An Act to provide for the voluntary formation of Cooperative Societies as apolitical, accountable, competitive, self-reliant business enterprises based

on thrift, self-help and mutual aid and owned, managed and controlled by members of common economic interests/needs for their economic and social betterment and to provide for functional autonomy and for matters connected therewith and incidental thereto.

CHAP !" - #

Preliminary
Section $% Preamble

In order to facilitate the voluntary formation and democratic functioning of Co-operative Societies as peoples institutions based on self-help, thrift and mutual aid and enable people to promote their economic and social betterment, the legislature of the State of Andhra Pradesh, in the Sixty First year of the epublic of India, do hereby, enact as follo!s"

Section &%

State Policy on Co-operatives

It shall be the policy of the State to promote Co-operative Societies as instruments of e#uity, social $ustice and economic development in fulfillment of the %irective Principles of State Policy as enshrined in the Indian Constitution& 'he role of the (overnment shall be mainly limited to enacting suitable legislation providing for timely conduct of elections, audit of the Co-operative societies and incorporate measures to safe-guard the interests of the members and other sta)e-holders in them& 'he State shall not interfere in the internal management and operation of the Co-operative Society& 'o!ards this end, the state shall recognise Co-operative Societies as democratic institutions o!ned, managed and controlled by members for their economic and social betterment, operating their business based on mutual aid and Co-operative Principles&

Section '%
Principles

Co-operative Principles

The co-operative principles are guidelines by which co-operatives put their values into practice. $st Principle% (oluntary and )pen *embership Co-operatives are voluntary organi*ations, open to all persons able to use their services and !illing to accept the responsibilities of membership, !ithout gender, social, racial, political or religious discrimination&

&nd Principle% +emocratic *ember Control Co-operatives are democratic organi*ations controlled by their members, !ho actively participate in setting their policies and ma)ing decisions& +en and !omen serving as elected representatives are accountable to the membership& In primary co-operatives members have e#ual voting rights ,one member, one vote- and co-operatives at other levels are also organi*ed in a democratic manner&

'rd Principle% *ember !conomic Participation +embers contribute e#uitably to, and democratically control, the capital of their co-operative& At least part of that capital is usually the common property of the co-operative& +embers usually receive limited compensation, if any, on capital subscribed as a condition of membership& +embers allocate surpluses for any or all of the follo!ing purposes" developing their co-operative, possibly by setting up reserves, part of !hich at least !ould be indivisible. benefiting members in proportion to their transactions !ith the co-operative. and supporting other activities approved by the membership&

,th Principle% Autonomy and #ndependence Co-operatives are autonomous, self-help organi*ations controlled by their members& If they enter into agreements !ith other organi*ations, including governments, or raise capital from external sources, they do so on terms that ensure democratic control by their members and maintain their co-operative autonomy&

-th Principle% !ducation,

raining and #nformation

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

.th Principle% Co-operation among Co-operatives Co-operatives serve their members most effectively and strengthen the co-operative movement by !or)ing together through local, national, regional and international structures&

/th Principle% Concern for Community Co-operatives !or) for the sustainable development communities through policies approved by their members& of their

Section ,% Co-operative (alues (alues

Co-operatives are based on the values of self-help, selfresponsibility, democracy, e#uality, e#uity and solidarity& In the tradition of their founders, co-operative members believe in the ethical values of honesty, openness, social responsibility and caring for others&

Section -% Short title, e0tent and commencement

,/,0,2'his Act may be called A&P& Co-operative Societies Act, 01/1& It extends to the !hole of the State of Andhra Pradesh& It shall come into force on such date the (overnment may, by notification in the A&P& (a*ette, appoint and from such date the Andhra Pradesh Cooperative Societies Act, /345 and the ules framed thereunder and the Andhra Pradesh +utually Aided Co-operative Societies Act, /336 shall stand repealed&

Section .% Saving of e0isting Co-operative Societies

,/7very co-operative society !hich has been registered under the A&P& Co-operative Societies Act 8 of /345 or under the A&P& +utually Aided Co-operative Societies act of /336 shall be deemed to have been registered under the corresponding provisions of this Act and byela!s framed thereof so far as the same are not inconsistent !ith the express provisions of this Act and continue in force until altered or rescinded& ,0All appointments and orders made, notifications and notices issued and suits and other proceedings instituted under the above said Acts, shall so far as they are consistent !ith the provisions of this Act be deemed to have been respectively made, issued, and instituted under this Act& ,2All guarantees given by the government for the debentures floated by the A&P& State Co-operative 9an) and its predecessors and other guarantees !here excess loan has been issued over and above the entitlement on the basis of value of land mortgaged, are confirmed and the role, functions and po!ers of the 'rustee and the board of A&P& State Co-operative 9an) in regard to issue of debentures and the charge accruing in favour of debenture-holders on mortgages and assets transferred to the said 9an) and the priority of mortgages in favour of Financing 9an): Primary Agricultural Co-operative Society over any claim of the (overnment and right of the A&P& State Co-operative: Financing 9an): Primary Agricultural Co-operative Society to purchase mortgaged property shall stand including the provisions in the 'rust %eed executed bet!een the A&P& State Co-operative and the 'rustee, till all the debentures in circulation as on date are redeemed& ,57very co-operative society registered under this Act shall !ithin a period of one year from the date of coming into force of this Act delete or amend such byela!s, as are inconsistent !ith the provisions of this Act and ma)e such further byela!s as may be necessary having regard to the provisions of this Act&

Section /%

+efinitions

In this Act, unless the context other!ise re#uires" ,/,0;Act< means the A&P& Co-operative Societies Act 01/1. ;Active +ember< is one !ho participates in the affairs of the Co-operative society using its services as prescribed in the byela!s of the Co-operative Society. 4

,2-

;Apex Co-operative Society< means a society !hose area of operation extends to the !hole of State and !hich has as its principal ob$ect the promotion of principal ob$ects of its affiliated societies and the provision of facilities for their operations !ithout running into competition inter-se& ;Associate member< means an individual or informal group !or)ing for similar ob$ective of a society of !hich associate membership is sought for, provided such member shall not be entitled to vote or to any share in the profits or assets of the society provided this shall not be made applicable to Agricultural Co-operative Credit Societies !hich are governed by special provisions in Chapter =>I& ;area of operation< means the area from !hich the membership is dra!n irrespective of the geographical boundaries of business operations. ;board< means the board of directors or the governing body of a Co-operative society, by !hatever name called, to !hich the direction of the affairs of the society is entrusted as per the byela!s. ;bye-la!s< means the bye-la!s of a co-operative society as originally registered or deemed to have been registered under this Act for the time being in force and includes amendments thereto !hich have been duly registered or deemed to have been registered under this Act. ;Chief 7xecutive< means an individual in a Co-operative Society in paid or honorary capacity, nominated or elected or appointed by the board of the Co-operative Society from among members or directors or others, in accordance !ith the bye-la!s, !ho is the person to sue or to be sued on behalf of the Co-operative society and !ho performs such functions sub$ect to superintendence, control and direction of 9oard and has such responsibilities as are specified in this Act and the byela!s and as are assigned by the 9oard. ;Chief Promoter< means a person !ho is chosen by the applicants to the registration of a co-operative society from among themselves and !ith !hom the egistrar

,5-

,6-

,4-

,8-

,?-

,3-

may correspond on the application& ,/1- ;common need:interest< means that specific economic need: interest !hich is common to all the applicants !ho have $oined the application for registration of a cooperative society& ,//- ;Co-operative Credit Society< means the Andhra Pradesh State Co-operative 9an) @APCA9B, the %istrict Co-operative Central 9an) @%CC9B and the Primary Agricultural Co-operative Credit Society @PACSB& A Primary Agricultural Co-operative Credit Society includes Farmers Service Co-operative Society @FSCSB, Cooperative ural 9an) @C 9B, Carge Si*ed Co-operative Society @CSCSB or any other Co-operative Credit Society primarily dealing !ith agricultural credit, allied activities and rural enterprises at primary level. ,/0- ;Cooperative Principles< means the principles as approved by the International Cooperative Alliance and specified in section ,2- of this Act& ,/2- ;Co-operative Society< means an autonomous association of persons united voluntarily to meet their common needs and aspirations through a $ointly-o!ned and democratically controlled enterprise and adhering to the Co-operative Principles and values, registered or deemed to be registered under this Act. or under any la! relating to co-operative societies for the time being in force in any State or the Centre. ,/5- ;Core Services< means those central services provided to members through !hich the Co-operative society intends to meet that economic need common to all members for the fulfillment of !hich the Co-operative society !as established and the fulfillment of !hich is expected to result in the economic and social betterment of members including value added services& ,/6;Creditor< means a person or a body corporate institution to !hom a debt is o!ed. or

,/4- ;%ecree< means any decree of a civil court and includes any decision or order or a!ard referred to in Section ,81- of the Act& ,/8- ;%ecree holder< means any society or person including the (overnment holding a decree&

,/?- ;%efault< means failure on the part of a Co-operative society, member or other person, to repay to the financing ban) or any other Co-operative society a loan or any other amount due to it !ithin the time limits fixed for repayment, or return to the Co-operative society !ithin the time fixed, the finished goods in respect of !hich ra! material is advanced or to )eep any other obligation for the fulfillment of !hich a time limit has been specified in the byela!s. ,/3- ;%efaulter<, means any Co-operative society, member or other person committing default. ,01;%eficit< means the excess of expenditure over income arrived at the end of a financial year after the payment of %ividend, if any, on Share Capital&

,0/- ;%eficit charge< means the amount collected from: debited to the accounts of members in proportion to the use and:or non-use of the services of the Co-operative Society in accordance !ith its byela!s and resolutions of the (eneral 9ody, to meet deficit, if any, in !hole or part& ,00- ;%elegate< means a member nominated by a Cooperative society to represent its interests at (eneral meetings of another Co-operative society of !hich the Co-operative society is a member. ,02- ;%eposit Insurance Corporation< means the %eposit Insurance and Credit (uarantee Corporation established under Section 2 of the %eposit Insurance Corporation Act /34/ @58 of /34/B. ,05- ;%irector< means a member elected or nominated in accordance !ith the byela!s to the 9oard of the Cooperative society& ,06- ;%ividend< means a share of the profit of the cooperative society divided among its members in proportion to the share capital held by each of them. ,04- ;7lection Authority< means the regulatory body constituted by the (overnment under this Act for the

purpose of ensuring timely conduct of, transparent and fair elections to the co-operative societies in the State. ,08- ;Federal Co-operative society< means a co-operative society !hose membership is available only to Cooperative Societies. ,0?;Financial year< means the period commencing on the first day of April of any year and ending !ith the 2/st day of +arch of the succeeding year.

,03- ;Financing 9an)< means a Co-operative society the main ob$ect of !hich is to assist any affiliated or other Co-operative society by giving loans or advancing moneys. and includes any scheduled ban) as defined in the eserve 9an) of India Act /325 @Central Act 0 of /325B and such other body corporate or financial institution as may be notified by the (overnment from time to time, !hich gives financial or other aid to a cooperative society. ,21- ;Form< means a Form appended to this Act. ,2/- ;Functional %irector< means an officer other than +anaging %irector: Chief 7xecutive of the ran) of %irector or above allo!ed to be member of the 9oard of a Co-operative Society as per its bye-la!s, but shall not have voting rights in the affairs of co-operative Society except in matters !hich relate to his speciali*ation for offering advice. ,20- ;(eneral 9ody< in relation to a Co-operative society means all the members of that society and in relation to a federal Co-operative society means all the delegates of the member Co-operative societies and includes a smaller body elected or selected in accordance !ith the bye-la!s to exercise such po!ers of the general body, as may be specified therein. ,22- ;(eneral +eeting< means a meeting of the general body of the Co-operative society and includes special general meeting . ,25- ;(overnment< means the State (overnment of Andhra Pradesh.

,26- ;Dudgment %ebtor< means any Co-operative society against !hich or any person against !hom a decree has been obtained. ,24- ;+ember< means a person admitted to membership after registration in accordance !ith the provisions of this Act: byela!s. ,28- ;EA9A %< means the Eational 9an) for Agriculture F ural %evelopment established under the Eational 9an) for Agriculture and ural %evelopment Act, /3?/ @4/ of /3?/B. ,2?- ;Eotification< means a notification published in the AP (a*ette. ,23- ;Affice-bearer< means a President or >ice-President, Chair person, >ice Chairperson, Secretary or a 'reasurer and include any other person to be elected by the 9oard of any co-operative society. ,51- ;Afficer< means a President, >ice-President, Chairperson, >ice-Chairperson, +anaging %irector, Secretary, +anager, member of a board, treasurer, li#uidator, an administrator appointed under section ,64- and includes any other person empo!ered under this Act or the bye-la!s to give directions in regard to the business of a Co-operative Society. ,5/- ;Ardinary esolution< means a resolution of the (eneral body !hich has the approval of the ma$ority of members !ith the right to vote, present and voting at the general meeting. ,50- ;Potential +ember< means a person !ho needs the core services being offered by a Co-operative society, may be accessing them, and is eligible to be a member of that Co-operative society, but is not yet its member. ,52- ;Presenting Afficer< means an officer of the Cooperation %epartment generally not belo! the ran) of Special Category %eputy egistrar appointed by the egistrar of Co-operative Societies to receive, on his behalf and on behalf of the State (overnment, notices issued by the Andhra Pradesh Co-operative 'ribunals and, to present the case: records pertaining to (overnment and its officers, to appear, act and plead on his behalf and on

behalf of the State (overnment in all proceedings before the said 'ribunals and includes any Afficer authori*ed by the egistrar of Co-operative Societies for the said purpose& ,55- ;Primary Co-operative Society< means a Society !hose membership consists of ",a- Individuals. or ,b-individuals and (overnment. or ,c- the individuals and homogenous groups, not belonging to the same class. or ,d- individuals and the financing ban). ,56- ;Professional %irector< means a person appointed as %irector to the 9oard of a Cooperative by virtue of his being an expert in the field of accounting, finance, management, ban)ing or any other speciali*ed field relating to the activities of the Co-operative Society !ho can be either elected or co-opted& ,54- ;Promoter< means a person !ho has singed the application for the registration of a Co-operative society& ,58- ; egistrar of the %istrict< means a person authori*ed by the egistrar to exercise in the district or any portion thereof, po!ers of egistrar under Section ,?6- of this Act& ,5?- ; eorgani*ation< means change in the structure of a cooperative society through merger:amalgamation:conversion into another Co-operative Society&

,53- ; epresentative< means a person elected or selected by a section of members, in accordance !ith the byela!s, to participate on their behalf at the representative general body meeting& ,61; epresentative general body< in relation to a Cooperative Society means all the representatives&

10

,6/; epresentative general body meeting< means a meeting of the representatives called and conducted in accordance !ith the provisions of this Act and byela!s of the society& ,60; eserve 9an)< means the eserve 9an) of India constituted under the eserve 9an) of India Act /325 @0 of /325B& ,62;Sale Afficer< means, an officer of the co-operative department or an officer of any co-operative society empo!ered by the egistrar by general or special order to attach and sell the properties of Dudgment debtor or to execute any decree, decision or order by attachment and sale of property. ,65- ;Schedule< means schedule appended to the Act. ,66;Secondary Co-operative Society< means a Cooperative Society !hose members are co-operative societies. ,64;Section< means, a section of this Act.

,68;Secured creditor< means a person as defined in this Act, !ho holds some security, such as a mortgage:hypothecation: charge, for the money he has lent. ,6?- ;special resolution< means a resolution of the (eneral 9ody, at a meeting called !ith at least /6 days notice, !hich has the approval of more than half of all the members of the Co-operative society !ith right of vote at the time of the general meeting or of at least t!othirds of members present !ith right of vote in the general meeting !hichever is less. ,63- ;Surplus< means the excess of income over expenditure, arrived at the end of the financial year, after allocation of reserves and other funds including the payment of dividend, if any, on share capital. ,41;Surplus refund< means the refund from the surplus given: credited to the accounts of members, in proportion to their use of the services of the Co-operative society in

11

accordance !ith the byela!s and resolutions of the (eneral 9ody. ,4/GSociety !ith limited liabilityG means a society in !hich the liability of its members for the debts of the society in the event of its being !ound up is limited by its bye-la!s. ,a- to the amount, if any unpaid on the shares held by each of them. or ,b-to such amount as they may underta)e to contribute to the assets of the society. ,40;Co-operative 'ribunal< means a 'ribunal constituted under section ,8/- and having $urisdiction. ,42;'urnover< means money value of goods sold: or loans issued. ,45;Hnsecured Creditor< means a persons !ho has lent money !ithout obtaining any security, li)e the depositor. ,46!ords and expressions defined in the Act and used but not defined in the byela!s of co-operative societies shall have the meanings respectively assigned to them in the Act&

12

CHAP !"1## #2C)"P)"A #)2

Section 3% Appointment of "egistrar

,/'he (overnment may appoint a person to be the egistrar of Co-operative Societies for the State for the purposes of this Act and may appoint such other persons as it may thin) fit to assist the egistrar& ,0'he (overnment may, by notification, direct that any po!er exercisable by the egistrar under this Act shall, in relation to such society, and such matters as may be specified in the notification, be exercisable by the Afficers assisting the egistrar sub$ect to the general supervision and control by the egistrar& ,2'he term of office of a egistrar shall be at least three years&

Section 4% )rgani5ations which may be registered

,/An organi*ation !hich has, as its main ob$ect, the promotion of the social and economic betterment of its members in accordance !ith the Co-operative principles or a federal society established !ith the ob$ect of facilitating the operation of such a society, may be registered under this Act& ,0A Co-operative Society shall be registered !ith limited liability& ,27very Co-operative Society registered or deemed to be registered and:or continued under this Act shall function sub$ect to such directions as may be issued by the egistrar, from time to time, in the interests of the Co-operative movement or the public interest or in order to prevent the affairs of the Society from being conducted in a manner detrimental to the interests of the members or of the depositors or creditors thereof, and the society shall comply !ith such directions&

Section $6%

Application for registration of a Co-operative Society

,/An application for the registration of a Co-operative Society shall be made to the egistrar in Form @/B either in person or through registered post or Anline through electronic medium& 13

,0-

'he application shall be signed, ,ain the case of a Co-operative society of !hich all the members are individuals, by at least /1 persons each being a member of different family and every one of them possessing eligibility to become a member under the provisions of this Act. In the case of a Co-operative society of !hich the members are Co-operative societies, by duly authori*ed representatives on behalf of at least five such societies&

,b-

,2-

'he application shall be accompanied by" ,a- four copies of the proposed byela!s of the Cooperative society duly signed by each of the persons by !hom or on !hose behalf such application is made duly incorporating therein the core services of the proposed co-operative society in its ob$ects. ,b- a list of persons !ith their addresses and occupation !ho have contributed to the Share Capital together !ith the admission fee paid by each of them. ,c- a s!orn statement in promoters. Form @0B by each of the

,d- evidence in proof of contribution made by the Promoters to!ards the Share Capital of the proposed Cooperative Society. ,e- a copy of the minutes of the meeting at !hich the byela!s of the proposed co-operative society !ere adopted and duly signed by the promoters, !hich shall also specify the name and address of the Chief Promoter& ,5Ihere any promoter of a Co-operative society to be registered is a Co-operative society, a resolution authori*ing the Chairperson or a member by the 9oard of %irectors of the said Co-operative society, shall be appended to the application&

14

,6'he list of promoters of the first board elected by the promoting applicants& ,4A true copy of the minutes of the meeting at !hich the byela!s !ere adopted, duly signed by the Chairperson& ,8A copy of the resolution indicating the name of one or more applicants !ho are authori*ed to ma)e alterations or additions to the proposed byela!s shall be submitted !ith the application& ,?Challan in proof of having remitted egistration fee amounting to one percent of the authori*ed share capital sub$ect to a minimum of upees Ane thousand and maximum of upees ten thousand, in (overnment treasury under the relevant Jead of account& 7xplanation" ;+ember of family< means a !ife, husband, father, mother, grand-father, grand-mother, step father, step mother, son, daughter, step son, step daughter, grandson, grand daughter, brother, sister, half brother, half sister and !ife of brother or half brother&

Section $$% "egistration of a Co-operative Society

An receipt of an application for registration of a Co-operative Society the egistrar shall enter the particulars of the application in the egister of applications to be maintained in Form @2B either manually or electronically and give a serial number to the application and issue a receipt in ac)no!ledgement thereof& ,/If the ,i,ii,iiiegistrar is satisfied that the application of the proposed Co-operative Society has complied !ith the provisions of this Act. that the proposed Co-operative society satisfies the basic criteria that its ob$ects are to serve the interests:needs of its members. that its byela!s provide for social and economic betterment of its members through the practice of thrift, self help and mutual aid in accordance !ith the Co-operative principles. that the proposed byela!s are not contrary to the provisions of this Act or any other Act relevant to the proposed activities of the Society, he may register the co-operative society and its byela!s&

,iv-

,0the

'he egistrar shall )eep a record of the registered bye-la!s of Co-operative Society, as amended from time to time and shall

15

ma)e available, on demand, a certified copy of the bye-la!s to any person on payment of fee prescribed by him& ,2'he application for registration shall be disposed off by the egistrar" a- in the case of a primary society !ith in a period of 56 days. b- and in the case of any other society !ithin a period of 41 days from the date of receipt of application& ,5Ihere the egistrar refuses to register a Co-operative society !ithin the above period, he shall communicate the order of refusal together !ith the reasons therefor to the Chief Promoter !ithin /6 days of such decision of refusal& Provided no order of refusal shall be made unless the Chief Promoter has been given a reasonable opportunity of being heard& Provided further that if the application for registration is not disposed off !ithin the above period or the egistrar fails to communicate the order of refusal !ithin /6 days thereafter, the application shall be deemed to have been accepted for registration and the egistrar shall issue egistration Certificate in accordance !ith the provisions of this Act&

Section $&%

"egistration Certificate

,/Ihere a Co-operative Society is registered, the egistrar shall issue a certificate of registration and byela!s registered signed and sealed by him !hich shall be conclusive evidence that the cooperative society has been duly registered under this Act, unless it is proved that the registration of the society is cancelled& ,0An receipt of egistration Certificate, the persons !ho have signed the application for the registration of the co-operative society shall conduct the affairs of the society for a period of three months from the date of registration or till the conduct of elections !hichever is earlier and shall cease to conduct the affairs of the society after the expiry of t!elve months or after constitution of a committee as per the provisions of the Act !hichever is earlier&

Section $'%

Society to be a body corporate

,/'he registration of a Co-operative Society shall render it a body corporate by the name under !hich it is registered having perpetual succession and a common seal and !ith po!er to ac#uire,

16

hold and dispose of property, both movable and immovable, enter into contract, institute and defend suits and other legal proceedings and to do all things necessary for the purposes for !hich it is constituted& ,0All transactions entered into in good faith prior to the registration of a Co-operative society, in furtherance of its ob$ectives, shall be deemed to be its transactions after registration& Jo!ever, acceptance of deposits, extending credit and purchase of fixed assets or trading in goods and services prior to registration shall not be deemed as transactions of the Society after registration&

Section$,%

+isplay of 2ame

,/7very Co-operative Society shall display its name and address of its registered office and the !ords ; egistered under A&P& Cooperative Societies Act, 01/1< in legible characters in a conspicuous position ,a- At the Jead Affice and every office or place at !hich it carries on its business. ,b-in all notices and other official publications. ,c- on all its contracts, business letters, orders for goods, invoices, statements of accounts, receipts and letters of credit. and ,d- on all bills of exchange, promissory notes, endorsements, che#ues and orders for money it signs or that are signed on its behalf& ,0'he name of every Co-operative Society shall contain the !ords KCo-operative Society and Klimited and their e#uivalent in 'elugu or Hrdu language&

Section $-% Classification of Societies

'he egistrar may classify the societies as follo!s and incorporate such classification in the certificate of registration" ,/-'hrift F Credit Society. ,0-9an)ing Society. ,2-+ar)eting Society. ,5-Producers F Sale Society. 17

,6-Processing F +anufacturing Society. ,4-Jousing society. ,8-Service Society. ,?-Construction F Cabour Contract Society. ,3-Co-operative Society for A!areness, 'raining F and ,/1- Consumer Society ,//- +iscellaneous societies

esearch.

