SECTION 38
38. Exemption from certain taxes fees and duties.-(1) The Central Government may, by notification in the official Gazette, remit the income tax payable in respect of the profits of any class of co-operative societies or the dividends or other payments received by members of any class or such societies on account of profits.
(2) The Government may, by notification remit in respect of any class of co-operative societies-
(a) the stamp duty chargeable under any law for the time being in force in respect of any instrument executed by or on behalf of a cooperative society or by an officer or member thereof and relating to the business of such society, or any class of such instruments or in respect of any award or order made under this Act, in cases ,where , but for such remission the co-operative society, officer or member , as the case may be, would be liable to pay such stamp duty;
(b) any fee payable under any law for the time being in force relating to the registration of documents or court fees.
Explanation :- In this sub-section Government means in relation to stamp duty in respect of bill of exchange, cheques, promissory notes , bills of loding, letters of credit, policies of insurance, transfer of shares, debentures, proxies and receipt, the Central Government and save as aforesaid the Government.
(3) The Government may, by notification , except any class of cooperative
societies from-
(a) land revenue;
(b) taxes on agricultural income;
(c) taxes on sales or purchase of goods; and
(d) taxes on profession, trades, calling and employments.
39. Deduction from salary to meet co-operative societies claim in certain cases. - (1) Notwithstanding anything contained in any law for the time being in force, a member of a co-operative society may execute an agreement in favour of the society providing that his employer shall be competend to deduct from the salary or wages payable to him by the employer, such amount as may be specified in the agreement and to pay the amount so deducted to the society in satisfaction of any debt or other demand owing by the member to the society.
(2) On the execution of such agreement, the employer shall, if so required by the co-operative society by a requisition in writing and so long as the society does not intimate that the whole of such debt or demand has been paid, make the deduction in accordance with the agreement and pay the amount so deducted to the society, as if it were a part of the salary or wages Act, 1936(IV of 1936). Such payment shall be valid discharge of the employer for his liability to pay the amount deducted.
(3) if after the receipt of a requisition made under sub-section(2), the employer at any time fails to deduct the amount specified in the requisition form the salary or wages payable to the member concerned or makes default in remitting the amount deducted to the society, the society shall be entitled to recover any such amount from the employer as arrears of land revenue and the amount so due from the employer shall rank in priority in respect of the liability of the employer equal to that of the wages in arrears.
40. Other forms of State aid to Co-operative Societies: - Notwithstanding anything contained in any law for the time being in force, the Government may-
(a) subscribe to the share capital of a co-operative society;
(b) give loans or make advances to co-operative society;
(c) guarantee the repayment of principal and payment of interest on debentures issued by a co-operative society;
(d) guarantee the repayment of the share capital of a co-operative society and dividends thereon at such rates as may be specified by the Government;
(e) guarantee the repayment of principal and payment of interest on loans and advances to a co-operative society; and
(f) give financial assistance in any other form, including subsidies, to any co-operative society.
Properties and Funds of
co-operative Societies
41. funds not be divided by way of profit: - No part of the funds of a co-operative society shall be divided by way of bonus or dividend or otherwise among its members;
Provided that after least one-tenth of the net profits in any year have been carried to the reserve funds, payments from the remainder of such profits and from any profits of past years available for distribution may be made among the members to such extent and under such conditions as may be prescribed by the rules or bye-laws;
42. Contribution to charitable purpose :- Any co-operative society may, with the sanction of the Registrar, after one tenth of the net profits in any year has been carried to the reserve fund contribute an amount not exceeding five percent of the remaining net profits to any purpose connected with the development of co-operative movement or charitable purpose as defined in Section 20 of the Charitable Endowments Act, 1980 (VI of 1980) .
43. Contribution to co-operative Education Fund: - A co-operative society shall out its net profits in any year credit such portion of the profits not exceeding 5 percent as may be prescribed to the Co-operative Education Fund constituted under rules.
44. Investments of funds (1) A co-operative Society may invest or deposit its fund-
(a) in the post office savings bank or
(b) in any of the securities specified in Section 20 of the Indian Trust Act, 1882; or
(c) in the share or securities of any other co-operative society; or
(d) with any bank carrying on the business of banking approved for this purpose by the Registrar; or
(e) in any other mode permitted by the rules.
