property
as may be directed by the Registrar.
2) The person seizing the property of the society under sub-section (1)
shall prepare an inventory of the properties seized in duplicate with his
635
signature and require the officer or member of the society from whose
possession or custody the property is
Seized to put his signature in witness thereof and if such officer or
member refuses to sign, then the person seizing the property shall call
upon two or more persons to sign the seizure list. A copy of the list
prepared under this section signed by the witnesses shall be delivered
to the officer of the society.
3) The Registrar shall take immediate steps in such case for Audit and
Inspection and pass such orders as he/she may deem think fit.
4) The administrative head of a civil sub-division or administrative area
shall give police help to all Officers mentioned in sub-section (1) to this
section when sought for.
123. Powers of the Managing Body of an Affiliating Society to enquire into the
affairs of a member society:
When a registered society takes a loan from an affiliating society and
defaults payment of Uie debt on any instalment thereof, any member of the
Managing Body of the Affiliating Society may examine and look into the
accounts and workings of such borrowing society and report the result of his
inquiry or examination particularly with reference to the said loan to the
Affiliating Society and may recommend any suggestion in his report. The
borrowing society shall furnish such information and produce such
documents, books and accounts as the member of the Managing Body may
require.
124. Limitation:
1) Notwithstanding any of the provisions of the Indian Limitation Act,
1908 the period of limitation for the institution of a claim to recover any
sum, including the interest thereon, due to a registered society by a
member thereof shall be computed from the date on which such
member dies or ceases to be a member of a society.
636
2) The Indian Limitation Act, 1908 shall not apply to any debts or liability
due by any member, past member or deceased member to any society
in respect of which an order of dissolution has been passed under this
Act.
125. Information and returns to be filed with the Registrar:
1) Every year within thirty days of holding of the Annual General Meeting,
the Board shall file the following information with the Registrar-
a) Annual Report of activities;
b) Annual financial statements of accounts as audited with auditors
reportthereon;
c) Statistical statement indicating name of the Co-operative Society,
services offered by the Co-operative Society to the members, total
number of members as on the last day of the financial year;
d) Total liabilities expressed as-
Funds from members and surplus;
(ii) Funds from other external sources as on the last day of the financial
'fear;
(iii) Quantum or rupees or services provided to members and non
members and surplus or deficit at the end of the financial year; and
2) Along with the returns specified in sub-section (1) every Co-operative
Society shall furnish the following information to the Registrar-
a) The date of Annual General Meeting at which the returns to be filed
with the Registrar were considered or appro"d;
h) The total number of members on the rolls of the Co-operative Society
who were eligible to vote on the date of such Annual General Meeting;
c) The number of eligible members present at such Annuai General
Meeting;
637
d) List of names or Directors with addresses and terms of office;
e) Name and address of the internal auditor appointed for internal audit
of the society for the current financial year accounts;
f) Any other relevant and special information required by the Registrar to
enable him/her to decide whether the Co-operative Society has
conducted its affairs in accordance with the Co-operative Principles
mentioned in Schedule tA' and the provision of this Act and the Bye-
Laws.
3) If the return sand information as specified under sub-section (1) and (2)
are not filed or furnished to the Registrar within the period specified
under sub-section (1) shall treated as an offence under this Act and the
Board shall be penalised in accordance with provisions of this Act.
126. Powerto make Rules:
1) The State Government may, after previous publication, make Rules for
carrying out the purpose and objects of this Act, and such Rules may
provide a penalty not exceeding five thousand rupees for a breach
thereof;
2) Every Rule made under this section shall be laid as soon as may be after
it is made before the Nagaland Legislative Assembly while it is in session
for a total period of fourteen days which may be comprised in one
session or in two successive sessions and if before the expiry of the
session in which it is so laid or the session immediately following the
Nagaland Legislative Assembly in making any notification in the rule or
the Nagaland Legislative Assembly agree that the Rules should not be
made, the Rule shall thereafter have effect only in such modified form
or be of no effect, as the case may be, so however, that any such
modification or annulment shall be without prejudice to the validity of
anything preciously done underthat Rule.