For the purpose of this section, ;'hrift F Credit Society< means a society !hich has as its principal ob$ect raising of funds from its members or external borro!ings for the purpose of lending to its members& ;9an)ing Society< means a society !hich has a license from 9I to carry on ban)ing business and may be further categori*ed as Primary Agriculture Co-operative Society or Primary Co-operative Hrban 9an) or %istrict Co-operative Central 9an) or Apex Co-operative 9an)& ;+ar)eting Society< means a society, !hich has as its principal ob$ect the arranging for the mar)eting of agricultural and other produce or products of its members or the underta)ing of the distribution of commodities and includes any Co-operative Society !hich has as its principal ob$ect the provision of facilities for the operation of a mar)eting society. ;Producers and Sale Society< means a Co-operative Society !hich has as its principal ob$ect the promoting of the interest of a class of producer members including facilitation of production, processing and mar)eting& ;Processing F +anufacturing Society< means a Co-operative Society organi*ed !ith the principal ob$ect of underta)ing processing and manufacturing activities for the economic benefit of its members& ;Jousing society< means a Co-operative Society !hich has as its principal ob$ect of providing Jousing services including Jouse Plots and : or Jome Coans and : or Construction of houses and : or apartments& ;Service Society< means a Co-operative Society !hich is formed !ith an aim to underta)e any service activity to further the economic and : or social interests of its members& ;Construction F Cabour Contract Society< means a Co-operative Society formed to underta)e construction activity on commercial lines and : or to supply construction material or labour or any other )ind of s)illed manpo!er on contractual terms&

18

;Co-operative Society for A!areness, 'raining F esearch< means a Co-operative Society established !ith the ob$ect of creating a!areness about co-operative !ay of carrying out economic activity, providing training and : or underta)ing research and development activities for the benefit of its members : sta)e holders of Co-operative Societies& ;Consumer Society< means a Co-operative Society !hich has as its principal ob$ect the supply of the domestic and other re#uirements of its members for the consumption of such members& ;+iscellaneous society< means a Co-operative Society not falling under any of the class of societies in this section&

CHAP !" 7 ###

89!-:A;S
Section $.% 8yelaws of Co-operative Societies
,/7xcept on such specific matters !hich the Act has provided for and !hich the byela!s may further regulate on but not contravene, the functions of every co-operative society shall be regulated by its byela!& ,07very Co-operative society may ma)e its byela!s consistent !ith the Co-operative principles and the provisions of this Act& ,2It shall be mandatory for every society to ,a- prescribe #ualifications and fit and proper criteria for the post of Chief 7xecutive Afficer : +anaging %irector of the Society& ,b- ma)e service bye-la!s for its employees laying do!n staffing pattern, pay scales, recruitment procedures, career advancement plans, mandatory training re#uirements, compensation and terminal benefits and disciplinary procedures and relevant competent authorities thereof&

19

,5A definition of KActive +ember in relation to the aims and ob$ects and activities of the Society shall be incorporated in the byela!& ,6In particular and !ithout pre$udice to the generality of the foregoing po!er, such bye-la!s may provide for all or any of the matters specified belo! and !ith such other matters incidental thereto as may be deemed necessary by the Society& ,/- 'he name, address and area of operations of the society. ,0- the core ob$ects of the Co-operative Society explicitly stated as common central need:interest of the members !hich the Co-operative society aims at fulfilling. ,0- the co-operative principles as stated in this Act, according to !hich the Co-operative Society shall conduct its affairs. ,2- the services to be provided to its members. ,5- the eligibility for obtaining membership. ,6- the procedure for obtaining membership. ,4- conditions for continuing as member. ,8- the time limit before !hich a potential member must see) and obtain membership in order to continue to use the services of the Cooperative Society. ,?- the procedure for easy !ithdra!al:transfer of membership. ,/1- the procedure for termination and cessation, expulsion of membership. ,//- the rights and duties of the members. ,/0- the transfer of shares. ,/2the payment, if any to be made or the interest to be ac#uired as a condition for exercising the right of membership. ,/5- fixation of minimum performance re#uired annually of each member vis-a-vis use of services, financial commitment and participation in meetings to be eligible to exercise the rights of membership including the right to vote. ,/6the conse#uences of default in payment of any sum due by a member. ,/4the nature and amount of capital if any of the Cooperative Society. ,/8the maximum capital to !hich a single member can subscribe.

20

,/?the nature and extent of the liability of the members for the debts contracted by the Co-operative Society. ,/3the maximum interest:dividend payable to members on Paid up Share capital. ,01the sources, types and extent of funds to be raised by the Co- operative society. ,0/the purpose for !hich the funds may be applied. ,00- the extent and conditions under !hich deposits, loans, debentures and other funds may be obtained. ,02the conditions and purposes for !hich State aid except e#uity and aid from other financial institutions may be sought and obtained. ,05- the manner of allocation or disbursement of surplus of the Co-operative Society. ,06the constitution of various reserves and their purposes. ,04- the manner of and fre#uency of convening general meetings and 9oard meetings and #uorum re#uired therefor other than those provided under this Act. ,08- the role of the general body and sub$ects !hich shall be dealt !ith by the general body. ,0?the manner of convening general meetings and #uorum thereof other than those provided under this Act. ,03the procedure for notice and manner of voting in general and 9oard meetings. ,21the manner of conducting elections and of filling casual vacancies. ,2/the manner of ma)ing or amending byela!s. ,20the number of members of the 9oard not exceeding '!enty one. ,22eligibility, ineligibility for becoming and continuing as member of the 9oard on the basis of fit and proper criteria. ,25the tenure of office of directors, chairperson and other office bearers of the Co-operative Society not exceeding five years. ,26- the procedure for removal of members of the 9oard and filling of vacancies. ,24the manner of convening 9oard meetings and #uorum.

21

,28the fre#uency of 9oard meetings. ,2?- po!ers and functions of the 9oard. ,23- po!ers and functions of office-bearers including Chairperson. ,51- #ualifications and fit and proper criteria for appointment of the Chief 7xecutive, his po!ers and functions. ,5/- penalties for acting against the interests of members and for nonfulfillment of duties by members, directors and staff. ,50- the appointment and role of auditors and the procedure for conduct of audit !here the Co-operative Society fails to ma)e necessary arrangements and time limit for audit compliance. ,52- the authori*ation of an officer or officers to sign documents and to institute and defined suits and other legal proceedings on behalf of the Co-operative Society. ,55- the terms on !hich a Co-operative Society may deal !ith non-members. ,56- the terms on !hich a Co-operative society may associate !ith other Co-operative Societies. ,54- the terms on !hich a Co-operative society may deal !ith Argani*ations other than Co-operative societies& ,58- the rights, if any, !hich the Co-operative Society may confer on any other Co-operative Society, or federal Co-operative Society and the circumstances under !hich such rights may be exercised by the federal Co-operative Society. ,5?- the procedure and manner of transfer of shares and interest in the name of a nominee in the case of death of a member. ,53- the minimum level of services to be used by the members of the Co-operative Society. ,61- the conse#uences of performing belo! the level fixed. ,6/- the conse#uences of default in payment of any sum due by a member. ,60- the educational and training programmes to be conducted by the Co-operative society. ,62- the manner of choosing delegates to higher tier Cooperative Societies and Federations.

22

,65- the mode of custody of valuable documents and manner of investment of funds and the manner of )eeping accounts. ,66- the method of appropriating payments made by members from !hom moneys are due. ,64- the preparation and submission of annual statements re#uired by the egulatory authorities and mode of publication of the same. ,68- in the case of productive and distributive societies the procedure to be follo!ed in purchasing and selling stores, ra! materials and finished products and in respect of stoc) ta)ing& ,6?- in the case of Agricultural Co-operative Societies, provision for creation of charge on the immovable property of a member for the SAA loans borro!ed and for long-term credit for agriculture and allied purposes byela! provision to include. ,imortgages created or assets transferred by members and deemed to have been transferred to Andhra Pradesh State Co-operative 9an) to vest in the 'rustee.

po!er to the Financing ban): Primary Agricultural Co-operative Society to sue and receive moneys due under mortgage in the absence of specific direction to the contrary from the 9oard of Andhra Pradesh State Cooperative 9an): 'rustee. ,iiiright to Financing 9an): Primary Agricultural Cooperative Society to advance loans and hold lands. ,ivmode of dealing !ith applications for long-term loans. ,vorder granting loan to be conclusive proof of productive purpose of the loan benefiting the land. ,viloans granted by Financing 9an) and Primary Agricultural Co-operative Society becoming recoverable by them !ith interest !hen falling due. ,vii- remedy of applying to the egistrar to recover arrear installment, by distraint and sale of produce, standing crop of the mortgaged land and any other movable property of the defaulter before the expiry of t!enty four months of the installment falling due. ,viii- board of Financing 9an) to bring to sale the mortgaged property !ithout intervention of the Court !ith three months notice to the mortgagor, his surety and his

,ii-

23

,ixSociety to

creditor holding a decree against the mortgaged property. Financing 9an): Primary Agricultural Co-operative

foreclose the loan !hen the mortgaged property is destroyed and the mortgagor failed to provide further security after opportunity being given. ,xPo!er to the 9oard of Andhra Pradesh State Cooperative 9an): 'rustee to direct Financing 9an): Primary Agricultural Co-operative Society to ta)e action against defaulter as per remedies in sub-division >II, >III F I= and to step in their place, on their failure. ,xithat title of the auction purchaser shall not be #uestioned on grounds of irregularity in the conduct of sale. ,xii- that mortgage in favour of Financing 9an): Primary Agricultural Co-operative Society shall not be #uestioned on insolvency of mortgagor. ,xiii- that the 9oard of Andhra Pradesh State Co-operative 9an) may on the application of the Financing 9an): Primary Agricultural Co-operative Society appoint a receiver in !riting, if there is none appointed by a Court to ta)e possession of the property collect its produce and income and reali*e the money due. ,xiv- that for sufficient cause the 9oard may remove the receiver and fill in the vacancy. ,xv- that the mortgagor may grant a lease of the property for a period of not more than six years. ,xvi- that the mortgage created by a manager of a Doint Jindu family shall be binding on the members !hether ma$ors or minors if the loan secured by the mortgage !as granted for purchase of any land or improvement of any agricultural land. ,xvii- that if the minor or ma$ors raise the #uestion that the loan is not binding on them the burden of proof shall be on them. ,63- in the case of 7mployees Credit Societies, byela!s to empo!er employer to deduct the sum indicated in the re#uisition of the 7mployees Co-operative Society from the salary: !ages of the employee and remit the same to the 7mployees Society concerned on an agreement, executed by the employee in favour of the said society. ,41admission of minors as members for purpose of providing services or benefits them.

24

,4/- compulsory thrift to be collected from members periodicity of collection, interest payable by the Co-operative society on such collection and manner of lin)age of thrift to eligibility of loans terms and conditions of thrift including its refund to the member. ,40manner of preparation and display of the list of members eligible to vote in general body or elections. ,42- mode of appointment of ad-hoc committee !here needed. ,45- the manner of dissolution of the Co-operative society. ,46- the manner of disposal of funds !hen the Co-operative society is under dissolution and ho! surplus assets are to be dealt !ith. ,44- language in !hich business is to be conducted by the Co-operative Society. ,48- Financial year adopted by the Co-operative Society. ,4?ecords to be maintained by the Co-operative Society. ,43- Internal mechanism for settlement of disputes, if any& <.= Any change in the registered office of a Co-operative Society through amendment to the bye-la!s shall be notified to the egistrar !ithin a period of fifteen days of its change&

Section $/% Amendment of byelaws of a Co-operative Society

,/A Co-operative Society may amend any of its bye-la!s by a resolution passed at a (eneral meeting by a ma$ority of the total membership !ith right of vote or of 0:2 rd of the members present and voting, !hichever is less. Provided no such resolution shall be passed by the (eneral 9ody unless at least t!enty clear days of !ritten notice of the resolution and of the (eneral +eeting has been given along !ith a copy of the proposed amendment to each member of the Co-operative Society& ,0An application for the registration of the amendment shall be for!arded by egistered Post to the egistrar !ithin a period of thirty days from the date of resolution duly signed by the Chairperson and t!o members of the 9oard and shall be accompanied by the follo!ing"-,a- A copy of the resolution adopting the amendment ,b- A statement containing the particulars indicatingL ,i- the date of the general meeting at !hich the amendments to the bye-la!s !ere approved.

25

,ii- the date of the notice issued for the general meeting. ,iii- the total number of members on the rolls of the Co-operative society having the right of vote on the date of such general meeting. ,iv- the number of members having the right of vote present at such general meeting. and ,v- the number of members !ho voted for the resolution. ,c- Four copies of the text of the byela!s incorporating therein the proposed amendments& ,2'he egistrar, if the proposed amendment is in consonance !ith the provisions of this Act, shall register the amendment !ithin a period of sixty days from the date of receipt of the application& ,5'he egistrar shall for!ard to the Co-operative society !ithin a period of fifteen days after registration, a copy of the registered amendment together !ith a certificate signed and sealed by him and such certificate shall be conclusive evidence that the amendment has been duly registered& ,6'he egistrar, if the proposed amendment is not in consonance !ith the provisions of this Act, shall communicate the order of refusal together !ith the reasons therefor to the Chief 7xecutive of the society !ithin fifteen days from the date of such refusal& Provided that no order of refusing to register the amendment shall be passed except after giving the Co-operative society an opportunity of ma)ing its representation& ,a- Ihere no order of refusal is communicated !ithin the specified period, it shall be deemed that the egistrar has registered the amendment after the expiry of 86 days from the date of application and the egistrar shall issue the certificate of registration of amendment proposed&

Section $3% Change of name%

,/A Co-operative Society may, by an amendment of its byela!s, change its name, ho!ever it shall be ensured that the name does not refer to any caste or religious denomination and is not inconsistent !ith the ob$ects of the Co-operative Society& ,0After the change is approved by the egistrar, the Cooperative society shall send the original registration Certificate to

26

the egistrar for amendment, !ho shall amend the certificate of registration accordingly, enter the ne! name in the register maintained in Form Eo&2 in the place of its former name and return the amended certificate of registration to the Co-operative Society& ,2Such change of name shall not affect any right or obligation of the Co-operative Society or of any of its members or past members and any legal proceedings !hich might have been continued or commenced by or against the Co-operative society by its former name, may be continued or commenced by or against its ne! name&

Section $4% and

Change of liability, transfer of assets liabilities, division, amalgamation of a Co-operative Society

,/A Co-operative Society may, by a resolution of its general body, decide to ,a- change the form and:or extent of its liability. ,b- transfer its assets and liabilities in !hole or in part to any other Co-operative Society !hich agrees to such transfer by a resolution of its general body. ,c- divide itself into t!o or more co-operative societies& ,0Any t!o or more co-operative societies may, by a resolution of their respective general body meetings decide to amalgamate themselves and form a ne! co-operative society& ,27very resolution of a co-operative society under this section shall be passed at its general meeting by a ma$ority of total members !ith right of vote or t!o thirds of members present and voting !hichever is less and such resolution shall contain all particulars of the liability, transfer, division, amalgamation as the case may be& ,5Ihere a co-operative society has passed a resolution under this section, it shall give notice thereof together !ith a copy of the resolution to all its members, federal Co-operative Societies to !hich it is affiliated and creditors !ho may give their consent& Ather!ise, not!ithstanding any byela! or contract to the contrary, any member, federal Co-operative Society or creditor shall, during a period of one month from the date of service of the notice have the 27

option of !ithdra!ing their shares, deposits, loans, or services as the case may be& ,6Any member, federal Co-operative Society or creditor !ho or !hich does not exercise !ithin the specified period the right under sub-section,5- shall be deemed to have assented to the resolution& ,4A resolution passed by a Co-operative Society under this section shall not ta)e effect until" ,a,i- all the members, federal Co-operative Societies and creditors have assented or are deemed to have assented to the resolution under sub-section ,5- or sub-section ,6-. or ,ii- all claims of the members, federal Co-operative Societies and creditors !ho have exercised the option referred to under sub-section ,5- !ithin the period specified therein have been met in full or other!ise satisfied. and ,b,i- in the case of change of liability, amendment of the byela!s of the Co-operative Society concerned is registered or deemed to have been registered. or ,ii- in the case of division or amalgamation, the certificate of registration of the Co-operative Society, or the Cooperative Societies, as the case may be, is issued or deemed to have been issued&

,8Ihen a resolution passed by a Co-operative Society under sub-section ,0- ta)es effect, the resolution shall be a sufficient conveyance to vest the assets and liabilities in the transferee !ithout any further assurance& ,?'he registration of a Co-operative Society shall stand cancelled and the co-operative society shall be deemed to have been dissolved and shall cease to exist as a corporate body. ,a!hen the !hole of the assets and liabilities of such Cooperative Society are transferred to another cooperative society. or

28

,b-

!hen such Co-operative Society divides itself into t!o or more co-operative societies&

,3Ihere t!o or more Co-operative Societies are amalgamated into a ne! Co-operative Society, the registration of Co-operative Societies so amalgamated shall stand cancelled and they shall be deemed to have been dissolved and shall cease to exist as corporate bodies&

Section &6% Promotion of subsidiary organi5ation

,/Any Co-operative Society may, by a resolution passed at general meeting by a ma$ority of members present and voting, promote one or more subsidiary organi*ations for the furtherance of its stated ob$ectives, and such organi*ation or organi*ations may be registered under any la! for the time being in force, as agreed to by the general body& Provided that a Co-operative 9an) shall not promote a subsidiary, nor shall a Co-operative Society promote a subsidiary !hose byela!s permit the carrying of ban)ing business !ithout obtaining the prior permission of the eserve 9an) of India in !riting& Provided further that the +anagement Committee of such subsidiary organi*ation shall not be members of family of the 9oard of %irectors of the Co-operative Society& ,0'he annual reports and accounts of any such subsidiary organi*ation shall be placed before the general meeting of the promoting co-operative society each year& ,2Any subsidiary organi*ation created under sub-section ,/shall exist only as long as general body of the co-operative society deems its existence necessary&

Section &$% Partnership of Co-operative Societies

,/Any t!o or more co-operative societies may, by resolutions passed at general meetings by a ma$ority of members present and voting in each such co-operative society, enter into a contract of partnership for carrying out any specific business permissible under the byela!s on such terms and conditions as may be mutually agreed upon& ,0Ihere such partnership re#uires the creation of a ne! organi*ation, the participating co-operative societies shall be its members&

29

Provided that a Co-operative 9an) shall not enter into such a partnership !ithout obtaining prior permission of the eserve 9an) of India in !riting& ,2Eothing in the Indian Partnership Act, /320 ,Central Act 3 of /320- shall apply to all such partnership&