(2) Any investment or deposits made before the commencement of this Act which would have been valid if this Act had been in force are here by ratified and confirmed.
45. Restriction on loans: (1) A co-operative society shall not make loan to any person other than a member
Provided that with the general or special sanction of the Registrar a co-operative society may make loan to another co-operative society.
(2) Notwithstanding anything contained in sub-section (1), a co-operative society may make a loan to a depositor on the security of his deposit.
46. Restrictions on borrowings:- A co-operative society shall receive deposits and loans only to such extent and under such conditions as may be prescribed or as may be specified in the bye laws.
47. Restrictions on other transactions with non-members: Save as is provided in Sections 45 and 46, the transaction of co-operative society with person other than member shall be subject to such prohibitions and restrictions, if any, as may be prescribed.
Audit, Inquiry, Inspection and Surcharge
48.
Audit : - (1) The registrar shall audit
or cause to be audited by a person authorised by him by general order in
writing in this behalf, the accounts of every co-operative society at least
once in each year,
(2) The audit under sub-section (1) shall include an examination of over-due debts, if any, the verification of the cash balance and securities, and a valuation of the assets and liabilities of the societies.
(2) The person auditing the accounts of a co-operative society shall have free access to the books, accounts, papers, vouchers, stock and other property of such society and shall be allowed to verify its cash balance and securities.
(3) The director, managers, administrators and other officers of the society shall finish to the person auditing the accounts of a co-operative society all such information as to its transactions and working as such person may require.
(4) The Registrar or the person authorised by him under sub-section (1) to audit the accounts of. A co-operative society shall have power where necessary-
(a) to summon at the time his audit any officer , agent, servant or member of the society, past or present , who he has reason to believe can give valuable information in regard to transactions of the society or the management of its affairs; and
(b) to require production of any book or document relating to the affairs of, or any cash or securities belonging to the society by officer, agent, servant, or member in possession of such books, documents, cash or securities and in the event of serious irregularities discovered during audit to take them into custody.
(5) If at the time of audit the accounts of a society are not complete, the Registrar or the person authorised by him under sub-section (1) to audit, may cause the account to be written up at the expense of the society.
(6) Audit fee, if any due from any co-operative society shall be recoverable in the same manner as is provided in Section 67.
49. Inspection of societies: The Registrar, or any person authorised by general or special order in this behalf by the Registrar, may inspect a co-operative society. For the purpose of inspection, the Registrar or the person so authorised by the Registrar shall at all times have access to all books, accounts, papers, vouchers, securities, stock and other property of the society and may in the event of serious irregularities discovered during inspection take them into custody and shall have power to verify the cash balance of the society and subject to the general or special order of the Registrar to call committee and general meeting. Every officer or member of the society shall furnish such information with regard to the working of the society as the Registrar or the person making such inspection may require.
50. (1) Inquiry by Registrar: The Registrar may of his own motion or on the application of a majority of the committee or of not less than one third of the members, hold an inquiry or direct some person authorised by him by order in writing in this behalf to hold an inquiry into the constitution, working and financial condition of a co-operative society.
(2) The Registrar or the person authorised by him under sub-section (1) shall have the following power, namely :-
(a) he shall at all times have, for purpose of examination, free access to the books, accounts, cash and other properties belonging to or in 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 at any place within the district within which the society has its registered address, *[and may it considered necessary, by an order in writing, direct the society to hand over to him all such, books, accounts documents and securities as may be specified in the order];
(b) he may, notwithstanding any rule or bye-law specifying the period of notice for a general meeting of the society, require the officers of the society to call a general meeting at such time and place at headquarters of the society to consider such matters, as may be directed by him; and where the officers of the society refuse or fail to call such a meeting he shall have power to call it himself:
(c) he may summon any person who is reasonably believed by him to have any knowledge of the affairs of the society to appear before him at any place at the head quarters of the society or any branch thereof and may examine such person on oath.
(3) Any meeting called under clause (b) of sub-section (2) shall have all the powers of a general meeting called under bye-laws of the society and its proceedings shall be regulated by such bye-laws.
(4) The Registrar shall communicate a brief summary of the report of the inquiry to the society the financing institutions, if any, to which the society is affiliated, and to the persons or authority, if any, at whose instance the inquiry is made.