127. Repeal:
The Assam Co-operative Societies Act, 1949 (Assam Act 1 of 1950) as
enforced in Nagaland is hereby repealed.
638
SCHEDULE-'A'
(See Section4 (1), 25)
CO-OPERATIVE PRINCIPLES
The Co-operative Principles are guidelines by which co-operative societies
puttheirvalues into practice:
r Principle:Voluntary and open Membership:
Co-operatives are voluntary organizations, open to all persons able to
use the services of such co-operatives and willing to accept the
responsibilities of membership, without gender, social, racial, political,
or religious discrimination.
2
nd
Principle: Democratic Member Control:
CO-operatives are democratic organizations controlled by their
members, who actively participate in deciding their policies and
making decisions. The elected representatives of co-operatives of co-
operatives are responsible and accountable to their members.
rd Principle: Member Economic Participation-
Members of co-operative contribute equitably and democratically
control the capital of their co-operative. Members usually receive
limited compensation, if any, on capital subscribed as a condition of
membership.
4th Principle:Autonomy and Independence:
Co-operatives are autonomous, self-help and self-governing
organisations controlled by their members. If co-operatives enter into
agreement with other organizations, including government, or raise
capital from external sources, they do so on terms that ensure their
democratic control by members by retaining its autonomous character.
5th Princi pie: Education, Training and Information:
Co-operatives provide education and training in their members,
elected representatives, managers and employees so that 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-operation.
639
6th Princi pie: Co-operation among Co-operatives:
Co-operatives serve their members most effectively and strengthen
the co-operative movement by working together through available
local, national, regional and international structures.
7th Principle:Concern for Community:
While focusing on their member needs and wishes, co-operatives work
for the sustainable development of communities, through policies
approved by their members.
SCHEDULE-1 B'
(See Section 9)
Subject matter for specific consideration when framing Bye-Laws
1. Identity of the Co-operative Society:
a) The name of the Co-operative;
b) The village/town/city where the head office of the Co-operative
Society is to be located.
c) The custody and the use of the common seal;
d) The area of operation from where the membership is to be drawn.
2. Aim and services:
a) The aim of the Co-operative Society explicitly stated as a common need
of the members which the Co-operative Society aims at fulfilling;
b) Key service and support services to members to fulfil the common need
stated in the aim;
c) The conditions under which services may be provided to non-
membership.
3. Membership:
a) Eligibility, ineligibilityfor obtaining membership;
b) Eligibility, ineligibility for continuing membership;
c) Procedure for obtaining membership;
d) Procedure for withdrawing membership;
640
e) Procedure for termination of membership;
g) Circumstances under which membership ceases;
h) Procedure for cessation membership.
4. 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 vote;
c) The consequences of performing below the minimum level fixed;
d) The consequences of default in payment of any sum due by a member.
S. General Body:
a) The role of the General Body and of the Delegates 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;
c) The minutes of proceedings of General Meetings.
6. Board of Directors:
a) The size and composition of the Board of Directors;
b) Eligibility, ineligibility for becoming Director;
c) Eligibility, ineligibility for retaining Directorship;
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 officer of the Directors;
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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 Boards Meetings;
j) The function, responsibilities and powers of Directors.
7. Chief Executive and Staff:
a) The person to sue or be sued on behalf of the Co-operative Society;
b) The manner of appointment and removal of Chief Executive;
C) The function, responsibilities and powers of the Chief Executive.