Section &&% others

Creation of new )rganisation with

Ihere the collaboration bet!een a co-operative society and any other organi*ation !ith similar core services re#uires the creation of the ne! organisation, the ne! organi*ation may be registered as a company or a public society, as appropriate for the fulfillments of the ob$ective !ith !hich it !as created, and such collaboration shall be revie!ed every year by the general body of the Co-operative Society&

30

CHAP !" - #( >!+!"A #)2S

Section &'% ?nions Co-operative Societies >ederations /

,/Federal Co-operative societies : Co-operative Hnions consisting of primary and: or secondary Co-operative Societies as members may be established and shall be eligible for registration under this Act& ,07very federal Co-operative Society shall in its general meeting be represented by its member Co-operative Societies& ,2A federal Co-operative Society may be classified !ith reference to the nature of its activities& Eot more than one federal Co-operative Society shall be registered !ith similar and identical ob$ects in the same area of operation& ,5A federal Co-operative Society for the sa)e of promotion of constituent members shall ma)e suitable provisions in their byela!s to avoid competition !ith their member-societies& ,6All provisions of this Act, applicable to a Co-operative society shall, as far as may be, apply to a federal Co-operative society&

Section &,% >unctions of >ederal Co-operative Society

,/Sub$ect to the provision of this Act and any other la! for the time being in force, a federal Co-operative society may discharge the functions to facilitate the voluntary formation, autonomous and democratic functioning of co-operative societies based on thrift, selfhelp and mutual aid&

31

,0Iithout pre$udice to the generality of the provisions contained in subsection ,/- the federal Co-operative Society may perform the follo!ing functions. ,aSafeguard the observance of the Co-operative principles by its constituents&

,b- Promote and organi*e the Co-operative Societies for this purpose, frame model byela! and guidelines for framing 1 various regulations and policies for consideration by Co-operative Societies& ,cProvide Co-operative training, 7ducation and information, and propagate cooperative principles and practices. ,d-Hnderta)e research and evaluation and assist in the preparation of perspective development plans for its member Co-operative societies& ,e- Promote harmonious relations Co-operative societies& ,f- Jelp member Co-operative disputes among themselves& amongst member societies to settle

,g- epresent the interests of member Co-operative societies and lobby for policies and legislation favorable to Co-operative societies& ,h-Hnderta)e business services on behalf of its member Co-operative Societies, if specially re#uired by or under the resolution of the general body or the board or byela!s of a member Co-operative Society& ,i- Provide Co-operative management %evelopment services to a member Co-operative Society including participation in board meetings !here invited& ,$- Arrange for timely conduct of annual statutory audit in member Co-operative Societies !hen they fail to get their statutory audit of accounts conducted on time&

32

,)- Assist member Co-operative societies in regular conduct of general meetings and in the event of their failure Federation to call for Annual (eneral +eeting& ,l- 7volve code of conduct for observance by a member Co-operative Societies& ,m- 7volve viability norms for member Co-operative Societies& ,n- Provide legal aid and advice to member Co-operative Societies& ,o- Assist member Co-operative societies in organising self-help groups of people living in its area of operations& ,p%evelop mar)et information system, logo brand promotion, #uality control and technology up-gradation ,#- Provide any other services, stated in its bye-la!s, at the behest of member Co-operative societies& Cooperative ?nion% 7very Co-operative Society registered may affiliate itself to the A&P& State Co-operative Hnion and pay yearly subscription at the rates fixed by the said Hnion for continuance of its affiliation and become eligible for the services offered by the A&P& State Co-operative Hnion& A Co-operative Hnion shall" (a) Collect from all the co-operative societies the Cooperative 7ducation Fund set apart for its use, annual member subscription and other contributions and maintain related accounts thereto& (b) epresent the interests, problems and !elfare of all types of Co-operative societies at district and State level to the competent authorities&

,c- Promote ne! forms of Co-operative societies& ,d- Hnderta)e experimental pro$ects to!ards the application of Co-operative ideology&

33

,e- Ciaise on behalf of and amongst Co-operative societies& ,f- Service as a data ban) on Co-operation and Cooperative societies& ,g- Hnderta)e esearch F 7valuation studies&

CHAP !" - (

*A2A@!*!2

)> >?2+S

Section &-% *obilisation of >unds

A Co-operative Society may mobilise share capital, deposits, debentures, loans and other contributions from its members to such extent and under such conditions as may be specified in the 9yela!s&

Section &.% "estriction on borrowings

,/A co-operative society may mobili*e debentures, deposits, raise loans and receive grants from external sources to such extent under such conditions as may be specified in the byela!s& %eposits and loans raised from external sources, ho!ever, shall at no time exceed ten times the sum of member funds and organi*ational reserves less accumulated deficit, if any&

34

,0A Co-operative Society may accept funds or guarantee from (overnment but not e#uity or other financing institutions for the fulfillment of its ob$ectives on such terms and conditions as are mutually contracted upon and such conditions may include the right of the (overnment or other financier to nominate one expert on the 9oard of the Co-operative Society&

Section &/% "estriction on holding shares

,/Eo member in a Primary Co-operative Society, shall at any time, hold more than one tenth of the total paid up share capital of the Co-operative Society& ,0Eo Co-operative Society shall accept funds from the (overnment by !ay of share capital provided the State (overnments e#uity in a Co-operative Credit Society defined in section ,/1/-,a- of the Act shall not exceed 06M of its paid up share capital& ,2Share capital already received from the (overnment should be repatriated and in case !here Co-operative Society is unable to return the (overnment share capital it shall enter into an +emorandum of Hnderstanding !ith the (overnment agreeing to such conditions that (overnment may stipulate&

Section &3%

+isposal of Surplus

,/In any year a Co-operative Society shall allocate to!ards deficit cover fund, reserve funds such as share capital redemption fund, common good fund, deferred payment to members as patronage rebate in proportion to their use of the co-operative societys services and payment on share capital as interest not exceeding the rate of interest paid by scheduled ban)s, such percentage of the surplus arising from its business transactions in the previous year, as may be approved by the general body& ,0eserves created under sub-section ,/- shall be costed by crediting an annual interest e#ual to the rate paid by scheduled ban)s on fixed deposits&

Section &4% :iability for +eficit

35

,/Ihere a co-operative society is left !ith an operational deficit in any given year, the 9oard of %irectors shall place before the general body in the first follo!ing annual general body meeting, a detailed report on the causes of deficit and the manner in !hich the deficit is proposed to be met& ,0'he general body of the Co-operative Society shall decide to have the deficit covered by setting it off against the amounts available in the deficit cover fund, and:or by debiting the deficit to the account of the member in proportion to the services they had availed or !ere expected to avail of the co-operative society during the year& ,2Any deficit arising from out of the provisions made for nonperforming assets: non-realisable assets shall be met as decided by the general body&

Section '6% "eserve and other >unds

,/A Co-operative Society may create statutory and nonstatutory reserves and other funds for the promotion of the ob$ects of the co-operative society& ,0Statutory eserve fund shall be invested outside the business in one or more of the modes mentioned in section ,2/-& ,2Statutory eserve fund is intended to meet unforeseen losses and !hen it exceeds 06M of its !or)ing capital, the excess may be utilised in the business !ith the approval of the (eneral body sub$ect to recoupment as decided by it& Eo Co-operative Society !hose eserve fund has been separately invested shall dra! upon pledge or other!ise employ such funds except !ith the previous permission of the (eneral body in !riting& ,5An !inding up of a Co-operative Society the eserve fund together !ith other funds constituted by the Co-operative Society as per byela!s shall be applied by the li#uidator to the discharge of such liabilities of the Co-operative Society as may remain undischarged out of the assets of the Co-operative Society in the follo!ing order namely",a,b,cthe debts of the Co-operative Society. paid up share capital. and any claim relating to the dividend upon paid up share capital due on the date of !inding up of the Cooperative Society&

36

,6'he balance, if any may be constituted as a trust for carrying out ob$ects of public utility as may be suggested by the (eneral body, in the case of Co-operative Societies other than a financing ban), or deposited !ith the financing ban) !or)ing in the area of the Co-operative Society till a ne! Co-operative Society !ith similar ob$ects is formed and !hen one such Co-operative Society is formed, the surplus fund may be transferred to the eserve Fund of the ne! Co-operative Society and !hen there is no prospect of a ne! Co-operative Society being formed, the (eneral body of the Co-operative Society under !inding up may resolve to assign the fund to the 9ad debt reserve or eserve fund of the financing ban) in that area& ,4In the case of a financing ban) under !inding up, its (eneral body may resolve to deposit the surplus in any other financing ban) in the area or deposit !ith the A&P& State Co-operative 9an) or !ith the eserve fund of a ne! financing ban) organi*ed, in consultation !ith the eserve 9an) of India&

Section '$% #nvestment of >unds outside business

Such of its funds as are not needed for use by a co-operative society may be invested or deposited outside its business by a resolution of ma$ority of the Committee, !ith due care and diligence& ,ain any federal co-operative society of !hich it is a member. or ,bin a local co-operative society or nationalised ban) or scheduled ban). ,cin the share capital of any other co-operative society. ,din any of the securities specified in section ,01- of the Indian 'rust Act, /??0. ,ein the local postal savings ban)&

Section '&% "estriction on contribution

Eo co-operative society shall ma)e a contribution either in money or in )ind !hether directly or indirectly to an Institution !hich has an ob$ect of furtherance of the interest of a political party or religious body&

Section ''% >irst charge

37

Eot!ithstanding anything in any la! for time being in force, but sub$ect to any claim of the (overnment in respect of land revenue, any debt or other amount due to a Co-operative Society by any member such shall be a first charge upon such properties of the member as agreed to by the Co-operative Society and as the member may declare in the manner specified in the byela!s&

CHAP !" 7 (#

*A2A@!*!2
Section ',% *embership
,/,a- Any person, !ho needs the services of the co-operative society, accepts the responsibilities of membership and fulfils such other 38

conditions as may be specified in the byela!s of the cooperative society, and is competent to contract may be admitted as a member.. ,c- any Co-operative Society. ,d-the Central (overnment. ,e- the State (overnment. ,f- the Eational Co-operative %evelopment Corporation established under the Eational Co-operative %evelopment Corporation Act, /340. ,g-any other Corporation (overnment. o!ned or controlled by the

,h-any (overnment Company as defined in Section 4/8 of the Companies Act, /364. ,i- any statutory body constituted for the purpose of development of a particular industry may become a member of a Co-operative +ar)eting or Processing Society or gro!ers or !or)ers engaged in such industry. Provided that a student, !ho has not attained the age of ma$ority, shall be eligible for the membership of a co-operative society formed for students in an educational institution to !hich he belongs& Provided further sub$ect to condition that the Co-operative Society is in a position to extend its services to the applicant and that the applicant is not already a member of any other co-operative society registered under this Act providing the same or similar services& ,0+embership shall be available as provided for in the cooperative principles !ithout any discrimination on grounds of sex& ,27very Co-operative Society shall organi*e, a co-operative educational course for all persons see)ing membership and for existing members and shall provide funds each year for cooperative education and training of its members, staff and directors and to organi*e into self-help groups for people living in its area to promote collective action for their economic development& ,5Admission of members may be made only by an elected board of directors or by the general body !here such a board does not

39

exist or by administrator appointed in respect of admission of ne! members& ,6In addition to such dis#ualifications as may be contained in the byela!s of a co-operative society, the follo!ing restrictions shall apply for obtaining and retaining membership in a co-operative society& ,a- Ineligibility of a person to obtain or retain membership !here the persons business is in conflict or competition !ith such business of the co-operative society as specified in the byela!s. ,b- ineligibility of the person to retain membership !here the person has not used for t!o consecutive years, the services of the Co-operative Society made available to the minimum level specified in the byela!s and such nonperformance has not been condoned by the general body. ,c- ineligibility of the person to retain membership !here the person has not attended three consecutive general meetings of the Co-operative Society and such absence has not received the consent of the general body. ,d- ineligibility of a person to retain membership !here the person is in default regarding any payment to be made to the co-operative society, exceeding an amount and for a period specified in the byela!s& Eo Co-operative Society shall, !ithout sufficient cause, refuse admission to any person duly #ualified for membership under the byela!s& Ihere admission is so refused, the decision !ith the reasons shall be communicated by registered post to such person !ithin fifteen days of the date of the decision, or !ithin thirty days from the date of application for membership, !hichever is earlier. Provided that no refusal of admission shall be made !ithout giving an opportunity to the applicant of being heard& Ihere a person has been refused membership by the 9oard of %irectors, an appeal shall lie to the general body against the decision of the board& Any applicant aggrieved by the decision of the general body may apply to the Co-operative 'ribunal for revie! of the decision&

Section '-% 2ominal or associate member

Eot!ithstanding anything contained in this Act, a Co-operative Society may admit any individual or informal group such as Self Jelp (roup, ythumitra (roup, non-governmental organi*ation

40

!or)ing for the !elfare of farmer community in the area of operation as nominal or associate member, but such member shall be entitled to vote, sub$ect to satisfying section ,/10- of this Act& 'he associate member shall not be entitled to any share in any form !hatsoever in the profits or assets of the Co-operative Society& Such member shall not have privileges, rights and liabilities of a member except those specified in the byela!s of the Co-operative Society& Provided that the members !ithout holding any agricultural land in Agricultural Credit societies be treated as associated members&

Section '.% *ode of serving of notice of 8oard and general meetings

'he Chief 7xecutive or the senior most paid employee or !here there is no paid staff, the Chairperson or the person authori*ed under the byela! of the co-operative society, after the date, time and venue of the meeting has been decided by the Chairperson shall send notice along !ith the agenda of the 9oard meeting to the 9oard members and the notice along !ith the agenda of the general meeting to all the members of the (eneral 9ody by certificate of posting so as to reach them !ithin the time specified in the byela!s and unless the contrary is proved such service shall be deemed to have been effected, at the time at !hich the letter !ould be delivered in the ordinary course&

Section '/% Auorum at general meeting

,/'he #uorum at a general body meeting shall be the percentage of the strength of the general body and shall be as belo!" ifor a strength of belo! /11 members, the #uorum shall be 61M of the total members. for a strength of /11 to 611 members, the #uorum shall be 22M of the total members. for a strength of 611 to /,111 members, the #uorum shall be 01M of the total members. for a strength of /,111 to 6,111 members, the #uorum shall be /1M of the total members. for a strength of above 6,111 members, the #uorum shall be 6M of the total members. 41

iiiiiivv-

vi-

in the case of representative general body, 61M of the total representatives shall form the #uorum&

,0Eo general meeting shall be held or proceeded !ith the transaction of business unless there is a #uorum as specified above& ,2'he #uorum for the 9oard meeting shall be the ma$ority of the total members of the 9oard& ,5If !ithin half an hour from the time appointed for the meeting the #uorum is not present, the meeting shall stand ad$ourned& Provided that a meeting !hich has been called on re#uisition of the members shall not be ad$ourned but dissolved& ,6If at any time during the meeting sufficient number of members are not present to form the #uorum the Chairperson or the member presiding over the meeting on his o!n, or on his attention being dra!n to this fact, shall ad$ourn the meeting& ,4Ihere the meeting is ad$ourned, the ad$ourned meeting shall be held either on the same day or on such date, time and place as may be decided by the Chairperson or the member presiding over the meeting but !ithin 8 days from the date of ad$ourned meeting& ,8Eo business shall be transacted at any ad$ourned meeting other than the business on the agenda slated for the original meeting !hich is ad$ourned& ,?+embers present at the ad$ourned meeting shall be the #uorum for such meeting&

Section '3% *eetings

,/'he byela!s of a Co-operative Society shall specify the fre#uency of and manner in !hich board and general body meetings shall be held, such ho!ever, that not less than four board meetings and one general body meeting shall be re#uired to be held in a year& ,0'he board shall convene a special general meeting !ithin thirty days of receipt of a re#uisition to this effect from at least /:/1th of members of the Co-operative Society or on the re#uisition of the Federation or egistrar as provided in the byela!s and any such re#uisition shall contain the proposed agenda and the reasons !hy the meeting is felt necessary&

42

,2Ihere a Co-operative Society fails to convene the annual general meeting !ithin due time and the concerned federation has also failed to convene the meeting, the egistrar shall on the expiry of ninety days convene the annual general meeting&

Section '4% *inutes of proceedings of general meetings and of 8oard and other meetings
,/7very general meeting or the meeting of the 9oard shall be presided over by the Chairperson of the co-operative society, in his absence the >ice-Chairperson thereof and in the absence of both the Chairperson and >ice-Chairperson by a member chosen by the meeting to preside over the occasion& ,07very Co-operative Society shall record in the minutes boo), minutes of all proceedings of every general meeting and of every meeting of its board of directors& ,0Such minutes shall be circulated to all persons invited to the meeting !ithin thirty days of the conclusion of the meeting& ,2'he minutes so recorded shall be signed by the person !ho chaired the said meeting or by a director duly authori*ed by the board !ho attended the meeting&

Section ,6% (ote of *embers

,/An active of member a Co-operative Society only shall have one vote in the affairs of the Co-operative Society after a period of first t!elve months on his admission as a member in the Cooperative Society ,0Je shall exercise his vote in person and not by proxy&

,2In respect a Federal Co-operative Society a member shall have one additional vote for every 6&11 la)h units transacted through the Federation in the previous financial year& ,5A delegate representing more than one member institution shall exercise the number of votes e#ual to the number of institutions he represents& ,6Provided that an active member !ho is an employee of such Co-operative Society shall not be entitled to vote"

43

(a) at the election of a member of the board of such Cooperative Society. ,b- in any general meeting convened for framing the byela!s of such Co-operative Society or any amendments thereto. ,c- to the extent that political personalities are themselves active members they !ould be entitled to be on the board and to vote in the affairs of the society, if elected. ,d- in the case of an e#uality of votes the Chairperson shall have a casting vote. ,e- !here any of the authorities or a Co-operative Society referred to in clauses ,c- to ,g- of sub-section ,/- of section ,25- is a member of a co-operative society, each person nominated by such authority or such society, on the board in accordance !ith the provisions contained in this Act shall have one vote. ,f- a Co-operative Society, the membership of !hich include other Cooperative Societies may provide in its byela!s for an e#uitable system of voting having regard to the share capital and the extent of business carried on by such Cooperative Societies. ,g- no member of a Co-operative Society belonging to such class of Co-operative Societies and !ho failed to transact such minimum business as specified in the byela!s ta)ing into consideration the nature of business transacted or the services or facilities made available by the Co-operative Society, shall have the right to stand as a candidate or to vote in any election to the Cooperative Society.

44

,h- a member of a Co-operative Society sub$ect to the other provisions in this section shall be eligible to exercise the right to vote only if he" ,i- contribute a minimum share capital of s&211:-.

,ii- is not in default in the payment of any amount due in cash or )ind to the Co-operative Society for a period of more than 4 months. ,iii- is not a delegate of a Co-operative Society !hich is under proceedings for !inding up. Provided ineligibility to vote does not amount to ineligibility to attend and participate in the meeting& Provided further a list of eligible members !ith right to vote and those !ithout right to vote shall be prepared and displayed on the Eotice 9oard of a Co-operative Society and its branches prior to holding of any general meeting or holding of elections in the manner laid do!n in the byela!s& Provided also in any meeting of the general body or the board of a Co-operative Society, another Co-operative Society is to be represented such cooperative society shall be represented in such meeting only through the Chairperson or the Chief 7xecutive or a member of the board or general body of said Co-operative Society if so authori*ed by the board& Ihere there is no board the Cooperative Society shall be represented by a member of the (eneral body nominated by the administrator till a ne! elected board is constituted&

Section ,$% *embers not to e0ercise rights till due payments made
Eo member of a Co-operative Society shall exercise the rights of a member unless he has made the full payment to the society in respect of all its dues or ac#uired such interest in the society as may be specified in the byela!s

Section ,&% "ights of *embers

7very member of a Society shall, inter alia, have follo!ing rights in Society sub$ect to provisions of the Act and the 9ye-la!s of the Society" 45

,/,0,2-

to vote at the (eneral 9ody +eeting. to contest elections to the 9oard of %irector, sub$ect to eligibility as per Act and 9ye-la!s. to )no! the affairs of the Society and to see) information under the provisions of ight to Information Act, 0116. to inspect such portions of the boo)s and records relating to him and obtain copies of such documents against payment of applicable fee. to transfer his shares and interests to any other person. to refer disputes bet!een him and other members or bet!een him and Society to the egistrar for settlement of such dispute. to voluntarily !ithdra! from membership. to patronage and obtain services offered by the Cooperative Society !hen available at similar conditions as in open mar)et. to receive patronage dividend : interest on capital&

,5-

,6,4,8,?-

,3-

Section ,'%

"edemption of shares

,/Shares held in a co-operative society by any of the authorities referred to in sub-section ,/- of section ,25- shall be redeemable in accordance !ith the byela!s of such co-operative society and in cases !here the byela!s do not contain any provision in this regard in such manner as may be agreed upon bet!een the co-operative society and such authority& ,0'he redemption of the shares in sub-section ,/- shall be on the face value of the shares&

Section% ,,%

ransfer of share or interest

,/'he transfer of a share or interest in the capital of a Cooperative Society shall be sub$ect to such conditions and restrictions as to the maximum holding as are specified in section ,08-,/-& ,0his ,iA member shall not transfer any share held by him or

46

interest in the Co-operative Society unless the member has held such share or interest for not than one financial year. and ,iithe transfer is made to a member of the Co-operative Society. ,iiino member of a financing ban) or a federal Co-operative Society shall transfer its share or interest in such ban) or Co-operative Society to an individual member, his heir or legal representative&

,2An the death of a member, a Co-operative Society may transfer the share or interest of the deceased member to the person nominated by the deceased member in accordance !ith the byela!s made in this behalf or, if there is no person nominated then to the legal heir of the deceased member and in case of more than one legal heirs, to the one in !hose favour the remaining legal heirs have agreed for such transfer& Provided that if the value of the share : interest doesnt exceed s&/ la)h the transfer of interest may be made based on the certificate of family membership issued by revenue authorities !ithout insisting for a legal heir certificate& ,5A Co-operative Society shall, unless !ithin 4 months of the death of the member prevented by an order of a competent court, pay to such nominee, heir or legal representative, all other monies due to the deceased member from the society& ,6All transfers and payments made by a co-operative society in accordance !ith the provisions of the section shall be valid and effectual against any demand made upon the society by any other person&

Section ,-% :iabilities of past member and estate of deceased member

,/Sub$ect to the provision of sub-section ,0- the liability of a past member or of the estate of a deceased member of a co-operative society for the debts of the society as they existedL ,a- in the case of a past member, on the date on !hich he ceased to be a member.