51. Inspection of books of indebted societies: (1) The Registrar on the application of a creditor of a co-operative society, inspect or direct same person authorised by him by order in writing in this behalf to inspect the books of the society:
Provided that no such inspection shall be made unless the applicant-
(a) satisfies the Registrar that the debt is a sum then due, and that he has demanded payment thereof and has not received satisfaction within a reasonable time; and
(b) deposits with the Registrar such sum as security for the costs of proposed inspection as the Registrar may require.
(2) The Registrar shall communicate the result of any such inspection to the creditor.
52. Costs of inquiry:- Where an inquiry is held under section 50. Or an inspection is made under Section 51, the Registrar may apportion the costs, or such part of the costs, as he may think fit between the society, the members or creditor demanding an inquiry or inspection, and the officers or former officers and the members or past members of the society:
Provided that
(a) no order of the apportionment of the costs shall be made under this section unless the society or the person liable to pay the costs thereunder has had a reasonable opportunity of being heard;
(b) the Registrar shall state in writing under his own hand the ground on which the costs are apportioned
53. Recovery of costs:- Any sum awarded by way of costs under section 52 may be recovered, on application to a magistrate having jurisdiction in the place where the person, from whom the money is claimed, actually and voluntary resides or carries on business, and such magistrate shall recover the same as if it were a fine imposed by himself.
54. Surcharge.-(1) If in the course of an audit, inquiry, inspection or the winding up of a co-operative society it is found that any person, who is or was entrusted with the Organisation or management of such society or who is or has at any time been an the Officer or an employee of the society, has made any payment contrary to this Act, the rules of the bye-laws or has caused any deficiency in the assets of the society by breach of trust of willful negligence or has misappropriated of fraudulently, retained any money or other property belonging to such society, the Registrar may of his own motion or on the application of the committee, liquidator or any creditor, enquiry himself or direct a person authorised by him, by an order in writing in this behalf, to enquiry into the conduct of such person:
Provided that no such inquiry shall be held after the expiry of six years from the date of any act or omission referred to in this sub section.
(2) Where an inquiry is made under sub-section (1) Registrar may, after giving the person concerned an opportunity of being heard, make an order requiring him to repay or restore the money or property or any part thereof, with interest at such rate, or to pay contribution and cost or compensation to such extent, as the Registrar may consider just and equitable.
Settlement of Disputes
55. Disputes which may be referred to arbitration (1) Notwithstanding anything contained in any law for the time being in force, if any dispute touching the constitution, management or the business of a co-operative society arises-
(a) Among members, past members and persons claiming through members, past members and deceased members; or
(b) between a member, past member or person claiming through a member, past member or deceased member and the society, its committee or any officer, agent or employee of the society or liquidator, past or present; or
(c) between the society or its committee and past committee, any officer, agent or employee, or any past officer, agent or past employee or the nominee, heirs or legal representatives of any deceased officer, deceased agent, or deceased employee of the society; or
(d) between the society and any other co-operative society, between a society and liquidator of another society or between the liquidator of one society and the liquidator of another society.
Such disputes shall be referred to the Registrar for the decision and no court shall have jurisdiction to entertain any suit or other proceeding in respect of such dispute.
(2) For the purpose of sub-section (1) , the following be deemed to be disputes touching the constitution, management or the business of cooperative society, namely-
(a) a claim by the society for any debt or demand due to it form a member or the nominee, heirs or legal representatives of a deceased member, whether such debt or demand be admitted or not;
(b) a claim by a society against the principal debtor where the society has recovered from the surety any amount in respect of any debt or demand due to it from the principal debtor as a result of the default of the principal debtor, whether such debt or demand is admitted or not;
(c) any dispute arising in connection with the election of any Officer of the society.
(3) if any question arises whether a dispute referred to the registrar under this section is or not a dispute touching the constitution, management or the business of a co-operative society, the decision thereon of the Registrar shall be final and shall not be called in question in any Court.
56. Reference of disputes to arbitration:- (1) The registrar may, on receipt of the reference of dispute under section 55:-
(a) decide the dispute himself; or
(b) transfer it for disposal to any person who has been invested by the Government with powers in that behalf; or
(c) refer it for disposal to one arbitrator .