8. Finances:
a) The financial year which the Co-operative Society wishes to adopt;
b) The manner of ppointment of Auditors and their duties;
c) The manner of appointment of Internal Auditors and their duties;
d) The nature and amount of equity capital if any, of the Co-operative
Society;
e) The maximum capital which a single member can hold;
f) The types and extent to funds to be raised;
G) The purposes for which the funds raised by the Co-operative Society
may be applied;
h) The debt-equity ratio that the Co-operative Society wishes to maintain
at all times,and the maximum external debt that a Co-operative Society
wishes to permit itself at any point of time;
i) Procedure fortransfer of shares or interest by a member;
j) Procedure for redemption of shares by the Co-operative;
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k) Procedure for transfer or repayment of interest on death of member;
I) The nature and extent of the liability of the members for the debts
contracted by the Co-operative Society;
m) The nature and extent of the liability of the Directors for the debts
contracted by the Co-operative Society;
n) The manner of disposal offunds if under liquidation.
9. Secondary Co-operative Societies:
a) The right, if any, which the Co-operative Society wishes to confer on any
Secondary Co-operative Society of which it is a member, and the
circumstances under which these rights may be exercised by such
Secondary Co-operative Society;
b) The procedure of appointing and changing representative to Secondary
Co-operative Society.
10. Other matters:
a) The manner of making or amending Bye-Laws;
b) The manner of constitution and functioning of arbitration council along
with the qualification of the members for settlement of disputes;
c) The manner and dissolution of the Co-operative Society;
d) The language in which the affairs of the Co-operative Society are to be
conducted;
e) Refunding of loan, guarantee, share capital, grant or subsidy received
from Government;
f) Other matters which the provision of this Act requires to be provided by
the Bye-Laws.
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SCHEDULE- 'C'
FORM (See Section 112)
Co-operative Demand Certificate granted under Section. 112(1) of the
Nagaland Co-operative Societies Act 2017
Case No of 20
District/Su b-division
In the matter of
'Iersus
Whereas' as a result of my enquiry decide that a sum of Rs
(Rupees
By way of under Section 100 (1) of the Nagaland
Co-operative Societies Act, 2017, and a sum of Rs
(Rupees
Byway of interest is/are due from you and you have not paid.
Or
Whereas has made a reference in writing to
me complaining/determining that a sum of Rs
(Rupees
by way of undersection of
The Nagaland Co-operative Societies Act, 2017 and a sum of Rs
Rupees
by way of interest is/are due from you and you have evaded payment of the same.
2. And whereas a notice of demand calling on you to pay the dues within the
specified time was served with notice to show cause.
3. And whereas you have not paid up your dues specified in the notice.
4. And whereas you have not submitted explanation/ your explanation is
unsatisfactory.
5. Now, therefore I, under authority of Section 100 (1) of the Nagaland Co-
operative Societies Act, 2017 sub-section (1) of Section 112 of the Nagaland
Co-operative Societies Act,2017 do hereby order that the above mentioned
sum of Rs
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(Rupees
Is due to the above named from you and that you will pay the amount with
further interest
On the principal sum at the rate Percent per annum from
togetherwith all costtill the date of realization of the above mentioned sum.
6. I further order that right, title and interest of
in the properties set out and described in the schedule below be sold as an
arrear of land revenue under the provisions of the Assam Land Revenue
Regulations, 1886 (Regulation I of 1886) and that, if the sale proceeds should
be found insufficient to discharge the dues with subsequent interest at all
above rate till the date of realization and costs in full, the balance be realized
by attachment and sale of other movable and immovable property of
judgement- debtora an arrearof land revenue.
7. Further take notice that if you fail to pay the amount as ordered above within
a period of thirty days from the date of service of Certificate you shall also
liable to prosecution under sub Section (6) of Section 112 of the Nagaland
Co-operative Society Act, 2017 in addition to other measures for recovery of
the amount payable by you.
Schedule
Dated
The
Date
The
Registrar Co-operative Societies
Nagaland Kohima
N.B The irrelevant words/portions may be struck off and relevant entries may be
made where necessary.
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Open official source version ↗About this act
- Jurisdiction
- Nagaland
- Enactment date
- 2017-06-09
- Sections available
- Document reader
India Code, Government of India. Text fetched 10 Oct 2026. Check the linked official text and subsequent notifications when applying a provision.