47

,b-in the case of deceased member, on the date of his death, shall continue for a period of t!o years from such date& ,0Eot!ithstanding any thing contained in sub-section ,/-, !here a Co-operative Society is ordered to be !ound up, the liability of a past member !ho ceased to be a member or of the estate of a deceased member !ho died !ithin t!o years immediately preceding the date of the order of !inding up shall continue until the entire li#uidation proceedings are completed, but such liability shall extend only to the debts of the society as they existed on the date of cessation of membership or death, as the case may be&

Section ,.%

ermination of membership

,/'he 9oard of %irectors may, by a resolution passed by a ma$ority of the total number of members of the board having the right to vote and not less than t!o third of the members of the 9oard present and voting, terminate the membership of a non-user member in terms of section ,25-,6-,b- in the co-operative society or of a member for acts : omissions !hich are detrimental to the proper !or)ing of the Co-operative Society, provided that the membership shall not be so terminated !ithout giving the person a reasonable opportunity of ma)ing representation in this regard& ,0Ihere membership of a person has been terminated by the board of directors an appeal shall lie to the general body and the decision of the general body shall be final& ,2Eo person !hose membership has been terminated shall be eligible for re-admission as a member of the co-operative society for a period of one year from the date of such termination&

Section ,/% "estriction on services to non-members

A Co-operative Societys services shall ordinarily be available only to members unless other!ise provided in the byela!s&

Section ,3% @eneral 8ody

,/Sub$ect to the provisions of this Act and the byela!s, the ultimate authority of a co-operative society shall vest in its general body& 'he (eneral 9ody of every Co-operative Society shall be

48

convened !ithin a period of six months of close of the financial year to transact the business specified in sub-section ,2- of this section& ,0Ihere a Co-operative Society so desires, its byela!s may provide for a representative general body dra!n from the members, to be constituted in such a manner and !ith such functions as specified in the byela!s& Any reference in this Act to the general body shall apply to the representative general body !here it exists& Provided !here the area of operation of a Co-operative Society extends to one or more revenue +andals or its membership exceeds t!o thousand, it may constitute a representative general body the total number of members of !hich shall not exceed 011 in Cooperative Societies having membership of 0,111 and less and 511 in any other case& Provided, further that the representative general body shall not have the right to amend the byela!s of the Co-operative Society except those in relation to !hich the byela!s have delegated the po!er of amendment to the representative general body& ,2Sub$ect to the other provisions of this Act, and of the byela!s the follo!ing matters shall be dealt !ith by the general body& ,/Aperate !ithout any restrictions imposed on area of operations and membership and choose any line of economic activity as desired by the members. election of %irectors of the 9oard. removal of %irectors of the 9oard and filling up of

,0,2vacancies. ,5consideration of the annual report presented by the 9oard. ,6appointment and removal of statutory auditors and internal auditors. ,4consideration of the auditors report and audited statement of accounts. ,8consideration of audit compliance report. ,?report on action ta)en on in#uiry report under section ,45-, if any. ,3disposal of net surplus. ,/1- revie! of operational deficit, if any. ,//- approval of the long-term perspective plan and the annual operational plan. ,/0- decide on the organisation structure and staffing including recruitment policies, service conditions and remuneration, as approved by the 9oard. ,/2- initiate measures for $oint ventures, partnerships, subsidiaries and strategic alliances !ith co-operative societies and other corporates.

49

,/5,/6,/4,/8,/?,/3,01,0/,00,02,05,06,04,08,0?,03,21,2/-

approval of the annual budget. creation of specific reserves and other funds. revie! of actual utili*ation of reserve and other funds. revie! on membership of the co-operative society in other Co-operative Societies. partnership !ith other co-operative societies. revie! of annual report and accounts of any subsidiary organi*ation. revie! of annual report and accounts of any organi*ation collaborated !ith. appeal of a person !hose application for membership has been re$ected or !hose membership has been terminated by the 9oard of %irectors. list of employees recruited !ho are relatives of %irectors or of the Chief 7xecutive. amendment of byela!s. formulation of code of conduct for the directors and officers. consideration of note on admission and termination of members. dissolution of the co-operative society. decision on de-layering !hen the co-operative societys association !ith the structure is found not cost effective. decision on consolidation of business through merger !ith other co-operative societies or successful corporates. ensuring at all times that the interests of members is protected. introduction of ne! technologies and +anagement Information System to ensure cost competitiveness. such other functions specified in the byela!s.

Section ,4% 8oard of +irectors

,/'he general body of a co-operative society shall constitute a 9oard of %irectors !ho shall be active members in accordance !ith the byela!s and sub$ect to the regulations framed by the 7lection egulatory Authority and approved by the (overnment& Provided to the extent that political personalities are active members, they !ould be entitled to be on the 9oard if chosen by the (eneral 9ody& Provided further that the 9oard shall co-opt experts having experience in the field of ban)ing, management, finance or speciali*ation in any field relating to the ob$ects of the Co-operative Society !ho shall be excluded for the purpose of counting the total number of directors specified in sub-section ,2- of this section&

50

,0An the 9oard of such Cooperative Society or class of Cooperative Societies other than the Cooperative Societies exclusively for the persons belonging to the scheduled castes, scheduled tribes or bac)!ard classes, the rule of reservation follo!ed in the state shall be applied in regard to allocation of slots on the 9oard to SCs, S's, minorities, !omenF bac)!ard classes in the Cooperative Society consisting of individuals as members and having members from such class or category of persons& ,2'he si*e of the board shall be in accordance !ith the byela!s sub$ect to the maximum of '!enty one members& Chief 7xecutive shall be an ex-officio member of the board& 'he byela!s shall lay do!n fit and proper criteria of eligibility for being chosen and to continue as board of directors ,5In addition to such criteria as may be specified in the byela!s, a person shall be ineligible for being chosen as a director, if he:she ,a,b,cbyela!s& has at any time lost the right to vote as a member as specified in the byela!s. loses the right to continue as member as specified in section 25 ,6- and the byela!s. incurs any other dis#ualification specified in the

,6In addition to such criteria as may be specified in the byela!s, a person shall cease to be a director if he:she incurs any of the dis#ualifications specified in sub-section ,5- and:or ,ameetings. ,band body. ,c,d,ehas not undergone a set of prescribed training programmes !ithin six months of being elected. is penali*ed under this Act. fails to ma)e a declaration assuming $oint and several responsibility for the decisions of the 9oard during his term in Form Eo&5& absents himself: herself from three consecutive board absents himself: herself from any general body meeting such absence does not receive consent from the general

,4In addition to such criteria as may be specified in the byela!s, all the directors of the board shall incur dis#ualification for a period

51

of three years for being chosen as directors and shall be ineligible to continue as directors of any co-operative society, if during their term as directors of co-operative society ,a'hey did not ta)e action for conduct elections !ithin the time specified in byela!s and before the expiry of their term. they did not conduct their annual general body meeting !ithin six months of closure of the co-operative societys accounting year or re#uisitioned meeting of the general body. they did not place the audited accounts along !ith the reports of the auditors before the general body !ithin six months of annual closure of accounts.

,b-

,c-

,8Iith the exception of the first three years after the registration of a Co-operative Society, in order to be eligible for being chosen as a director of the board, a member ,ashall have been a voting member of the co-operative society for at least t!o years immediately preceding the year of election.

,b- shall have attended the t!o general body meetings of the co-operative society immediately preceding the elections&

Section -6%

+isclosure of interests by +irector

7very %irector of a Co-operative Society !ho is in any!ay, !hether directly or indirectly concerned or interested in a contract or arrangement or proposed contract or arrangement, enter into or to be entered into, by or on behalf of the co-operative society shall disclose the nature of his concern or interest and also the interests of his relatives in the affairs of the Co-operative Society at a meeting of the 9oard of %irectors&

Section -$% #nterested +irector not to be present in 8oardBs proceedings

Eo director of a co-operative society shall, as a %irector, be present in the discussion of, or vote in any contract or arrangement entered into, or to be entered into, by or on behalf of the co-operative society if he:she or his:her relatives are any!ay, !hether directly or indirectly, concern or interested in the contract or arrangement.

52

Section -&% Powers and functions of the 8oard of +irectors

,/'he 9oard shall, in accordance !ith the byela!s, be the authority to ,a,b,c,dformulate policy, plans and periodic goals for the conduct of business and ta)e ma$or decisions thereof. admit and terminate membership. to provide for !omen participation through family membership !ith one vote only. constitute an 7xecutive Committee and sub-committees li)e Audit and 7thics Committee, Planning and %evelopment Committee of the 9oard !hich shall perform such functions as are assigned in the byela!s. elect the chairperson and other office bearers. remove from office the chairperson and other office appoint and remove the Chief 7xecutive. fix staff strength and appoint staff as per fit and proper cause the preparation of business management

,e,fbearers. ,g,hcriteria. ,imanuals. ,$-

frame policies concerning

,ibusiness development for enhancing member participation and capital of the co-operative society. ,iigrooming talented employees for leadership positions. ,iii- engaging suitable expertise on contractual basis to meet the re#uirements of the co-operative society. ,iv- utilising training facilities provided by A&P& State Cooperative Hnion, Eational Council for Coop& 'raining ,ECC'-, regional Institutes of Coop& +anagement, Institutes of Coop& +anagement and Agricultural Coop& Staff 'raining Institute by laying do!n J % policy in the byela!s such that 61M of the 9oard members !ill undergo training for a minimum period of one !ee) !ithin six months in the first year of their assumption of office and remaining 61M of the members of the 9oard during the second year of their term. ,vallocation of 0M of annual budget of the cooperative society for training and member education and s)ill upgradation of 9oard of %irectors, members and employees to be shared bet!een the co-operative 53

society and A&P& State Co-operative Hnion on 61"61 basis& ,vi,viiarranging for member a!areness and education programme on a continuing basis.

devising financial instruments such as bonds, debentures, special shares etc&, )eeping in vie! the regulatory regime for augmenting capital. ,viii- ma)ing arrangements for redemption of (overnment share capital at the earliest. ,ixco-option of sub$ect matter specialists to the 9oard in business related areas of the Cooperative Society. ,x,xi,xii,xiii#ualifications and fit and proper criteria for the post of Chief 7xecutive in the byela!s. organi*ation and ensuring provision of services to eligible members. #ualifications, recruitment, service conditions and other staff related matters. mode of custody of funds.

,xiv- manner of )eeping accounts. ,xvfunds. ,xvi- monitoring and management information systems including statutory returns to be filed. ,xviithe society. ,$,),l,mplace the annual report, annual financial statements, plan and budget for the approval of the general body. consider audit and compliance reports and place these before the general body. revie! membership in other co-operative societies. appoint Co-operative Information Afficer and designate the senior-most officer in the Co-operative Society as such other sub$ects and matters necessary for effective performance of the co-operative mobili*ation, utili*ation and investment of various

54

Appellate Authority to provide information to the members about the affairs and management of the Cooperative Society. ,nunderta)e such other functions as delegated by the general body.

,0'he Chairperson shall be elected by the 9oard of %irectors from among the elected members and shall, in accordance !ith the byela!s, ,a,bany preside at meetings of the board and the general body. have a second vote in the event of e#uality of votes on

matter being decided upon by the board except in matter of elections. exercise such other po!ers as delegated by the board specified in the policies framed or resolutions adopted by the board. (b) (c) have po!er to delegate his functions to the >iceChairperson during his absence&

Section -'% Staff and Chief !0ecutive

,/All staff of the Co-operative Society including the Chief 7xecutive shall be recruited, appointed, removed and guided in accordance !ith such personnel policies and service conditions as framed by the board and approved by the general body& ,0'he Chief 7xecutive shall perform such functions as specified in the byela!s and policies and shall" ,a,b,c,dbe accountable to the board. have general control over the day-to-day operations of the Co-operative Society. be the person to sue or be sued on behalf of the cooperative society. on behalf of the Co-operative Society, have po!ers to endorse, sign, negotiate che#ues and other negotiable instruments and operate the ban) accounts of the Cooperative Society and :or !ith such other person as the board may desire. 55

,e-

,f,g,h,i,$,),l,m-

,n,o-

be responsible for causing correct, upto-date maintenance and authenticated accounts related to the Co-operative Society and for production !hen called for in connection !ith audit, in#uiry or election. be responsible for staff recruitment, discipline, performance and development. on behalf of the Co-operative Society, be the person to enter into agreements or contracts. arrange to maintain proper records and upto date, correct and authenticated accounts of the Co-operative Society. present the draft annual report and financial statements for the approval of the board, !ithin thirty days of closure of the financial year. convene in consultation !ith the chairperson, the board and general body meetings in accordance !ith the byela!s and record the proceedings thereof& assist the board in the formulation of policies and plans. furnish to the board information necessary for monitoring the performance of the Co-operative society. arrange to provide services or facilities including sanction of loans and advances to the members sub$ect to availability of funds after proper appraisal and recommendation as delegated by the 9oard. initiate all steps that are necessary including legal, for ensuring prompt recovery of all the loans sanctioned both under his discretion and of the 9oard. perform any other function as specified in the byela!s or as decided by a resolution of the board and general body&

,2An officer of the (overnment shall not either during the course of his:her service !ith the (overnment or for a period of t!o years thereafter, serve in any capacity !ith any Co-operative Society, unless such service relates to academic assignments&

Section -,% "emoval of Chief !0ecutive )fficer/ Professional +irector

Ihere the Chief 7xecutive Afficer :Professional %irector,s- are not appointed as per the fit and proper criteria specified for such appointment by the eserve 9an): EA9A %, the egistrar in consultation !ith them shall be competent to remove them from Affice after giving him:them an opportunity of ma)ing representation and the 9oard of such Co-operative Society shall

56

ta)e action to fill up the vacancies duly follo!ing the fit and proper criteria laid do!n&

Section --%

erm of )ffice

,/'he term of office of the directors of the board or, !here the bye-la!s provide for retirement of directors by rotation, the term of office of the individual directors shall be for such period as specified in the bye-la!s but not exceeding five years from the date of assumption of office. Provided, ho!ever, that the term of office can be terminated by the general body at its meeting by a ma$ority of members !ith right of vote or t!o third of members present and voting& Provided further that the term of the first board shall not exceed /0 months from the date of registration of the cooperative& ,0Ihere the bye-la!s of the Co-operative Society provide for staggered term for %irectors, it shall be so staggered that at any point of time the vacancies arising as a result of the terms of %irectors coming to an end, are less than one-half of the total strength of the 9oard and at the first election all the %irectors shall be elected at once, and their terms staggered by dra!l of lots specifying different terms&

Section -.%

Supersession of the 8oard of a Co-operative Society

,/If in the opinion of the egistrar the 9oard of any co-operative society is persistently ma)ing default or is negligent in the performance of the duties imposed on it by this Act or its byela!s or has committed any act !hich is pre$udicial to the interest of the cooperative society or its members or has omitted or failed to comply !ith any la!ful directions given to it under the provisions of this Act or that there is a stalemate in the constitution or functions of the 9oard, the egistrar may after giving the 9oard an opportunity to state its ob$ections, if any and considering the ob$ections, if received, by an order in !riting, remove the 9oard and appoint one or more administrators to manage the affairs of the co-operative society for such period not exceeding six months, as may be specified in the order& Provided no supersession of a 9oard of a co-operative society shall be ordered !here there is no (overnment shareholding, loan or financial assistance or any guarantee by the (overnment&

57

Provided further that in the case of a Co-operative Society, carrying on the business of ban)ing and a PACS the provisions of Chapter => shall apply for the purpose of supersession of the 9oard& Provided also a member of the 9oard of a PACS !hich has been superseded due to a reason of section,/10-,/2-,a- and ,b- shall not be entitled to contest again for a period of five years after supersession& ,0'he egistrar may fix the remuneration for the administrator as he may thin) fit and the remuneration shall be paid out of the funds of the cooperative society& ,2'he administrator:s shall sub$ect to the control of the egistrar and to such instructions as he may from time to time give, have po!er to exercise all or any of the functions of the 9oard or of any Afficer of the Co-operative Society in the conduct of day-today administration including admission of ne! members and not ta)e policy decisions save !ith the explicit approval of the (eneral 9ody and ta)e all such actions as may be re#uired in the interest of the Co-operative Society& ,5Save as other!ise provided in sub-section ,6- the administrator, shall before the expiry of the term of office, arrange for the constitution of a ne! 9oard in accordance !ith the byela!s of co-operative society& ,6If, at any time during the period, the administrator is in office, the egistrar considers it necessary or expedient so to do, he may by order in !riting giving reasons therefor, direct the administrator to arrange for the constitution of an ad-hoc board, for the specific purpose of conduct of elections, for such Co-operative Society in accordance !ith the byela!s and immediately on the constitution of ne! board, the administrator:s shall hand over the management of such Co-operative Society to such ne!ly constituted board and cease to function&

Section -/%

!lection Commission for Co-operatives

,/'he State (overnment shall, by notification in the official ga*ette, appoint an 7lection Commissioner for conduct of free, fair and impartial elections to boards of Cooperative Societies in the State and appoint such other Afficers and staff to assist the Commissioner& ,0- A person to be appointed as 7lection Commissioner for Cooperatives shall be a person !ho is or has been a Dudge of the

58

Jigh Court or an Afficer not belo! the ran) of Chief Secretary to (overnment& Provided that no sitting Dudge of a Jigh Court shall be appointed except after consultation !ith the Chief Dustice of the Jigh Court of the State& ,2'he status, pay and other per#uisites of the 7lection Commissioner for Cooperatives shall be on par !ith State 7lection Commissioner& ,5'he superintendence, direction and control of the preparation of electoral rolls for, and the conduct of, all elections to a Cooperative Society shall vest in the 7lection Commissioner for Cooperatives for the purpose of !hich he shall frame guidelines !hich shall be notified by the (overnment& ,6'he egistrar of Cooperative Societies shall be 7lection Authority in case of Apex Societies and such other Societies as notified by the 7lection Commissioner for Cooperatives and the %istrict Collectors shall be the 7lection Authorities in respect of other Societies& ,4'he egistrar of Cooperative Societies as !ell as his subordinates and the %istrict Collectors shall discharge their responsibilities relating to 7lections to Cooperative Societies under the direction, superintendence and control of the 7lection Commissioner for Cooperatives& ,8Any dispute concerning in the elections of a Cooperative Society shall be filed !ithin 21 days of the declaration of result before the Cooperative 'ribunal established under section ,8/- of this Act&

Section -3% "ole of !lection Authority

,/'he Chief 7xecutive Afficer of every Co-operative Society shall send a !ritten re#uest to the 7lection Authority to conduct election of its Committee six months before expiry of the existing board& ,0An receipt of the re#uest under sub-section ,/- the Authority shall ensure that the election is conducted before the expiry of the term of the existing board& ,2It shall be the duty of the board of a Co-operative Society to ensure that all the information, boo)s and records, !hich the Authority may re#uire for the purpose of election, are updated and made available in time to the Authority or a person authori*ed by it for the purpose&

59

,5'he board of the Co-operative Society shall also ensure that the Co-operative Society provide all the assistance to the Authority as may be re#uired by it for conduct of the elections& ,6'he 7lection Authority shall announce the schedule of elections from time to time. ,4'he process of election of the Co-operative Society once started shall not be stopped or postponed for any reason, save for a natural calamity or brea) do!n of la! and order&

Section -4% !lection )fficer

,/Sub$ect to the general or specific directions of the 7lection Commissioner for Cooperatives, the 7lection Authority appointed under sub-sections ,6 and 4- of Section ,68- shall appoint an 7lection Afficer to conduct the elections to the 9oard of a Cooperative Society& Provided that no member or employee of the concerned Cooperative Society and no retired employee of Cooperative %epartment shall be appointed as an 7lection Afficer& ,0'he 7lection Afficer, sub$ect to the superintendence, direction and control of the 7lection Commissioner for Cooperative shall conduct the elections to the members of the 9oard of a Cooperative Society in accordance !ith election regulations notified by the 7lection Commissioner !ith the approval of the (overnment&

60

CHAP !" 7 (##

*A2A@!*!2

#2>)"*A #)2

Section .6% Accounts and records to be maintained

,/7very Co-operative Society shall )eep at its registered office, the follo!ing records and account boo)s and shall adopt %ouble 7ntry system of 9oo)-)eeping in the case of account boo)s from the succeeding financial year commencing after the notification of this Act& ,a,b,c,da copy of the Andhra Pradesh Co-operative Societies Act !ith amendments made from time to time. the minutes boo). registration certificate and a copy of the registered byela!s and of the amendments registered from time to time !ith date of amendment. a copy of the authenticated byela!s of the federal Cooperative Society of !hich it is a member and of each of its member Co-operative Societies in the case of a Federation. account of all sums of money received and expended by the Co-operative Society and their respective purposes.