(2) The Registrar may withdraw any reference transferred under clause (b) of sub-section (1) or referred under clause (c) of that sub-section and decide it himself or refer the same to another arbitrator for decision.
(3) The Registrar or any other person to whom a dispute is referred for decision under this Section may, pending the decision of the dispute, make such interlocutory orders as he may deem necessary in the interest of justice.
57. Winding up of co-operative societies:- (1) if the Registrar, after an inquiry had been help under section 50, or an inspection has been made under section 51, or on receipt of an application made by not less than-fourths of the members of a co-operative society, is of opinion that the society ought to be wound up, he may issue an order directing it to be wound up.
(2) The Registrar may of his own motion make an order directing the winding up of a co-operative society-
(a) where it is a condition of the registration of the society that the society shall consist of at least ten members and the number of members has been reduced to less than ten: or
(b) where the co-operative society has not commenced working or has ceased to function in accordance with co-operative principles.
(3) The Registrar may cancel an order for the winding up of a co-operative society, at any time, in any case where, in his opinion, the society should continue to exist.
(4) A copy of such order shall be communicated by registered post to the society and to the financing institutions, if any, of which the society is a member.
58. Liquidator:-(1) Where the Registrar has made an order under Section 52 for the winding up of a co-operative society, he may appoint a liquidator for the purpose and fix his remuneration.
(2) A liquidator shall, on appointment takes into his custody his control all the property, effects and actionable claim to which the society is or appears to be entitled, and shall take such to steps age nay deem necessary if expedient to prevent loss or the deterioration of, or damage to such property. Effects and the claims. He may carry on the business of the society so far as may necessary with the previous approval of the Register.
(3) Where an appeal is preferred under Section 68 an order of the winding up of a co operative society made under Section 57shall not operate thereafter until the order is confirmed in the
Provided that the liquidator shall continue to have custody or the control of the property, effects and actionable claims mentioned in sub section (2) and have authority to take the steps referred to in that sub section.
(4) Where an order of winding up of an co operative society is set aside in appeal. The property, effects and the actionable claims of the society shall re-vest in the society.
59. Powers of Liquidator:- (1) Subject to any rules made inn this behalf, the whole of the assets of a co operative society, in respect of which an order for winding up has been made, shall vest in the liquidator appointed under section 58from the date on which order takes effect and the liquidator shall have power to realize such assets by sale or other wise.
(2) Such liquidator shall also have powers, subject to the control of the registrar.
(a) to institute and defends suits and other legal proceeding on behalf of the co operative society by the name of his office;
(b) To determine from time to time the contribution (including debts due and cost of liquidation ) to be made or remaining to be made by the members or past members or by the estates or nominees heirs or legal representatives of deceased members or by any officers or farmers officers , to the assets of the society ;
(c) To investigate all claims against the co operative society and subject to the provision of this Act, to decide question of priority arising between claimants. ;
(d) to pay claims against the co-operative society, interest up to the date of winding up according to their respective priorities, if any, in full or ratably, as the assets of the society may permit; the surplus, if any remaining after payment of the claims being applied in payment of interest from the date of such order of winding up at a rate fixed by him but not exceeding the contract rate in any case;
(e) to determine by what persons and in what proportions the costs of the liquidation are to be borne;
(f) to determine whether any person is a member, past member, or nominee of deceased member;
(g) to give such directions in regard to the collection and distribution of the assets of the society as may appear to him to be necessary for winding up the affairs of the society;
(h) to carry on the business of the society so for may be necessary for the beneficial up of the same;
(i) to make any compromise or arrangement with creditors or persons claiming to be creditors or having or alleging to have any claim, present or future, whereby the society may be rendered liable;
(j) to make any compromise or arrangement with any person between whom and the society there exists any dispute and to refer any such display to arbitration;
(k) after consulting the member of the society, to dispose of the surplus, if any, remaining after paying the claims against the society, in such a manner as may be prescribed; and
(l) to compromise all calls or liabilities to call and debts and liabilities and capable or resulting in debts, and all claims present or future, certain or contingent, subsisting or supposed to subsist between the society and a contributors or alleged contributors or other debtor or person apprehending liability to the co-operative society and all question in any way relating to or affecting the assets or the winding up, of the society on such terms as may be agreed and take any security for the discharge of any such call, liability, debt or claim and give a complete discharge in respect thereof.