,e-

61

,f,g,h,i,$,),l-

account of all purchases and sales of goods by the Cooperative Society. account of the assets and liabilities of the Co-operative Society. a register sho!ing total membership and the member!ise use of various services. a list of members !ith voting rights for the current year updated !ithin thirty days of closure of the financial year. copies of the 9oard policies. annual reports and audit reports. other registers prescribed in the %epartmental Accounts +anual and other registers mandatory under any other Act for the time being in force applicable to Co-operative Societies&

Provided in the case of Primary Agricultural Co-operative Credit Societies, boo)s of accounts and records as prescribed by EA9A % under the Common Accounting System shall be maintained& Provided also that in the case of 9an)ing institutions coming under the 9an)ing egulation Act, /353 ,as applied to Co-operative Societies-, they shall maintain the registers and boo)s of accounts prescribed by eserve 9an) of India:EA9A %&

,0- 'he boo)s of accounts of every Co-operative Society together !ith supporting records and vouchers, shall be preserved for such period as may be provided in the byela!s sub$ect to any other la!s for the time being in force& ,2In the case of Co-operative Societies, having paid staff, the Chief 7xecutive by !hatever designation he is called and in case of all other Co-operative Societies !ithout paid staff, the Chairperson shall be responsible for the custody and for maintaining and arranging for the maintainance properly and upto date, and the authenticated boo)s registers and accounts referred to in the section&

Section .$% >iling of returns

7very year, !ithin six months of the closure of the financial year, every co-operative society shall file the follo!ing information !ith the egistrar of Co-operative Societies" ,aannual report of activities.

62

,bannual audited statements of accounts !ith auditors report. ,cplan for surplus disposal as approved by the general body. ,dlist of names of directors, their addresses and their terms of office. ,elist of amendments to the byela!s of the Co-operative Society, if any. ,fany other information re#uired by the egistrar in pursuance of any of the provisions of this Act& Provided that the Annual eport of an Apex Co-operative Society, having (overnment Share Capital or loans or guarantees, shall be placed before the State Cegislature&

CHAP !" 7 (### Audit, #nCuiry and Surcharge Section .&% A u d i t

,/A co-operative society shall get its accounts audited by an auditor selected from the panel approved by the egistrar from among the Chartered Accountants or by any other auditor of Cooperation %epartment at least once in each financial year, the #ualifications and dis#ualifications of !hom shall be as per the byela!s& Provided the audit of the Apex Co-operative 9an) and %ist& Cooperative Central 9an)s, Primary Co-operative Hrban 9an), State level Apex Co-operative Societies and Carge Si*e Cooperative Societies, PACS having turnover exceeding s&6&11 crores 63

shall be by Chartered Accountants selected from the panel approved by the egistrar& ,0'he audit shall be completed !ithin a period of six months from the close of financial year to !hich the accounts relate& ,2'he auditors report signed by the Auditor in addition to the report on the accounts of the Co-operative Society and certificates expected of him, shall also contain a report on the attendance at meetings by directors, loans and advances sanctioned to or the business done !ith the co-operative society by the directors and their near relatives, expenditure on board meetings, remuneration paid to directors, expenses reimbursed to directors, expenditure on education and training for members, staff, directors and others& ,5It shall be the duty of the board of directors to ensure that annual financial statements are prepared and presented for audit !ithin forty-five days of the closure of the financial year and that the auditor has a right of access at all times to the boo)s, accounts, documents, records, securities, cash and other properties belonging to or in the custody of the Co-operative Society& ,6'he Audit eport of the accounts of an Apex Co-operative Society, having (overnment Share Capital or loans or guarantees, shall be placed before the State Cegislature as specified in this Act& ,4'he remuneration of an auditor excepting in the case of a departmental auditor, may be fixed by the board of directors and placed before the general body at its next meting, for information. ,8'he general body may at a special meeting remove an auditor from office by a resolution passed by a ma$ority of the members present and voting. ,?'he auditor shall be given notice of every general meeting and !ill be entitled to attend the meeting and be heard & ,3'he auditors report shall read at the general meetings&

,/1- Hpon the re#uisition:summons of the auditor of a Co-operative Society, the present or former officers, committee members, members or employees of the co-operative society shall furnish such ,a,binformation and explanation regarding transactions and !or)ing of the society. and affairs,

ensure access at all reasonable times, at the head#uarters of the co-operative society or branch

64

thereof, to cash, other properties, records, documents, boo)s, accounts and vouchers belonging to or in the custody of the co-operative society from the persons responsible for or in the possession of them as are, in the opinion of the auditor, necessary to enable him:her to ma)e the examination and report& ,/1- Ihere a Co-operative Society fails to get its annual accounts audited !hen due, it shall be responsibility of the federation to get the accounts of the Co-operative Society audited !ithin a period of ninety days from the date !hen the audit !as due& 'he cost of conducting such audit shall be borne by the co-operative society& If the Co-operative Hnion:federation is unable to get the audit of the Co-operative Society conducted for any reason, the egistrar shall get the accounts of the co-operative society audited at the cost of the Society&

Section .'% Special Audit

,/A Co-operative Society dealing !ith funds from the (overnment or public deposits or a Jousing Society that received land from (overnment may be sub$ected to a special audit initiated by the egistrar at the re#uest of such (overnment or %epositors holding more than /M of the total deposits or /1M or more members of a Jousing Society, as the case may be, on such specific terms of reference as agreed to by the egistrar& Provided a special audit may be arranged by the egistrar in the case of A&P& State Co-operative 9an): %ist& Coop& Central 9an) at the re#uest of the eserve 9an) of India and special audit report arranged to be furnished to the eserve 9an) of India !ithin the stipulated time& Provided further a special audit may be arranged by the egistrar in the case of a primary society at the re#uest of the federation or its creditor& ,0'he cost of the special audit under sub-section ,/- shall be met by the person !ho demanded it& Provided that !here the special audit reveals serious mismanagement in the co-operative society such costs may be recovered from the co-operative society or the persons responsible for the mismanagement& ,27very special audit shall be completed and the report submitted to the egistrar !ithin four months of its commencement&

65

,5-

'he special audit reports shall contain a statement of, ,a,bevery payment !hich appears to the audit to be contrary to the la!. the amount of any deficiency, !aste or loss !hich appears to have been caused by the gross negligence or misconduct of any person in the performance of the duties. the amount of any sum received !hich ought to have been accounted for but is not brought into account by any person. and any material impropriety or irregularity !hich the special auditor may observe in the expenditure or in the recovery of money due.

,c-

d-

,6'he egistrar shall, !ithin a period of thirty days from the date of receipt of the special audit report communicate copies of the same to, (a) (b) (c) (d) the applicant creditor. the Co-operative Society concerned. and the eserve 9an) of India. the Co-operative 'ribunal !here necessary&

Section .,% #nCuiry

,/'he egistrar may on his o!n motion after recording reasons, or on the application of a co-operative society to !hich the cooperative society concerned is affiliated, or of a creditor to !hom the co-operative society is indebted, or of not less than /:2 rd of the members of the committee, or of not less than /:/1 th of the total number of members of the co-operative society hold an in#uiry or cause an in#uiry to be made into the specific matters raised in the application relating to the constitution, !or)ing and financial condition of the Co-operative Society& ,0'he egistrar shall order an in#uiry only after the receipt of a fee, from the applicant or applicants, deemed sufficient to meet the costs of the in#uiry to be conducted& ,2'he in#uiry shall be completed !ithin a period of four months from the date of ordering the in#uiry&

66

Provided the egistrar may, for reasons to be recorded in !riting, extend a period of four months for the completion of the in#uiry for a further period not exceeding t!o months each time, sub$ect to a maximum of four months& ,5'he egistrar shall, !ithin a period of one month from the date of completion of in#uiry, communicate the report of the in#uiry ,ato the Co-operative Society concerned.

,bto the applicants and the person designated by the applicants to receive such a report. ,dto any member of a Co-operative Society, to any federation of !hich the co-operative society is a member, to any creditor on payment of fee specified by the egistrar&

Section .-% #nspection of 8ooDs of Account of a Co-operative Society

,/'he boo)s of accounts and other boo)s, auditors report and other papers of every Co-operative Society shall be open to inspection during business hours" ,i,ii,iiiby the members of the Co-operative Society. by the Federation: Financing 9an). 9y egistrar or such Afficer as may be authorised by the egistrar in this behalf" Provided such inspection may be made !ithout giving any previous notice to that Co-operative Society or any officer thereof& ,0It shall be the duty of every %irector, other officer or employee of the Co-operative Society to produce to the person ma)ing inspection under sub-section ,/- all such records of the Co-operative Society in his custody or control and to furnish him !ith any statement, information or explanation relating to the affairs of such Co-operative Society as the said person may re#uire of him !ithin such time and at such place as he may specify& ,2It shall also be the duty of every %irector or other officer or employee of the Co-operative Society to give to the person ma)ing

67

inspection under this section all assistance in connection !ith the inspection !hich the Co-operative Society may be reasonably expected to give& ,5'he person ma)ing the inspection under this section, may during the course of inspection ,i- ma)e or cause to be made copies of boo)s of account and other boo)s and papers, or ,ii- place or cause to be placed any mar)s or identification thereon in to)en of the inspection having been made& ,6Eot!ithstanding anything contained in any other la! for the time being in force or any contract to the contrary, the egistrar or an officer authori*ed by him ma)ing inspection under this section shall have the same po!ers as are vested in a Civil Court under the Code of Civil Procedure, /31? ,6 of /31?- !hile trying a suit, in respect of the follo!ing matters, namely,ithe discovery and production of boo)s of account and other documents at such place and such time as may be specified by such person. summoning and enforcing the attendance persons and examining them on oath. of the

,ii,iii-

inspection of any boo)s, registers and other documents of the Co-operative Society at any place&

,4Such inspection shall be completed !ithin three months from the date of commencement of inspection !hich may for the reasons to be recorded in !riting by the egistrar, be extended for a further period not exceeding t!o months& ,8Ihere an inspection of the boo)s of account and other boo)s and papers of the Co-operative Society have been made under this section the egistrar or the officer authori*ed by him ma)ing the inspection shall ma)e a copy of report along !ith findings to the 9oard of directors of the Co-operative Society !hose responsibility shall be to place the inspection report together !ith the findings of the egistrar before the (eneral body meeting for its information& ,?'he egistrar shall be competent to initiate action under the provisions of this Act if the Committee fails to ta)e action&

68

Section ..% Service of summons/notices/reCuisitions and directions on parties

'he preparation and service of summons: notices:re#uisitions and directions on parties shall be as far as possible by the same means and in the same manner as provided for a Civil Court in the Code of Civil Procedure, /31? and as detailed in the schedule on ;Settlement of %isputes<&

Section ./% Action on special audit report or inCuiry report

,/An communication of a special audit report under section ,42or an in#uiry report under section ,45- to the persons concerned the egistrar may, !here the special audit or in#uiry report reveals mismanagement on the part of any or all of the office-bearers or %irectors, or employees, !ithout pre$udice to any civil or criminal proceedings to !hich they may be liable, direct the board ,a- to convene the (eneral 9ody meeting !ithin such reasonable time as he may specify, to enable him to bring to the notice of the (eneral 9ody, either directly or through his nominee, the findings of the special audit or in#uiry report, for necessary action against the office-bearers and %irectors involved. and ,b- to place the employee,s- under suspension against !hom prima-facie case of misappropriation of funds is established. ,0If the 9oard fails to comply !ith the directions issued by the egistrar under Sub-section ,/-, the egistrar may ,ithe amount. and : or ,iita)e action for supersession of the 9oard under Section 64. and : or ,iii- initiate action under the provisions of Chapter = of the Act& initiate action under Section ,4?- for the recovery of

Section .3% Surcharge

69

Eot!ithstanding anything contained in any la! for the time being in force !herein the course of an audit under Section ,40- or special audit under Section ,42- or an in#uiry under Section ,45- or inspection under Section ,46-, or the !inding of a Co-operative Society under Sections ,88-, ,8?- and ,83- it appears that any person !ho is or !as entrusted !ith the organisation, affairs or management of the Co-operative Society or any past or present officer or servant of the Co-operative Society has misappropriated or fraudulently retained any money or other property or has been guilty of breach of trust in relation to the Co-operative Society or has caused any deficiency in the assets of the Co-operative Society by breach of trust or !illful negligence or has made any payment contrary to the provisions of this Act or the byela!s, the egistrar himself may en#uire or direct any person authori*ed by him by an order in !riting in this behalf of his o!n motion or on the application of the board of the Co-operative Society, li#uidator or any creditor or contributor to en#uire into the conduct of such person regarding the extent to !hich the person !ho has ta)en part in the organisation or management or affairs of the Co-operative Society or any deceased, past or present officer or employee of the Co-operative Society is liable or accountable for any loss or deficiency caused to the Cooperative Society by his omissions and commissions& ,0An the completion of further en#uiry into the conduct of the person under sub-section ,/- the egistrar shall issue a notice to the person or persons concerned furnishing him or them !ith particulars of acts of misapplication or retension or misfeasance or breach of trust and extent of his or their liability involved therein and calling upon him or them to put in statements in his or their defence !ithin thirty days of the date of issue of the notice& ,2An receipt of the statement referred to in sub-section ,0-, the egistrar if he is satisfied that there are reasonable grounds for holding the person or persons liable, shall frame charges& ,5'he person or persons concerned after the charges are framed, to put in his or their statements in defence and to indicate the documentary or oral evidence !hich he:they !ould li)e to produce& 'he egistrar may permit production of other documentary or oral evidence if considered necessary subse#uently& ,6'he egistrar shall thereafter record the evidence led by the In#uiry Afficer or Inspecting Afficer or the Afficer !ho conducted special audit or the li#uidator as the case may be and the Cooperative Society concerned and ta)e on record the documents proved by them and shall thereafter fix a date for hearing arguments of both the parties& ,4An the day fixed for hearing under sub-section ,6-, the egistrar shall hear the arguments and may pass his final orders on

70

the same day or any date fixed by him !ithin fourteen days from the date on !hich the hearing is completed either ordering repayment or restoration of the money or property or any part thereof !ith interest at such rates as the egistrar or the person authori*ed aforesaid thin)s $ust or to contribute such sum to the assets of the Co-operative Society by !ay of compensation in respect of the misappropriation, misapplication of funds, fraudulent retention, breach of trust, or the !illful negligence as the egistrar or the person authori*ed aforesaid thin)s $ust" Provided that no order shall be passed any person,s- referred to in this sub-section unless the person,s- concerned has been given an opportunity of ma)ing his representation& ,8'he egistrar or the person authori*ed as aforesaid shall furnish a copy of his order to the party,ies- concerned !ithin ten days of the date on !hich he ma)es his final order& Any sum ordered under this section to be repaid to a Co-operative Society or recovered as a contribution to its assets may be recovered in the same manner as arrears of land revenue under the Andhra Pradesh evenue ecovery Act, /?45 and the egistrar or the person authori*ed by him in this behalf shall exercise the po!ers of the Collector under this Act& ,?'his section shall apply not!ithstanding that such person or officer or servant may have incurred criminal liability by his act&

71

CHAP !" - #E Settlement of +isputes

Section .4% Settlement of +isputes
,/If any dispute touching the constitution, management or business of a Cooperative arises ,a,bamong members, past members and persons claiming through members and deceased members. or bet!een a member, past member or a person claiming through a member, past member or deceased member and the co-operative society, its board or any officer, agent or employee of the Co-operative Society, or li#uidator, past or present. or bet!een the Co-operative Society or its board and any past board, any officer, agent or employee, or any past officer, past agent of past employee or the nominee, heirs or legal representatives of any deceased officer, or deceased employee of the Co-operative Society, not being the dispute regarding disciplinary action ta)en by the Society. or bet!een the Co-operative Society and any other Cooperative Society or bet!een a Co-operative Society and li#uidator of another Co-operative Society or bet!een the li#uidator of one Co-operative Society and the li#uidator of another Co-operative Society. or a surety of a member, past member or a deceased member or a person other than a member !ho has been granted a loan by the Co-operative Society, !hether such surety is or is not a member of Co-operative Society.

,c-

,d-

,e-

Such dispute shall be referred to the egistrar for decision and no Court shall have $urisdiction to entertain any suit or other proceeding in respect of such dispute& Explanation"include"For the purposes of this section a dispute shall

,i- a claim by Co-operative Society for any debt or other amount due to it

72

from a member, or any employee, or the nominee, heir or legal representative of a deceased member, or an employee, !hether such debt or other amount be admitted or not. ,iia claim by a surety against the principal debtor !hether the Cooperative Society has recovered from the surety any amount in respect of any debt or other amount due to it from the principal debtor as result of the default of the principal debtor !hether such debt or other amount due to, be admitted or not. ,iii- a claim by a Co-operative Society against the member, past member or the nominee, heir or legal representative of a deceased member for the delivery of possession to the Co-operative Society of land or other immovable property resumed by it for breach of the conditions of assignment or allotment of such land or other immovable property& ,0If any #uestion arises !hether a dispute referred to the egistrar under this section is a dispute touching the constitution, management or the business of the Co-operative Society, such #uestion shall be decided by the egistrar& ,2'he period of limitation in the case if any dispute except those mentioned in other provisions of this Act shall be regulated by the provisions of the Cimitation Act, /342, as if the dispute !ere a suit and the arbitrator a Civil Court&

Section /6% Action to be taDen by the "egistrar on such reference

'he egistrar shall on receipt of the reference of a dispute under section ,4?,a,b7lect to decide the dispute himself. or transfer it for disposal to an officer subordinate to him !ho has been invested by the (overnment !ith the po!ers in that behalf as belo!" refer it for disposal to an arbitrator. 73

,c-

7xplanation"- For the purpose of this section the mean ,a-

egistrar shall

Additional egistrar of Co-operative Societies in respect of all disputes relating to Jousing Co-operative Societies located in the districts of Jyderabad and angareddy, monetary disputes !ith claims exceeding s&6&11 crores& Doint egistrar:%istrict Co-operative Afficer in all districts of the State in respect of all non-monetary disputes, monetary disputes !ith claims ranging from s&/&11 crore to s&6&11 crores and disputes coming under section ,43-,/-,c-& %eputy egistrars in respect of all monetary disputes !ith claims ranging from s&61&11 la)hs to s&/&11 crore& Assistant egistrars in respect of monetary disputes !ith claims belo! s&61&11 la)hs&

,b-

,c-

,d-

,0'he egistrar may by order for reasons to be recorded therein !ithdra! any reference transferred under clause ,b- of sub-section ,/- or referred under clause ,c- of that sub-section and may elect to decide it himself or refer the same to another arbitrator for decision& ,2'he egistrar or any other person to !hom the dispute is referred for decision under this section may, pending decision on the dispute ma)e such interlocutory orders as he may deem necessary in the interest of $ustice& ,5'he period of limitation for referring a dispute touching the Constitution, management or the business of a Co-operative Society to the egistrar under sub-section ,/- of ,4?- of the Act shall be regulated by the provisions of Cimitation Act, /342 as if the dispute is a suit and the egistrar, a Civil Court& Provided that a dispute arising bet!een the parties mentioned in clause ,c- of sub-section ,/- of section ,4?- of the Act shall !here the dispute relate to any Act or omission on the part of the Cooperative Society, or its Committee and any past Committee, any officer, agent or employee, or any past officer, past agent, or past employee or the nominee or legal representative of any deceased officer, deceased agent, deceased employee of the Co-operative Society may refer to the egistrar !ithin six years from the date of !hich the Act or omission !ith reference to !hich the dispute arose had occurred&

74

,6'he egistrar or his subordinate officer vested !ith the po!ers of the egistrar or the arbitrator deciding the dispute shall record a brief note of the evidence of the parties and !itnesses !ho attended and upon the evidence so recorded, and after consideration of any documentary evidence produced by the parties, shall pass a decision in accordance !ith the $ustice, e#uity and good conscience and such decision given shall be in !riting& In the absence of any party duly summoned to attend, the dispute may be decided ex-parte& ,4'he proceedings of the arbitrator shall be governed as far as practicable by the provisions of Code of Civil Procedure, /31? ,Central Act > of /31?- and as detailed in the schedule on ;Settlement of %isputes<&

Section /$% Constitution of Co-operative

ribunals

,/'he Sate (overnment may, by notification in the official ga*ette constitute Co-operative 'ribunals for the ad$udication of appeals under this Act and to exercise all appellate and revisional po!ers exercised by the (overnment under the Andhra Pradesh evenue ecovery Act, /?45& ,0'he Co-operative 'ribunal shall consist of a Chairman and not more than t!o members and a Presenting Afficer appointed by the (overnment& ,2'he Chairman shall be the person !ho is or has been a $udicial officer not belo! the ran) of a %istrict Dudge and a member shall be a person !ho holds or held a post not belo! the ran) of Additional egistrar of Co-operative Societies and a Presenting Afficer shall be not belo! the ran) of a Special Category %eputy egistrar& ,5'he Presenting Afficer has to receive on his behalf and on behalf of the State (overnment notices issued by the Co-operative 'ribunal, to present the case:records pertaining to (overnment and its officers, to appear, act and plead on his behalf and on behalf of the State (overnment in all proceedings before the Co-operative 'ribunal&

75

,6'he (overnment may from time to time li)e!ise reconstitute any Co-operative 'ribunal constituted under sub-section ,/- or may abolish such Co-operative 'ribunal& ,4'he #uorum to constitute a meeting of a Co-operative 'ribunal and the manner of ta)ing decision there at and the procedure and conduct of its business shall be summary and shall be governed as far as practicable by the provisions of the code of Civil Procedure, /31? ,Central Act > of /31?-& ,8Eo Act or proceeding of any Co-operative 'ribunal shall be deemed to be invalid by reason only of the existence of any vacancy among its members or any defect in the constitution or reconstitution thereof& ,?A dispute relating to or in connection !ith any election to the office of the President of a primary society, a committee, a member of a committee shall be preferred to the Co-operative 'ribunal having $urisdiction over the place !here the main office of the Cooperative Society is situated !ithin one month from the date of declaration of results of such election and such dispute shall be disposed of !ithin a period of four months from the date of filing of the dispute&

CHAP !" - E )ffences and Penalties

Section /&%
,/-

)ffences

'he follo!ing shall constitute offences under this Act. ,a,bviolation of the provisions of the Act and byela!s. failure to hand over the records of the co-operative society to the person authori*ed to have the custody of the records. indulging in fraudulent activities concerning the constitution, management and business of the cooperative society.

,c-

76

,d-

carrying on trade or business under any name or title of !hich the !ord ;co-operative< or its e#uivalent in any Indian language forms part. failure to give a notice, send a return or document, or failure to do or allo!ing to be done any act !hich a cooperative society is by this Act or under its byela!s re#uired to give, send, do, or allo! to be done. !illfully ma)ing a false return or furnishing insufficient : false information. or !illfully does not furnish any information re#uired from him:her by a person authori*ed in this behalf under the provisions of this Act& !illfully neglecting or refusing to do an act or to furnish information for the purposes of this Act or doing an act forbidden by this Act or the byela!s. !illfully !ithout any reasonable excuse disobeying any summons, re#uisition or la!ful return order issued under the provisions of this Act. failure by an employer !ithout sufficient cause to pay to the 7mployee Co-operative Society the amount deducted by him from the salary !ithin a period of Fourteen days on !hich such deduction is made. !illful, failure by any Afficer or custodian to handover custody of boo)s, accounts, documents, records, cash, security and other property belonging to a co-operative society of !hich he is an Afficer or custodian. to an authorised person. the funds and property of the co-operative

,e-

,f,g-

,h-

,i-

,$-

,)-

,lmisusing society. ,m-

indulging in ;corrupt practices< before, during or after the elections of the members of the 9oard as defined under section /02 of the epresentation of People Act, /36/. non-admission of ne! members by the administrators !hen the 9oard is under supersession. non-fulfilling the obligation on the part of a Co-operative Society to ma)e available its products and services to its eligible members !hen available.

,n,o-

77

,p-

failure of a member in patronising his Co-operative Society !hen all other conditions in regard to services in open mar)et being e#ual. A person other than a Co-operative Society carrying on trade or business under any name or title of !hich the !ord ;Co-operative< or its e#uivalent in any Indian language forms part&

,#-

Provided that !here the 9oard of %irectors, an Afficer, employee or any member of a Co-operative Society is guilty of misappropriation, fraud, breach of trust, cheating or any other act involving moral turpitude, resulting in a loss to the Co-operative Society or erosion of its !or)ing capital, he shall be punishable under the relevant provisions of the Indian Penal Code, /?41 ,Central Act 56 of /3?1-& ,0'he follo!ing shall constitute corrupt practices under this Act& ,i- Ihere any Afficer of a Co-operative Society or an employee or a paid servant or any member of such Co-operative Society,-,a- commits any irregularity in receipt or sanction of loans or in purchases or causes deficit in stoc)s. or ,b-accepts or obtains or agrees to accept or attempts to obtain from any person for himself or for any other person, any gratification !hatever, other than legal remuneration as a motive or re!ard for doing or forbearing to do any official act or sho!ing or forbearing to sho!, in the exercise of his official functions or duties, favour or disfavour to any person or rendering or attempting to render any service or dis-service to any person. or ,c- uses or allo!s the use of funds of the society other!ise than in accordance !ith the provisions of this Act or the byela!s of the society. or ,d-signs in the minutes boo)s of committee meetings of the Co-operative Society !ithout actually attending such meetings. or ,e- passes a meeting !ithout proper #uorum as valid, he shall be deemed to be guilty of a corrupt practice in relation to the Co-operative Society&

78

,ii- Explanation"-- For the purposes of this section,-,a- Kirregularity in receipt or sanction of loan includes ,b- receipt of loan by or sanction of loan to any person !ho does not o!n or cultivate a land or the extent of land sho!n in the application for loan, !here o!ning or cultivating land is a condition precedent for the sanction of loan. and ,c- fictious loan. ,d- Kirregularity in purchases includes purchases, made !ith the intention to gain !rongfully of,-,i- sub-standard or adulterated goods. ,ii- goods by paying higher price. ,iii- goods in excess of re#uirement& ,27very person guilty of a corrupt practice shall be punishable !ith imprisonment for a term !hich may extend upto one year or !ith fine !hich may extend to rupees five thousand or !ith both&

Section /'% offences

Presumption as to commission of in certain cases%-

,/In the trial of offences by the Court it shall be presumed until the contrary is proved that any member, officer or employee of a society" ,a!ho dra!s the amounts from the financing institutions and fails to properly disburse or account for it, has misappropriated the amounts. !ho is responsible for the custody of boo)s and properties or !ho is in actual possession thereof, fails to produce the same on re#uisition by the egistrar or any person authori*ed by him, has !illfully !ithheld the same. !ho ma)es any false entries or manipulates or alters the account boo)s of the Co-operative Society, has !illfully committed the said act in order to cause loss or damage to the Co-operative Society.

,b-

,c-

79

,i- !ho misuses the properties of the Co-operative Society in contravention of the provisions of the Act and the rules made thereunder or the byela!s of the Co-operative Society has done so, for his personal benefit. ,ii- !ho executes any documents or enters into an agreement for sale or purchase of the land plots in contravention of the provisions of the registered byela!s of the Co-operative Society, has done so for his personal benefit and in order to cause loss to the members of the Co-operative Society& ,0Any member, officer or employee of a Co-operative Society !ho issues any receipt shall be deemed to have issued the same in the name of the Co-operative Society and shall be responsible to account for the same& ,2Eot!ithstanding the criminal liability the member, officer or employee of a Co-operative Society shall be responsible to ma)e good the loss caused to the Co-operative Society by committing such offences and the same shall be recovered as arrears of land revenue by the egistrar or the person authori*ed by him from the person responsible for causing such loss or his legal heirs or any person !ho has ac#uired the properties from such person or !ith the assistance of such person&

Section /,% Presumption as to statements

Ihere any member, officer or employee of a Co-operative Society has made a statement during the en#uiry under Section ,45- or inspection under Section ,46- and the statement is recorded by the egistrar or the person authori*ed by the egistrar in exercise of their po!ers conferred on them under this Act, the Court shall presume that the statement !as so recorded by the egistrar or the person authori*ed by him as a statement !ithin the meaning of the Indian evidence Act, /?80&

Section /-% Penalties

Any person !ho commits any of the offences specified in Section ,80-,/- of the Act shall be liable for a fine of s&01,111:- for each of the offences committed, !ithout pre$udice to the civil or criminal liability that may arise on such person under any other la!s for the time being in force& 80

Section /.% Authority to taDe cogni5ance

,/Eo Court inferior to that of a +agistrate of First class or a +etropolitan +agistrate shall try any offence under this Act& ,07very offence under this Act shall, for the purpose of the code of Criminal Procedure, /382 ,Central Act 0 of /385- be deemed to be cogni*able& ,2Eo prosecution shall be instituted under this Act !ithout the previous sanction of the egistrar

CHAP !" - E#

+#SS):? #)2
Section //% +issolution by *embers

81

,/- 'he general body of a Co-operative Society may authori*e the dissolution of the Co-operative Society& ,0'he board shall cause a notice for a general meeting to be sent to each member for the purpose of authori*ing dissolution& ,2A notice to attend such general meeting shall also be sent to the egistrar of Co-operative Societies, to any federation:s to !hich the Co-operative Society is affiliated, to any Co-operative Society:s !ith !hich a partnership contract has been entered in, to auditors and to any subsidiary organi*ation of the Co-operative Society to attend the meeting& ,5epresentatives under sub-section ,2- shall have the right to ma)e a presentation to the general body& ,6For the purpose of sub-section ,0-, dissolution is authori*ed !hen the members approve the dissolution by a special resolution of 0:2rd of members present and voting& ,4Iithin fifteen days of such authori*ation for dissolution, the Co-operative Society shall send to the egistrar of Co-operative Societies a copy of the authori*ation to dissolve the co-operative society, by registered post& ,8'he authori*ation approved in pursuance of sub-section ,6- is re#uired to set out" 'he assets and liabilities of the Co-operative Society. the claims of any creditors. the number of members. and the nature and extent of the members interest in the Co-operative Society. and (e) the name of the li#uidator, if appointed by the (eneral 9ody or a re#uest to the egistrar to issue a certificate of dissolution !here there are no assets and liabilities& (a) (b) (c) (d) ,?Ihen the egistrar approves a special resolution passed in pursuance of sub-section ,6-, he shall cause a notice of the special resolution to be published once a !ee) for t!o !ee)s in the A&P& (a*ette and in a ne!spaper having general circulation in the district !here the registered office of the Co-operative Society is located& ,3'he egistrar may re#uire from the Co-operative Society, li#uidator or trustee appointed by the Co-operative Society or any other person !ho is re#uired to furnish information, a periodical return sho!ing"--

82

,a- 'he progress of dissolution. ,b- the distribution of any undistributed surplus or reserve. ,c- the progress of the administration of a trust established in accordance !ith this section. and ,d- any other information that he:she may re#uire& Explanation"- In this section ,a;interest< means the interest of a member in a Cooperative Society and includes shares, members loans, deposits and obligations of any )ind that" iii,barise by virtue of the byela!s of the Co-operative Society. and are o!ed by the Co-operative Society to the member&

;Hnallocated surplus< includes any net proceeds from the sale of assets on dissolution of the Co-operative Society after the liabilities of the Co-operative Society and the claims of creditors, members and others have been satisfied&

Section /3% "egistrar

+issolution/+e-registration by

,/'he egistrar shall, at any time, of his o!n motion and after giving the society an opportunity of ma)ing its representation, if any, by order, de-register a Co-operative Society"iif the membership of the Co-operative Society has fallen belo! ten, the minimum number prescribed for registration of such Co-operative Society. or if the Co-operative Society has not commenced business !ithin t!o years after the date sho!n on its certificate of registration. or if the Co-operative Society has not carried on business for t!o consecutive years. or

ii-

iii-

83

if the Co-operative Society is no longer operating in accordance !ith the co-operative principles and provisions of this Act& ,0A Co-operative Society de-registered under sub-section ,/shall cease to conduct its business forth!ith from the date of such order& ,2Ihere a Co-operative Society is de-registered the egistrar shall appoint a li#uidator for !inding of the affairs of the Cooperative Society and fix his remuneration&

iv-

Section /4%

+issolution by Court order

,/'he egistrar or an interested person may, after giving the Co-operative Society three months notice of the proposed application, apply to a court of senior Civil Dudge for an order dissolving a Co-operative Society, !here the Co-operative Society-a- Abtained its registration by mista)e or fraud. b- exists for illegal purpose. c- has !illfully, after notice by the egistrar violated any of the provisions of this Act or its byela!s. d- is no longer operating on a co-operative basis& ,0Ihere an interested person applies in pursuance of this section, he:she shall give the egistrar notice of his:her application and the egistrar is entitled to appear and be heard in person or by counsel& ,2Ihere the court receives an application in pursuance of this section, it may order that the Co-operative Society be dissolved or li#uidated and dissolved under the supervision of the egistrar& ,5Ihere the egistrar receives an order made in pursuance of subsection ,2-, he:she shall a- !here the order is to dissolve the Co-operative Society, issue a certificate of dissolution. or b- !here the order is to li#uidate and dissolve the Cooperative Society under the supervision of the egistrar, publish a notice in the ga*ette&

Section 36% Appointment of liCuidator

84

Ihere a Co-operative Society is to be li#uidated and dissolved and no li#uidator is appointed by the general body or the court, the egistrar may ,a,bappoint any person as a li#uidator to !ind up the affairs of the Co-operative Society. or !here he:she is satisfied that the Co-operative Society has no assets and liabilities, issue a certificate of dissolution&

Section 3$% +uties of liCuidator

An his:her appointment, a li#uidator shall ,a-

immediately give notice of his:her appointment. ,i,iiin the case of a li#uidator not appointed by the egistrar, to the egistrar. and to each claimant and creditor )no!n to the li#uidator&

,b-

immediately publish notice of his:her appointment in the A&P& (a*ette once a !ee) for t!o consecutive !ee)s and in a ne!spaper published or distributed in the place !here the co-operative society has its registered office and ta)e reasonable steps to give notice of the li#uidation in the $urisdiction of the Co-operative Society !here it carries on business. place in the notice mentioned in clause ,a- and ,b- a provision re#uiring any person ,iindebted to the Co-operative Society, to render an account and pay to the li#uidator at the time and place specified any amount o!ing. possessing property of the Co-operative Society, to deliver it to the li#uidator at the time and place specified. and having a claim against the Co-operative Society, !hether li#uidated, unli#uidated, future or contingent, to present particulars of the claim in !riting to the li#uidator not later than t!o months after the first publication of the notice.

,c-

,ii-

,iii-

,d-

ta)e into custody and control the property and assets of the Co-operative Society.

85

,e,f,g-

open and maintain a trust account for the moneys of the Co-operative Society. )eep accounts of the moneys of the Co-operative Society received and paid out by him:her. maintain separate lists of the members, creditors and other persons having claims against the Co-operative Society. ta)e action for recovery of dues from members, past members or deceased members by filing arbitration references, and obtaining a!ards initiating 7xecution proceedings and passing contribution orders as outlined in the schedule on li#uidation proceedings. !here at any time he:she determines that the Cooperative Society is unable to pay or ade#uately provide for the discharge of its obligations, apply to the egistrar for directions. and deliver to the egistrar, at least once in every six months period or more often after his:her appointment as the egistrar may re#uire, financial statements of the co-operative society in any form that the li#uidator considers proper or that the egistrar may re#uire&

,h-

,i-

,$-

Section 3&% Powers of liCuidator

,/'he li#uidator may ,a,b,c,d,e,f,gretain la!yers, accountants, engineers, appraisers and other professional advisors. bring, defend or ta)e part in any civil, criminal or administrative action or proceeding in the name and on behalf of the Co-operative Society. carry on the business of the Co-operative Society as re#uired for an orderly li#uidation. sell by public auction or by private sale any property of the Co-operative Society. do all acts and execute any documents in the name and on behalf of the co-operative society. borro! money on the security of the property of the Co-operative Society. settle or compromise any claims by or against the cooperative society. and

86

,h,i-

do all other things that he:she considers necessary for the li#uidation of the Co-operative Society and distribution of its property and funds. pass contribution orders against members, or past members, or deceased members, their heirs or legal representatives to recoup the deficits of a Co-operative Society under !inding up after giving an opportunity to them of being heard&

,0Ihere a li#uidator has reason to believe that any person has in his:her possession or under his:her control or has concealed, !ithheld or misappropriated any property of the co-operative society. he:she may apply to the Court of senior Civil Dudge for an order re#uiring that person to appear before the Court at the time and place designated in the order and to be examined& ,2Ihere the examination mentioned in sub-section ,0- discloses that a person has concealed, !ithheld or misappropriated property of the co-operative society, the court may order that person to restore the property or pay compensation to the li#uidator on behalf of the co-operative society& ,5Eo li#uidator or his:her relatives shall purchase, directly or indirectly, any part of the stoc)-in-trade, debts or assets of the cooperative society&

Section 3'%

ermination of +issolution proceedings

,/'he dissolution proceedings shall be closed !ithin a period of three years from the date of the order of dissolution& After the expiry of three years, if the charged:mortgaged assets are ad$udged defective in title involving disputes !ith either encumbrances or posing problems of getting possession, or protracted litigation, on submission of a detailed action ta)en report relating to such property by the li#uidator, the egistrar may direct disposal of such assets through Assets e-construction Company regulated by the eserve 9an) of India, or recovering the same as if it !ere a money debt&

Section 3,% >inal Account

,/A li#uidator shall pay the costs of li#uidation out of the property of the co-operative society and shall pay or ma)e ade#uate provision for all claims against the co-operative society& ,0After paying or ma)ing ade#uate provision for all claims against the Co-operative Society, the li#uidator shall convene a 87

(eneral 9ody meeting and present a summary of actions ta)en by him to settle all claims and !ith the resolution of the (eneral 9ody shall apply to the egistrar for approval of his:her final accounts and for permission to distribute in money or in )ind the remaining property of the Co-operative Society in accordance !ith the byela!s& ,2Ihere the egistrar approves the final accounts rendered by a li#uidator in pursuance of sub-section ,0-, he:she shall ab,5issue directions !ith respect to the custody or disposal of the documents and records of the co-operative society. and discharge the li#uidator&

Ihere the egistrar discharges a li#uidator pursuant to subsection ,2-, he :she issue a certificate of dissolution& 'he Co-operative Society ceases to exist on the date sho!n in the certificate of dissolution, !hich shall not be later than sixty months after the appointment of the li#uidator&

88

CHAP !" - E##

!0ecution of +ecrees, +ecisions, Awards and )rders

Section 3-% !0ecution orders relating to recovery of amounts
7very decision or order made under Section ,2?- or Section ,4?- or Section ,3/- or section ,35-, if not carried outL ,a- An a certificate signed by the egistrar or any person authori*ed by him in !riting in this behalf, be deemed to be a decree of Civil Court and shall be executed in the same manner as if it !ere a decree of such Court and such decree shall be executed by the egistrar or any person authori*ed by him in !riting in this behalf by attachment and sale or sale !ithout attachment of any property of the person or a Co-operative Society against !hom the decision or order has been made. or ,b-Ihere the decision or order provides for the recovery of money, be executed according to la! for the time being in force for the recovery of arrears of land revenue and for the purpose of such recovery, the egistrar shall have the po!ers of a Collector under A&P& evenue ecovery Act, /?45& Provided that any application for the recovery of any sum shall be made !ithin t!elve years from the date fixed in the decision or order and if such no date is fixed, from the date of decision or order, as the case may be. or

89

,c- be executed by the egistrar or any person authori*ed by him in !riting in this behalf by attachment and sale or sale !ithout attachment of any property of the person or a Co-operative Society against !hom the decision or order has been made as per schedule ;on procedure in execution of decree, decision, a!ard or contribution order<& ,/- Sale of properties sub$ected to charge" Eot!ithstanding anything contained in this Act or in any other la! for the time being in force and !ithout pre$udice to any other mode of recovery !hich is being ta)en or may be ta)en, the egistrar or any person subordinate to him and empo!ered by the egistrar in this behalf may on an application from a Co-operative Society for the purpose, recover any debt or outstanding demand due to the Co-operative Society by any member, or past or deceased member by sale of property or interest in property !hich is sub$ect to a charge& Provided no sale shall be ordered under this section unless the member, or past member or the nominee, heir or legal representative of the deceased member has been served, !ith a notice of the application to sell and has failed to pay the debt or outstanding demand !ithin fifteen days from the date of such service& ,0- 7xecution of non-monetary orders" 7very order or decision of a non-monetary nature made under the provisions of section ,43- section ,3/-, ,32- or section ,35- shall be executed by the Cooperative 'ribunal having $urisdiction as if such order or decision is a decree of that Court on a certificate issued by the egistrar or any person authori*ed by him in this behalf& ,2- Publication of information respecting members !ho are overdue defaulters to Co-operative Societies" If the financing ban) is of opinion that it is necessary or expedient in the public interest or for the purpose of securing the recovery of any debt or outstanding demand due to any Cooperative Society !hich is affiliated to the financing ban) to publish the names of any members, past or deceased members from !hom any debt or outstanding demand is due to the Co-operative Society,

90

the financing ban) may cause to be published in such a manner as it thin)s fit the names of such members& ,5- Afficers to be Public Servants" 'he egistrar or any person authori*ed by him to recover any amount or to execute any orders issued or decisions ta)en under any of the provisions of this Act shall be deemed to be a Public Servant !ithin the meaning of section 0/ of the Indian Penal Code, /?41&

Section 3.% Power of "egistrar to issue certificate for recovery of sums due from members of a Co-operative Society
,/Eot!ithstanding anything contained in this Act or in any other la! time being in force and !ithout pre$udice to any other mode of recovery !hich is being ta)en or may be ta)en under this Act or any other la! for the time being in force, the egistrar may on his o!n motion or on the application made by a Co-operative Society : financing ban) : federal co-operative society for the recovery of any sum due to it from any of its members and after ma)ing such in#uiry as it deems fit, issue a certificate for recovery of such sums" Provided that every application under this sub-section made by a Co-operative Society : financing 9an) : federal Co-operative Society shall be accompanied by a statement of accounts in respect of sums to be recovered from the member& Provided further that no such certificate under this sub-section shall be issued unless the member concerned has been given an opportunity of ma)ing his representation& ,0A certificate issued by the egistrar under the sub-section ,/shall be final and conclusive evidence of the sum due to the cooperative society from its members and the same may be recovered as if it !ere arrears of land revenue and for the purposes of such recovery, the egistrar shall have the po!ers of a Collector under A&P& evenue ecovery Act, /?45&

Section decision

3/%

Attachment

of

property

before

or order
If the egistrar is satisfied on application, report, in#uiry or other!ise that any person !ith intent to delay or obstruct the 91

enforcement of any decision or order that may be made against him under the provisions of this Act,ais about to dispose of the !hole or any part of his property. or ,bis about to remove the !hole or any part of his property from the $urisdiction of the egistrar, the arbitrator or li#uidator as the case may be he may, unless ade#uate security is furnished, direct the attachment of the said property and such attachment shall have the same effect as if made by a Civil Court& a direction made for the attachment of any property under this section may be !ithdra!n by the Cooperative 'ribunal: egistrar !hen the party concerned furnishes the security re#uired together !ith security for the cost of the attachment or !hen the egistrar decides that the party need not pay or restore any money or property or any part thereof !ith interest or contribute any sum to the assets of the co-operative society by !ay of compensation. or !hen the dispute referred under Section ,43- of this Act has been decided against the party at !hose instance the attachment !as made. any attachment made under this section shall not affect the rights existing prior to the attachment, of persons not parties to the proceeding in connection to !hich the attachment !as made, nor bar any person holding a decree against the person !hose properties attached from applying for the sale of the property under attachment in execution of such decree.