(3) When the affairs of a co-operative society have been wound up, the liquidator shall make a report to the Registrar and deposit the records of the society in such place as the Registrar may direct.
60. Priority of contributions assessed by liquidator:- Notwithstanding any thing contained in the Provincial insolvency Act, 1920, the contribution assessed by a liquidator shall rank next to debts due to the Government or to any local authority in order of priority in insolvency proceeding.
61 Power of
registrar to cancel registration of a co-operative Society :-
(1) The Registrar may after considering the report of the liquidator made to him under sub-section (3) of Section 59 order the registration of the co-operative society to be cancelled.
(2) An order passed under sub-section (1) shall be communicated by registered post to the President of the society and to the financing institution, if any, of which the society was a member.
Execution of Award,
decrees, Orders and Decisions.
SECTION-62
62. Enforcement of charge:- Notwithstanding anything contained in Chapter VIII or any other law for the time being in force, but without prejudice to any other made of recovery provided in this Act, the Registrar or any person subordinate to him empowered by the Registrar in this behalf may, on the application of a co-operative society, make an order directing the payment of any debt or outstanding demand due to the society by any member or past member or deceased member, by sale of the property or any interest therein, which is subject to a charge under Section 31:
Provided that no order shall be made under this section unless the member, past member or the nominee, heir or legal representative of the deceased member, has been served with a notice in the manner prescribed.
*63. Execution of certain decision, awards and orders.-Every decision, award or order duly passed under Section 54, 56, 62 or 69 shall, if not carried out-
(a) on a certificate signed by the 3Registrar or any person authorised by him in this behalf, be deemed to be a decree of a civil court, and shall be executed in this same manner a decree of such Court; or
(b)
be executed by the Registrar or
any other person subordinate to him, empowered by the Registrar in this behalf,
by the attachment and sale or by sale without attachment of any property to the
person or of the co-operative society against whom the order, decision or award
has been obtained or passed; or
(c)
be executed according to the law
for the time being in force for the recovery of arrears of land revenue :
Provided that an application for the recovery of any sum in the last aforesaid manner shall be made to the Collector and shall be accompanied by a certificate signed by the Registrar or any person authorized by him in this behalf.
64. Execution of orders of liquidator. The orders of the liquidator under Section 59shall be executed according to the Act and under the rules for the time being in force for the recovery of arrears of land revenue.
65. Attachment before award. Where the Registrar is satisfied that a party to any reference made to him under Section 55 intent to defeat or delay the execution of any decision that may be passed thereon is about to-
(a) dispose of the whole or any part of the property; or
(b) remove the whole or any part of the property from the local limits of the jurisdiction of the Registrar, the registrar may, unless adequate security is furnished, direct the conditional attachment of the said property or such part thereof as he thinks necessary. Such attachment shall be executed by a Civil court having jurisdiction in the same way as an attachment order passed by itself and shall have the same effect as such an order :
Provided that the powers of the Registrar under this Section shall not be delegated to any officer below such rank as may be prescribed.
66. Registrar or person empowered by him to be civil Court for certain Purposes. The Registrar or any person empowered by him in this behalf shall be deemed, when exercising any powers under this Act for the recovery of any amount by the attachment and sale or by the sale without attachment of any property, or when passing any orders on any application made to him for such recovery for taking a step-in-aid of such recovery, to be civil Court for the purposes of Article 182 of the first schedule to the Indian Limited Act, 1908 (9 of 1908).
67. Recovery of sums due to government.- (1) All sums from a co-operative society, or from an officer or member or past member of a co-operative society as such, to government, including any costs awarded to government under any
Provision of this Act, may on a certificate issued by the Registrar in this behalf, be recovered in the same manner as arrears of land revenue.
(2) Sums due from a co-operative Society to Government and recoverable under sub-section (1) may be recovered, firstly from the property of the society, secondly, in this case of a society the liability of the members of which is limited, from the members, past members or the estates of deceased members, subject to the limit of their liability ; and , thirdly, in the case of other societies, from the members, past members or the estate of the deceased members;
Provided that the liability of past members and the estates of deceased members shall in all cases be subject to the provisions of Section 22.