,c-

,d-

,e-

(f) !here the property is under attachment by virtue of this section and a decree is subse#uently passed against the person !hose property is attached, it shall not be necessary to ma)e an application for re-attachment of the property for the purpose of sale of such property&

Section 33% #ndemnity

Eo suit, prosecution or other legal proceedings shall lie against the egistrar or, any person subordinate to him or acting on his authority or any nominee of the (overnment for anything !hich is done in good faith or intended to be done in pursuance of any provision of this Act or byela!s made thereunder&

92

Section 34%

Power to summon witnesses and reCuisition documents

,/'he Co-operative 'ribunal constituted under section ,8/-, the egistrar or any person authori*ed by him !hile conducting special audit under section ,42- or in#uiry under section ,45- or an arbitrator appointed under section ,81- or a Ci#uidator proceeding under section ,?/- or inspecting records under Section ,?0- or hearing a evision Petition under section ,32- shall exercise po!ers of a Civil Court in respect of the follo!ing matter namely",/-summoning and enforcing the attendance of any person and examining him on oath or affirmation. ,0-compelling the production of any boo), account, record or other document, cash, security or other property. ,2-issuing a commission for the examination of any !itness. ,5-receiving evidence on an affidavit. ,0'he Co-operative 'ribunal, egistrar, the person authori*ed by him in this behalf by general or special order the arbitrator, the li#uidator, as the case may be, referred to in sub-section ,/-may re#uire any person present before it or him to furnish any information or to produce any document forth!ith in his possession or po!er and shall also have po!er to ta)e, or to authori*e the ta)ing of such copies of the documents, or of any entries therein as it or he may consider necessary& Copy so ta)en shall, !hen certified as per the provisions of this Act, be admissible in evidence for any purpose in the same manner and to the same extent as the original document or the entries therein&

Section 46%

8ar of Furisdiction of Courts

,/Save as other!ise expressly provided in this Act, all orders, refusals, decisions or a!ards passed or directions issued or action ta)en in accordance !ith this Act or bye-la!s made thereunder shall be final sub$ect to the provisions for appeal, revision and revie! and no such order, refusal, decision, a!ard, direction or actual action ta)en shall be liable to be called in #uestion in any court or forum& ,0Ihile a Co-operative Society is being !ound up, no suit or other legal proceeding relating to the business of such Co-operative Society shall be proceeded !ith or instituted against the li#uidator as such or against the society or any member thereof on any matter

93

touching the affairs of the society except by leave of the egistrar and sub$ect to such terms and conditions as he may impose& Provided that !here the order of !inding up of is cancelled the provisions of sub-section shall cease to apply in relation to the Cooperative society and any member thereof, but shall continue to apply to the person !ho acted as li#uidator&

CHAP !" - E### Appeals, "evision and "eview

Section 4$% Appeals
,/Any person or co-operative society aggrieved by any decision passed or order made, ,i,ii,iii,iv,v,vi,vii,viii,ixin respect of registration. or de-registration of a Co-operative Society. or amendment of byela!. or dis#ualification of member or 9oard member. or expulsion of member. or supersession of the 9oard. or in respect of decree or a!ard. or contribution order. or execution of a certificate or a decree. or 94

,xto the

ordering of attachment before $udgement, may appeal Co-operative 'ribunal&

Provided nothing in this sub-section shall apply to any order of !ithdra!al or transfer of a dispute under sub-section ,0- of section ,81-& ,0- An a reference made by the egistrar of Coop& Societies, the Co-operative 'ribunal may call for and examine the record of any proceeding !hich is appealable to it for the purpose of satisfying itself as to the legality or propriety of any decision or order passed and !here it appears to the Co-operative 'ribunal that any such decision or order should be modified, annulled or reversed, Cooperative 'ribunal may pass such order thereon as it may deem fit& ,2Any appeal under sub-section ,/- shall sub$ect to the other provisions of this Act be preferred !ithin sixty days from the date of communication to the appellant of the decision, refusal or order complained of but Co-operative 'ribunal may admit an appeal preferred after the said period of sixty days, if it is satisfied that the appellant has sufficient cause for not preferring the appeal !ithin the said period& ,5In disposing of an appeal under this section, the Co-operative 'ribunal, may after giving the parties an opportunity of ma)ing their representations, pass such order thereon as it may deed fit& ,6'he decision or order of the Co-operative 'ribunal on the appeal shall be final& ,4'he Co-operative 'ribunal may pass such interlocutory order pending the decision on the appeal as it may deem fit& ,8'he Co-operative 'ribunal may a!ard costs in any proceedings before that authority to be paid either out of the funds of the society or by such party to the appeal as the Co-operative 'ribunal may deem fit& ,?An appeal, it shall be competent for the Co-operative 'ribunal to provide information to the members about the affairs and management of a Co-operative Society&

Section 4&% 2o appeal in certain cases

Eot!ithstanding anything contained in this Act, !here !ith the previous sanction in !riting, or on re#uisition by the eserve 9an), a Co-operative 9an) -

95

,a,b-

is being !ound up. or in respect of !hich a scheme of amalgamation or reorganisation is given effect to,

no appeal thereof shall lie against or be permissible, and the sanction or re#uisition of the eserve 9an) shall not be liable to be called in #uestion&

Section 4'% "evision

,/'he egistrar may at any time, suo-moto or an application made to him call for the record of any Afficer subordinate to him or acting on his authority not being a proceeding in respect of !hich an appeal to the Co-operative 'ribunal is provided, to satisfy himself as to the regularity of such proceeding or the correctness, legality or propriety of any decision passed or order made therein. and if, in any case it appears to the egistrar that any such decision or order should be modified, annulled, or reversed or remitted for reconsideration, he may pass orders accordingly& Provided that every application to the egistrar for the exercise of the po!ers under this section shall be preferred !ithin ninety days from the date on !hich the proceeding, decision or order to !hich the application relates !as communicated to the applicant& ,0Eo order pre$udicial to any person shall be passed under subsec& ,/- unless such person has been given an opportunity of ma)ing his representation& ,2'he egistrar may pass such interlocutory orders pending decision on the application for revision as he may deem fit& ,5'he egistrar may a!ard costs in proceedings under this section, to be paid either out of the funds of the society or by such party to the application for the revision as the egistrar may deem fit& Explanation:For the purpose of this section, the expression ; egistrar< means the egistrar of Coop& Societies for the State appointed as such under sub-section,/- of ,?-&

Section 4,% "eview

,/'he Appellate Authority referred to in section ,3/-, may, on the application of any party, revie! its o!n order in any case and pass in reference thereto such order as it thin)s fit. 96

Provided that no such application shall be entertained unless the Appellate Authority is satisfied that there has been a discovery of ne! and important matter or evidence !hich after exercise of due diligence !as not !ithin the )no!ledge of applicant or could not be produced by him at the time !hen the order !as made or that there has been some mista)e or error apparent on the face of the record or any other sufficient reason. Provided further that no such order shall be made under this subsection unless notice have been given to all interested parties and they have been afforded the reasonable opportunity of being heard& ,0An application for revie! under sub-section ,/- by any party shall be made !ithin thirty days from the date of communication of the order of the Appellate Authority sought to be revie!ed& Provided that no application for revie! shall be preferred more than once in resspect of the same order& ,2'he revie!ing authority may pass such interlocutory orders pending the decision on the application for revie! as that authority may deem fit& ,5'he decision or order passed on the application in revie! shall be final& ,6'he revie!ing authority may a!ard costs in any proceedings for revie! to be paid either out of funds of the Co-operative Society or by such party to the application for revie! as it may deem fit&

CHAP !" - E#(

Certain essential privileges to Co-operative Societies

Section 4-% attachment Share or interest not liable for

'he share or interest of a member in the capital of a Co-operative Society or of an employee in the Provident fund established, if any, or the contribution made by a member or past member or from the estate of a deceased member or by any Afficer or by a former officer or the eserve fund of a Co-operative Society or the bad debts reserve of a co-operative society or the Provident fund of its

97

employees invested if any, 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, or Afficer. and an official assignee or a receiver under any la! relating to the insolvency shall not be entitled to or have any claim on such share, or contribution or interest or fund& Provided a Co-operative Society shall have a charge on the share or contribution or interest in the capital and on the deposits of a member or past or deceased member and on any dividend, bonus or profits payable to a member or past member or the estate of a deceased member in respect of any debt due from any of them and may set of any sum credited or payable to any of them in or to!ards payment of any such debt&

Section 4.%

"egister of *embers

Any register or list of members or shares )ept by any co-operative society shall be prima-facie evidence of any of the follo!ing particulars entered therein",a,bthe date on !hich the name of any person !as entered in such register or list as a member. the date on !hich any such person ceased to be a member&

Section 4/% evidence

Admissibility of copy of entry as

,/A copy of any entry in any boo), register or list, regularly )ept in the course of business and in the possession of a co-operative society shall if certified by the Chairperson or the Chief 7xecutive or the li#uidator bearing the seal of the co-operative society, be received in any suit or legal proceedings as prima-facie evidence of the existence of such entry and shall be admitted as evidence of the matters, transactions and accounts therein recorded in the same manner and to the same extent as the original entry is admissible& ,0A Co-operative Society may grant copies of any document obtained and )ept by it in the course of its business, or of any entries in such document excepting of the title deeds lodged !ith it, and any copy so granted shall, !hen certified by the Chairperson or the Chief 7xecutive or Ci#uidator of the co-operative society bearing its seal, be admissible in evidence for any purpose in the same

98

manner and to the same extent as the original documents, or the entries therein, as the case may be& ,2'he charges to be levied for the supply of such certified copies shall be as provided in the byela!s of the Co-operative Society& ,5Eo officer of a Co-operative Society and no officer in !hose office the boo)s of a co-operative society are deposited after li#uidation shall, in any legal proceedings to !hich the co-operative society or the li#uidator is not a party, shall be compelled to produce any of the co-operative societys boo)s or documents the contents of !hich can be proved under the section, or to appear as a !itness to prove the matters, transactions and accounts therein recorded except under an order of a Court or an Arbitrator made for a special cause&

Section 43% registration

!0emption of instruments

from

compulsory

Eothing in clauses ,b- and ,c- of sub-section ,/- of section /8 of the egistration Act, /31? shall apply toL ,/Any instrument relating to shares in a Co-operative Society not!ithstanding that the assets of the Co-operative Society consist in !hole or in part of immovable property. or any debenture issued by any such Co-operative society and not creating, declaring, assigning, limiting or extinguishing any right, title or interest to or in immovable property, except in so far as it entitles the holder thereof to the security afforded by a registered instrument !hereby the co-operative society has mortgaged, conveyed or other!ise transferred the !hole or part of its immovable property or any interest therein to trustees upon trust for the benefit of the holders of such debentures. or an endorsement upon or transfer of any other debenture issued by any such Cooperative Society&

,0-

,2-

CHAP !" - E(

99

Special provisions relating to eligible Co-operative 8anDs

Section 44% +efinitions%In this chapterL ,a,b,c,d;'he said Act< means the %eposit Insurance Corporation Act, /34/ ,Central Act 58 of /34/-. ;eligible Co-operative 9an)< means a Co-operative 9an) as defined in clause ,gg- of Section ,0- of the said Act. ;Corporation< means the %eposit Insurance Corporation established under Section 2 of the said Act. all other expressions used in this Chapter but not defined shall have the meaning respectively assigned to them in the said Act&

Section $66% Special provisions applicable to eligible Co-operative 8anDs

Eot!ithstanding anything in this act, the follo!ing provisions shall apply to an eligible Co-operative 9an), namely",ian order for the !inding up, or an order sanctioning a scheme of compromise or arrangement or of amalgamation or reconstruction, of the ban) may be made under the provisions of this Act only !ith the previous sanction in !riting of the eserve 9an). an order of the !inding up of the ban) shall be made under the provisions of this Act, if so re#uired by the eserve 9an) in the circumstances referred to in Section /2-% of the said Act. if so re#uired by the eserve 9an) in the public interest or for preventing the affairs of the ban) being conducted in a manner detrimental to the interests of the depositors or for securing the proper management of the ban) an order shall be made under the provisions of this Act for the supersession of the 9oard of the 9an) or other managing body ,by !hatever name called- of the ban) and the appointment of a special officer therefore for such periods not exceeding five years in the aggregate as may, from time to time, be specified by the eserve 9an). 100

,ii-

,iii-

,iv-

an order for the !inding up of the ban) 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 !hatever name called- of the ban) and the appointment of a special officer therefore made !ith the previous sanction in !riting or on the re#uisition of the eserve ban) shall not be liable to be called in #uestion in any manner. and the li#uidator or the insured ban) or the transferee ban), as the case may be, shall be under an obligation to repay the corporation in the circumstances to the extent and in the manner referred to in Section 0/ of the Act&

,v-

101

CHAP !" - E(# Special provisions applicable to Co-operative Credit Societies identified under "evival PacDage
Section $6$% +efinitions

In this chapter unless the context other!ise re#uires,,a;Agricultural Co-operative Credit society< means the Andhra Pradesh State Co-operative 9an) ,APCA9-, the %istrict Co-operative Central 9an) ,%CC9- and the Primary Agricultural Co-operative Credit Society ,PACS-& A Primary Agricultural Co-operative Credit Society includes Farmers Service Co-operative Society ,FSCS-, Co-operative ural 9an) ,C %-, Carge Si*ed Cooperative Society ,CSCS- or any other Co-operative Credit Society primarily dealing !ith agricultural credit at primarily level included under the evival Pac)age and other similar relief measures offered by the (overnment of India from time to time. ;Scheduled Area< means such areas as the President may by order declare to be Scheduled Area ,under Fifth Schedule to Article 055,/- of the Constitution of India-& All other expressions used in this chapter but not defined shall have the same meaning respectively assigned to them in section ,8- of the Act&

,b-

,c-

Section $6&% Special provisions applicable Agricultural Co-operative Credit Societies

to

Eot!ithstanding anything contained in the Act, the follo!ing provisions shall apply to the Co-operative Credit Societies, namely",/,aAn associate member !ho is an individual or a group depositor holding a minimum deposit of s&6,111:, upees Five thousand only- in normal areas and s&0,611:- , upees '!o thousand and five hundred onlyin scheduled areas or a higher sum as may be prescribed, for a continuous period of minimum t!o years preceding the date of notification of election in a

102

Primary Agricultural Co-operative Credit Society shall have full voting rights& ,bA group borro!er, !hich is an associate member and availed a minimum loan of s&/1,111:- , upees ten thousand only- or higher amount of loan as may be specified for at least 4 ,six- months preceding the date of notification of elections in a Primary Agricultural Cooperative Credit Society shall have full voting rights& 7very group borro!er or a group depositor !hich is an associate member as described under section ,8- shall be entitled to vote through one delegate nominated by the group&

,c-

,0'he Agricultural Co-operative Credit Society shall have autonomy in all financial and internal administrative matters, sub$ect to the guidelines of eserve 9an) of India: Eational 9an) for Agriculture and ural %evelopment in the follo!ing areas",i,ii,iii,iv,v,2,aInterest rates on deposits and loans. borro!ing and investments. loan policies and individual loan decisions. personnel policy, staffing, recruitment, posting, and compensation to staff. and internal control systems, appointment of auditors and compensation for the audit& 'he state (overnments e#uity in a Co-operative Credit Society shall not exceed 06M of the paid up share capital& 'he State Co-operative Credit Society may reduce the State e#uity further at its choice& 'here shall be only one (overnment nominee on the +anaging Committee of the Andhra Pradesh State Cooperative 9an): %istrict Co-operative Central 9an) as long as the e#uity of (overnment continues and there shall be no (overnment nominee on the managing committee of a Primary Agricultural Co-operative Credit Society&

,b-

Provided that the existing nominee,s- on the managing committee shall continue till the expiry of their current term& Jo!ever, they shall not have any voting right in any election or in the motion of no confidence& ,5An Agricultural Co-operative Credit Society may affiliate or disaffiliate !ith a federal society at its choice&

103

,6An Agricultural Co-operative Credit Society shall have the freedom of entry and exist at any tier and there shall be no mandatory restrictions of geographical boundaries for its operation& ,4An Agricultural Co-operative Credit Society may invest or deposit its funds in any financial institution regulated by eserve 9an) of its choice !ith a minimum net !orth an any other criteria as may be prescribed by EA9A % from time to time and not necessarily in the federal society to !hich it is affiliated& ,8An Agricultural Co-operative Credit Society may obtain loans from any financial institution regulated by eserve 9an) and refinance from EA9A % or any other refinancing agency directly or through any 9I regulated financial institution of its choice and not necessarily from the federal society to !hich it is affiliated& ,?'he egistrar shall frame guidelines for payment of dividend by a PACS in consultation !ith EA9A %& ,3'here shall be no compulsion on contribution to any fund other than those re#uired for improving the net !orth: o!ned funds of a Co-operative Credit Society& ,/1- ,a- A member of managing committee representing an Agricultural Co-operative Credit Society on the managing committee of APCA9:%CC9 shall be dis#ualified by the egistrar in the event of such society committing a default for a period exceeding one year on intimation of such default by the Chief 7xecutive of the ban) concerned& ,b- A member of managing committee representing society other than PACS on the managing committee of APCA9:%CC9 shall be dis#ualified by the egistrar in the event of such society committing a default for a period exceeding 31 ,ninety- days on intimation of such default by the Chief 7xecutive of the ban) concerned& ,//- A defaulting member shall not be eligible to be elected to the managing committee of a Co-operative Credit Society and a defaulting office-bearer of a PACS shall not continue on such managing committee for more than one year unless the default is cleared& ,/0- 'he egistrar shall ensure that the regulatory prescriptions of the 9I in the case of APCA9:%CC9 including their !inding up or supersession of their managing committee are implemented and the Ci#uidator:Special Afficer, as the case may be, is appointed !ithin one month of being so advised by 9I&

104

,/2- ,a- 'he supersession of the managing committee of APCA9:%CC9 under section ,64- of the Act shall be done only in consultation !ith the eserve 9an) of India& ,b- 'he supersession of the managing committee of a Primary Agricultural Co-operative Society under section ,64- of the Act shall be done only on the follo!ing grounds",iIf a Co-operative Society incurs losses for three consecutive years, or if serious financial irregularities or frauds have been identified, or if there are $udicial directives to this effect, or if there is lac) of #uorum for three consecutive meetings, or if there is a failure in getting the audit conducted as per the Act, or if there is a failure in conducting general body meeting as per the Act, or if there is !illful disobedience or failure to comply !ith any la!ful direction:guidelines issued by the egistrar& egistrar shall conduct elections to the Co-operative

,ii,iii,iv,v,vi,vii-

,/5- ,aSociety

'he

before the expiry of the term of the existing managing committee and in case of supersession of managing committee, the egistrar shall conduct elections invariably !ithin six months from the date of supersession& ,b- A member of the managing committee of PACS !hich has been superseded due to a reason mentioned in clause ,/2-,b-,iand ,iiabove shall not be entitled to contest against for a period of five years after supersession&

105

,/6- 'he byela!s of the Co-operative Credit Society shall be registered by the egistrar !ithin 21 ,thirty- days from the date of receipt of application& Provided that if the byela! are contrary re$ect the same duly ,thirty- days from the egistrar is satisfied that the proposed to the provisions of the Act, he shall recording his reasons thereon !ithin 21 date of the receipt of application&

,/4- 'he prudential norms including Capital to is) Ieighted Assets atio ,C A - shall be prescribed by the egistrar for all the PACS in consultation !ith EA9A %& ,/8- 'he directors:Chief 7xecutive Afficers of APCA9 and a %CC9 !ho do not fulfil the fit and proper criteria stipulated by 9I shall be removed by the egistrar:Appointing Authority at the re#uest of EA9A %: 9I& ,/?- 'here shall be co-option of professionals on the managing committee of the APCA9:%CC9 !ith full rights, in case such professionals as stipulated by the 9I do not get elected to the committee& ,/3- 'he APCA9:%CC9 shall cause audit of its accounts by a Chartered Accountant selected from a panel approved by EA9A %& ,01- 'he egistrar shall arrange conduct of Special Audit of APCA9:%CC9 if re#uested by 9I and also arrange to furnish the report to 9I !ithin the time stipulated& ,0/- 'he egistrar shall de-register a PACS !hich is using the !ord ;9an)<, ;9an)ing<, ;9an)er< or any other derivating of the !ords ;9an) in its registered name& ,00- 'he existing provisions of the Act and guidelines shall continue to be in force till the guidelines:stipulations are issued by 9I:EA9A % !herever re#uired in the above provisions&

106

CHAP !" - E(##

SP!C#A: P")(#S#)2S >)" C)-)P!"A #(! H)?S#2@ S)C#! #!S Section $6'% Application of this Chapter
In addition to the other provisions in this Act !hich are applicable to all types of societies registered under this Act, the provisions in this chapter exclusively apply to ,a- All types of Co-operative Jousing Societies registered or deemed to be registered at the commencement of the Act& ,b-A&P& Co-operative Jousing Societies Federation or any Cooperative Jousing Societies Federation registered or deemed to be registered at the commencement of the Act&

Section $6,% +efinitions

In this Chapter, unless the context other!ise re#uiresL ,/;Co-operative Jouse 9uilding Society< means a society based on the individual o!nership system advancing long-term loans to members for purchase of sites and building of houses on sites purchased or already o!ned by them or ac#uired for them through the society for the establishment of a cooperative colony and the actual building of houses is left to the members themselves, o!nership vesting !ith the members !ho pledge their sites to the society as security for the loans. 107

,0-

;Co-operative Jouse Construction Society< means a society formed on co-partnership tenancy system ac#uiring sites, constructs individual houses or apartments and rents them out to members with common facilities in case of apartments under the hire purchase system according to which a tenant member becomes the ultimate owner of the house along with a portion of the land in case of apartments after ma)ing a stipulated number of payments usually spread over a period of 6 to 01 years. ,viii- ;Co-operative 'o!nship< means a society based on the individual o!nership system or the tenancy system and !hich ac#uires land and prepares layout of the house sites for establishment of a ne! colony, advances loans to members and also provides and maintains civic amenities.

,5-

;Co-operative Jousing Society< means a society belonging to any one of the above three types according to the context in !hich it occurs. ;Apex Federation< means A&P& Co-operative Jousing Societies Federation Ctd&, or any co-operative housing societies federation registered to provide long-term loans for construction, development of infrastructure and bridge loan for purchase of land. ;Allottee< means a member of Co-operative Jousing Society to !hom a plot of land or a house or a flat in a building or in the pro$ect or a commercial plot held by it, is allotted by the society. ;%!elling unit< includes a house, flat and apartment for the purpose of d!elling. ;Eational Jousing 9an)< means the Eational Jousing 9an) established under the Eation l Jousing 9an) Act, /3?8 ,62 of /3?8-. ;'ransfer Fee< means fee payable to transfer the membership of a member to another member in a Cooperative Jousing Society as provided in the byela!s and a premium not exceeding /M of the value of the plot, house or flat sho!n in the transfer document !hich shall be credited to eserve fund of the society.

,6-

,4-

,4,8-

,?-

108

Provided that no such premium shall be paid in the case of a transfer to a member of a family as defined in Section ,/1-& Iords and expressions defined in this Act and used, but not defined, in this chapter, shall have the same meanings, assigned to them in this Act&

Section $6-% Conditions to be fulfilled precedent to registration of Co-operative Housing Society

,/Ihere a Co-operative Jousing Society secures (overnment land, the conditions imposed by the (overnment, if any, shall be fulfilled and if such land is mis-utilised in violation of such conditions or is in surplus, it shall be competent for the (overnment to resume the land& ,0'he list of seniority of a member comprising of his name, his fathers and mothers name, his date of birth and permanent account number of income tax, if any, shall be prepared strictly in accordance !ith his date of admission in the Co-operative Jousing Society& 'he list so prepared shall be published on the notice 9oard of the Co-operative Jousing Society at the end of every co-operative year and shall also be sent to the %istrict Co-operative Afficer concerned& 'he seniority list shall be updated every year before its publication as above& ,2Eo Co-operative Jousing Society shall admit as members ,ipersons belonging to the same family or having close relationship to each other as defined in explanation ,/- to Section ,/1- of this Act ,ii- realtors, bro)ers engaged in real estate business. firms dealing !ith real estate matters and persons closely related to them&

Section $6.% "ights and Privileges of members on allotment of plot or dwelling unit in a Co-operative Housing Society
,/7very member of a Co-operative Jousing Society, !hether registered before or after the commencement of this Act, to !hom plots of land or house or flat have been allotted, shall be issued certificate of allotment by the Co-operative Jousing Society under its seal and signature& ,0Eot!ithstanding anything contained in the 'ransfer of Property Act, /??0 ,5 of /3?0-, or the egistration Act, /31? ,/4 of

109

/31?-, any allotment ,including re-allotment- of a plot of land or house or flat of a Co-operative Jousing Society to its member as per terms of allotment shall entitle such member to hold such plot of land or house or flat !ith such title or interest as provided for in the byela!s& ,2A member of a Co-operative Jousing Society shall not be entitled to any title or interest in any plot of land or house or flat of the society until he has made such payment as may be specified by the Co-operative Jousing Society to!ards the cost of such plot of land or construction of such d!elling unit, as the case may be, to the Co-operative Jousing Society& ,5'he right, title and interest in a plot of land or d!elling unit in a building of the Co-operative Jousing Society ,including the undivided interest in common areas and facilities- shall constitute a heritable and transferable immovable property !ithin the meaning of any la! for the time being in force& Provided that not!ithstanding anything contained in any other la! for the time being in force, such land or building shall not be partitioned for any purpose !hatsoever& ,67very member of a Co-operative Jousing Society shall be entitled to an undivided interest in the common areas and facilities pertaining to the plot of land or d!elling unit allotted to him, !hich shall be described in the certificate of allotment as provided in subsection ,/-& ,4'he !or) relating to the maintenance, repair and replacement of the common areas and facilities ,including additions or improvements thereto- shall be carried out in accordance !ith the building rules of the concerned civic authorities, or other competent authority, as the case may be, and the costs thereof shall be apportioned amongst the members of the Co-operative Jousing Society in such manner as may be determined and notified by the committee from time to time&

Section $6/% Allotment of plots, flats or houses through draw of lots

,/Allotment of plots of land, flats, houses or other d!elling units shall be made in a meeting of the general body of a Co-operative Jousing Society to the members strictly on the basis of seniority of their admission by dra! of lots only in an open and transparent manner after due intimation and reasonable opportunity to participate and !itness the dra! in respect of such members !hose enrolment as a member of a Co-operative Jousing Society is found proper in accordance !ith the provisions of this Act and the byela!s 110

of the Co-operative Jousing Society and such a dra! of lot shall be conducted under the supervision of an officer not belo! the ran) of a %eputy egistrar of Co-operative Societies& ,0If any dra! of lot is held in violation of above provisions it shall be void and any financial loss on account of this shall be recovered as arrears of land revenue from persons !ho !ere responsible for it and such persons shall be declared ineligible from holding any office in the Co-operative Jousing Society in future and shall also be liable to be sub$ected to the penal provisions under this chapter&

Section $63% Provision for nomination

7very member of a Co-operative Jousing Society shall nominate a person or persons to !hom in the event of his death his right and interest in such Co-operative Jousing Society shall be transferred& Provided that such nomination is registered in a KEomination egister !ith full details of the +ember and nominee !hose photograph:signature, so recorded and saved in physical and electronic form&
,/-

,0,2time&

A member of the Co-operative Jousing Society shall have right to change the nomination at any time& 'here shall not be more than one nomination subsisting at any Provided that $oint and more than one nominee !ithin the blood relation shall be permissible&

Section $64% "estriction on transfer of share or interest of a member

Sub$ect to the provisions of this Act, in the case of a Co-operative Jousing Society, no transfer of share or interest of a member or the occupancy right, except the transfer to his heir or a nominee, shall be effective unless ,a- the previous permission of the Co-operative Jousing Society has been obtained for the transfer by paying the transfer fee. ,bthe dues of the Co-operative Jousing Society are paid or transferred to the transferee !ith the consent of the Co-operative Jousing Society. 111

,c- the transferor vacates and gives possession of the premises to the transferee.

Section $$6% "egistration of mortgage in favour of Co-operative Housing Society or Ape0

Eot!ithstanding anything contained in the egistration Act, /31? ,/4 of /31?-, it shall not be necessary to register mortgages, executed in favour of Co-operative Jousing Society or apex society provided that the Co-operative Jousing Society or apex society sends, !ithin a period of sixty days, a copy of the instrument !hereby the property is mortgaged or a !ritten declaration creating a charge on such property in the prescribed form and manner to the registering officer !ithin !hose $urisdiction the !hole or part of the mortgaged property is situated and such registering officer shall file a copy or copies thereof, as the case may be, in 9oo) Eo&/ prescribed under section ,6/- of the egistration Act, /31? ,/4 of /31?-&

Section $$$%

Settlement of disputes

,/Eot!ithstanding anything contained in any la! relating to rents or any other corresponding la! for the time being in force in Andhra Pradesh, any dispute relating to the allotment, occupation or recovery of possession of any plot, d!elling unit or flat in any Cooperative Jousing Society, the recovery of dues payable by a member of a Co-operative Jousing Society shall be deemed to be a dispute !ithin the meaning of Section ,43- of this Act and shall be decided in accordance !ith the provisions of this Act, and no court or other 'ribunal or authority shall have $urisdiction to entertain and decide any proceedings in respect of such disputes& ,0Ihere any property mortgaged to the Co-operative Jousing Society including the apex, as the case may be, is !holly or partially destroyed or for any reasons the security is rendered insufficient and the mortgagor having been given reasonable opportunity to repay such portion of loan as may be determined by the Cooperative Jousing Society or the apex, as the case may be, has failed to provide such security or to such portion of loans, the !hole of the loan shall be deemed to fall due at once not!ithstanding the original terms on !hich the loan !as advanced, and the Cooperative Jousing Society or the apex, as the case may be, shall be entitled to ta)e action against the mortgagor for the recovery thereof&

112

Section $$&% "ecovery of dues and foreclosure

,/Ihere a Co-operative Jousing Society has raised loan from the apex or any other approved housing finance institution against the security of land and building and the possession of such building has been handed over to the loanee members, if any member fails to repay the loan installment for a continuous period of sixty days after the installment has become due, the Co-operative Jousing Society shall issue a notice for repayment of the defaulted amount along !ith the balance outstanding as recall of loan&
,0-

If the member fails to repay the recalled amount of loan together !ith the interest, if any, !ithin thirty days after the notice of calling up of the loan, the committee shall refer the case to the egistrar !ho may ma)e further en#uiries as deemed fit and issue a notice to the defaulter member providing him an opportunity to pay the defaulted amount !ithin such time as he may deem fit sub$ect to a maximum of ninety days and pass orders to that effect and in case the defaulter member still persists in default, the egistrar may issue a recovery certificate for the recovery of defaulted amount along !ith interest and cost, if any, as arrears of land revenue& Ihere an installment is not paid !ithin 31 days of the due date it !ill be declared as Eon Performing Asset ,EPA- and shall be sub$ected to initiation of legal action for recovering the arrear installment by the Society or by the federal society& Failure to initiate legal action shall entail fastening of liability against the defaulting +anaging Committee : Special Afficer: Person-in-charge Committee as the case may be&

Section $$'% !0pulsion of a member

,/Eot!ithstanding anything contained in this Act, the (eneral 9ody of a Co-operative Jousing Society may, by a resolution, expel a member on any one or more of the follo!ing grounds, namely ,a,bif he has been a persistent defaulter in respect of any dues of the Co-operative Jousing Society. or if he has !illfully deceived the Co-operative Jousing Society by ma)ing any false statement or submitting any false document to obtain the membership of such Co-operative Jousing Society. or 113

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if he has brought disrepute to the society by indulging in vilification campaign against the society or has done any other act detrimental to the interest and proper !or)ing of the co-operative society. Provided that no such resolution shall be passed unless the member concerned has been given an opportunity of being heard on the grounds for his proposed expulsion& Provided further that no member shall be expelled unless a resolution to that effect is passed by not less than t!o thirds of the members of the general body present and entitled to vote at the meeting&

,0Any party aggrieved by the order of expulsion under this section may, !ithin sixty days from the date of such order, appeal to the 'ribunal&

Section $$,% Housing Co-operative Societies which have achieved their obFectives
In case of a house building co-operative society existing for more than /6 years and has outlived its existence after allotment of ma$ority of plots to its members or execution of the housing pro$ect !hichever is earlier, the egistrar shall, after giving sixty days notice to the committee, initiate !inding up proceedings and such Co-operative Jousing Society shall be !ound up& Provided that in the case of a Co-operative Jousing Society giving loans to member for securing a house : flat or plot of land or !here court cases are pending or civic maintenance issues have to be attended, appropriate !elfare body shall be formed to pursue action&

CHAP !" E(### Special provisions applicable to 2on-Agricultural Co-operative Credit Societies other than Co-operative ?rban 8anDs Section 115

114

(1) For the purposes of this chapter, Non-Agricultural divided into three classes"

redit !ocieties are

(a) #i$ited liability o-operative !ocieties with paid-up share capital and reserves of $ore than %s.1.&& la'h and accepting public deposits( (b) )$ployees o-operative redit !ocieties whose paid up share capital and reserves are not less than %s.1.&& la'h, accepting public deposits( (c) !elf-help group o-operative societies underta'ing thrift and savings, doing agri business whose paid up share capital and reserves are $ore than %s.1.&& la'h and accept public deposits. (*) These o-operative !ocieties raise their funds by way of share capital, fi+ed deposits, savings and thrift, cash credit fro$ financing agencies, ad$ission fee. The tenure of fi+ed deposits shall not e+ceed seven years. Acceptance of large deposits shall be discouraged, if large deposits are received they $ay be split up into s$all deposits with staggering $aturity periods so that the recoveries fro$ loans issued $ight be available to repay the$.

Section 116
(1) The o-operative !ocieties categori,ed in !ection (1) shall obtain license fro$ %eserve -an' of .ndia to carry on -an'ing business underta'en by the$ and a$end their byelaws accordingly within two $onths fro$ the date on which this Act co$es into force and sub/ect the$selves for regulation by the %eserve -an' of .ndia. (*) They shall $aintain cash reserves to the e+tent of 01 of their de$and and ti$e liabilities and shall par' the$ in their financing institutions and $aintain li2uid funds to the e+tent of *31 of their de$and and ti$e liabilities. These societies shall sub$it three copies of their profit and loss account and balance sheet with Auditor4s %eport to the %eserve -an' of .ndia within si+ $onths fro$ the close of the co-operative year.

Section 117
!uch o-operative !ocieties whose share capital and reserves are less than %s.1.&& la'h but accept public deposits shall $aintain fluid resources as per the standards fi+ed below and shall $aintain a register in the For$ No.1*.

Section 118

115

The $a/or portion of funds of these o-operative !ocieties shall be derived fro$ short-ter$ deposits. Thrift deposits shall be encouraged a$ong their $e$bers as they would attract s$all savings of the poor and $iddle classes and in the case of e$ployees shall for$ not e+ceeding *31 of their substantive pay in each case. The ter$s offered for the deposits shall correspond to the $oney $ar'et conditions and guidelines of the %eserve -an' of .ndia. No loans shall be granted on the security of thrift deposits.

Section 119
)very $e$ber shall subscribe to a thrift fund according to his inco$e5salary every $onth which a$ount shall not be refunded either by ad/ust$ent or by cash so long as he continues as a $e$ber. At the end of the period of two years the accu$ulated a$ount $ay be converted into a fi+ed deposit and held to his credit till he ceases to be a $e$ber. .nterest on such deposits $ay be paid in cash or by ad/ust$ent to the loans due by the $e$ber.

Section 120
Thrift deposits shall not be liable for attach$ent or sale under any decree or order of a ourt in respect of any debt or liability incurred by the $e$ber.

Section 121
The $a+i$u$ borrowing power of the o-operative societies shall be eight ti$es of the paid up share capital plus reserve fund.

Section 122
The principal business of the o-operative societies shall be issue of loans for the following productive and consu$ption purposes. (i) (ii) (iii) (iv) (v) (vi) To secure assets which provide e$ploy$ent to the $e$ber5s. )ducation of $e$ber4s children. onsu$ption e+penses during une$ploy$ent or illness. 6bligatory religious rites li'e $arriages, other cere$onies. Agri business li'e buying Agricultural output, processing, $ar'eting, far$ing and such other value addition services incidental thereto. For putting up housing units and repairs to the e+isting houses with reference to the inco$e and repaying capacity of the $e$ber, the total a$ount of such loans not e+ceeding *&1 of total lendings in a year.

116

#oan shall be granted on the basis of repaying capacity of the borrower rather than security. #oans on $ortgage of i$$oveable property of the borrower shall be bac'ed up by encu$brance certificate obtained for a period of not less than twelve years prior to the date of application. #oans $ay be given upto a period of three years but not e+ceeding five years in the aggregate. #oans given for five years shall not e+ceed 3&1 of the total loans given in a year. A second loan $ay be given to a $e$ber, if he5she repaid 150 rd of the first loan ta'en.

Section 123
!hort-ter$ loans on the security of gold and silver /ewel $ay be issued to $e$bers, as such /ewels represent the savings of the $e$bers.

Section 124
ash credit loans $ay be given to a $e$ber upto a li$it decided by the 7eneral -ody due regard being given to his status in life, securities offered or on the /oint and several responsibility of the borrower and one or two other $e$bers standing surety for hi$ or on the $ortgage of unencu$berred i$$ovable wholely belonging to the borrower not e+ceeding 3&1 of the esti$ated $ar'et value of such property or on the security on the fi+ed deposits, not being thrift deposits, 7overn$ent securities, debentures of A.8. !tate o-operative -an' to the e+tent not e+ceeding 9&1 of the value of the security offered, on continuity guarantee agree$ents.

Section 125
The individual $a+i$u$ borrowing power of a $e$ber shall be decided by the 7eneral -ody and shall include all types of loans and shall be related to the share-holding of the $e$ber and his repaying capacity which shall be rec'oned as 150rd of his earnings.

Section 126
There shall be conducted an annual evaluation of i$$ovable properties accepted as security for the loans granted by the o-operative !ocieties and in case of any depreciation in the value of such securities, the borrowers shall be directed to furnish additional security or repay the loans to the necessary e+tent.

Section 127

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These o-operative !ocieties shall not per$it withdrawal of share capital e+ceeding 1&1 of the aggregate share capital as it e+isted on the preceding 01st day of :arch in a year.

Section 128
.nvest$ent of funds in shares of other o-operative !ocieties shall not e+ceed *1 of the own funds of the o-operative !ociety. The o-operative !ociety shall not sanction loans on the security of its shares.

Section 129
There shall be a ceiling on sanction of unsecured loans decided by the 7eneral -ody. No unsecured loans shall however, be sanctioned to the ;irectors of the o-operative !ociety.

Section 130
8roper $anage$ent syste$s such as credit appraisal, credit dispensation and credit ad$inistration and $onitoring shall be ensured in the wor'ing of the o-operative !ocieties.

Section 131
The o-operative !ocieties $ay underta'e the activity of purchase and distribution of do$estic articles and other essential food stuffs to their $e$bers and non-$e$bers ali'e on strictly cash and carry basis by fra$ing suitable business regulations and fi+ing a reasonable li$it approved by the 7eneral -ody.

Section 132
<hen a o-operative !ociety beco$e un$anageable, it $ay set up its branches with a li$ited area of /urisdiction and a local o$$ittee of its own elected fro$ a$ong the $e$bers living in its area.

Section 133
A $ini$u$ of share holding and deposits shall be specified for election as ;irectors. To $ini$i,e election disputes, the /urisdiction of a o-operative !ociety with large $e$bership $ay be divided into several wards so that each ward $ay send a representative to the -oard of ;irectors.

118

Section 134
A suitable :e$ber education and Training progra$$e shall be put in place by the o-operative !ocieties for its $e$bers, office-bearers, -oard of ;irectors and e$ployees with the help of the o-operative Training entres run by A.8. !tate o-operative =nion and National o-operative =nion of .ndia..

CHAP !" - E#E

*iscellaneous
Section $'-% >ee for services

119

'he egistrar may charge a reasonable fee for any of the services provided by him or by an Afficer authori*ed by him under the provisions of this Act and apportion the costs among the applicants& Any sum a!arded by !ay of fee s or costs may be recovered as arrears of land revenue and the egistrar shall have the po!ers of a Collector under A&P& evenue ecovery Act, /?45 for this purpose&

Section $'.% Co-operative "ehabilitation and "e-construction >und

An Apex Co-operative Society shall create a ;Co-operative ehabilitation and e-construction Fund< for rehabilitation and development of Co-operative Societies by contribution of /M of the gross profit from its constituent societies to overcome sic)ness in business and resources crunch etc&

Section $'/%

Amendments to the schedules

If the egistrar is satisfied that any modification is necessary in any of the schedules, he may by notification, amend the said schedule so as to include therein or exclude any provision there- from and there upon the said schedule shall be deemed to have been amended accordingly&

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