Chapter III MEMBERS OF CO-OPERATIVE SOCIETIES AND THEIR

(1) No person shall be admitted as a member of a co-operative society except the following, namely:-(a) an individual competent to contract under section II of the Indian Contract Act, 1872; 9 of 1872. (b) any other co-operative society; (c) the Government ; and (d) such class or classes of persons or associations of persons as may be notified by the Chief Commissioner in this behalf. (2) Notwithstanding anything contained in sub-section (1); the Chief Commissioner may, having regard to the fact that the interest of any person or class of person conflicts or is likely to conflict with the objects of any society or class of societies, by general or special order, published in the Official Gazette, declare that any person or class of persons engaged in or carrying on any profession, business or employment shall be disqualified from being admitted, or for continuing, as members or shall be eligible for membership only to a limited extent of any specified society or class of societies, so long as such persons is or are engaged in or carrying on that profession business or employment, as the case may be. (1) Every notice to be given under sub-section (2) of section 12 shall be sent by post under certificate of posting or otherwise to the address of each of its members and creditors as recorded in the books of the society. A copy of such notice shall be exhibited on the notice board or on the outer wall of society's building or at a conspicuous public place and a copy shall also be sent to the Registrar for exhibition on the notice board of his office; and there upon, the notice of resolution to change the form or extent of its liability shall be deemed to have been duly given to all its members and creditors, notwithstanding the fact that such notice had not been sent to their correct address or that it had not been received by them.

(2) For the purpose of determining the claims of a member under clause (b) of the sub-section 12, the value of a share of a member in a co-operative society shall be ascertained as in the following manner, namely:

(a) in the case of a co-operative society with limited liability, the value of a share shall be the actual amount received by the co-operative society in respect of such share; and

(b) in the case of a co-operative society with unlimited liability, the value of the shares shall be the amount arrived at by a valuation based on the financial position of the co-operative society as shown in the last audited balance sheet:

Provided that it shall not exceed the actual amount received by the co-operative society in respect of such shares.

(3) Any member or creditor desiring to exercise his option under sub-section (2) of section 12 shall inform the co-operative society accordingly in writing and when he does not propose to withdraw his entire shares or deposits the member or creditor shall clearly indicate in writing the extent of his withdrawals. The co-operative society shall examine and draw up a scheme for orderly payment of all claims in an equitable manner including shares, the value of which shall be ascertained in accordance with provisions of sub-rule (3). The scheme may also provide for settlement of claims by mutual agreement. Where the Registrar does not approve the scheme on the ground of impracticability or undesirability, resolution passed by the co-operative society for amendment of its bye-laws or the purpose shall be ineffective and the form and extent of liability of co-operative society shall not be changed in accordance with the resolution so passed.

(4) After the Registrar approves the scheme, the co-operative society shall make payments to member and creditors as provided for in clause (b) of sub-section (b) of sub-section (4) of section 12 and make a report to that effect to the Registrar and the Registrar shall thereupon proceed to register the amendment to the bye-laws of the co-operative society.

(5) Subject to the provisions of this rule the provisions of section 10 and rules 10 to 12 shall apply to an amendment of the bye-laws of a society for purpose of changing the form or extent of its liability.

No member of a co-operative society shall exercise the rights of a member unless he has made such payments to the society in respect of membership or has acquired such interest in the society as may be specified in the bye-laws. Where an application for registration of an amendment to bye-laws of a co-operative society is rejected by the Registrar under sub-section (4) of section 10, the appeal, if any, against such refusal shall be made only after a meeting of the general body has reconsidered the matter and has decided to prefer an appeal. Such appeal shall be signed by an officer of the co-operative society duly authorised in this behalf by a general body meeting.

Every member of a co-operative society shall have only one vote in the affairs of the society: Provided that- (a) in the case of an equality of votes, the chairman shall have a second or casting vote. (b) a nominal or associate member shall not have the right of vote; and (c) where the Government is a member of the co-operative society, such person nominated by the Chief Commissioner on the committee shall have one vote. (2) On the execution of such agreement, the employer or the officer disbursing the salary or wages of the members shall, if so required by the co-operative society by a requisition in writing and so long as the society does not intimate that the whole of such debt or other demand has been paid, make the deduction in accordance with the agreement and pay the amount so deducted to the society within fourteen days from the date of the deduction. (3) If after the receipt of requisition made under sub-section (2), the employer or the officer disbursing the salary or wages of the member at any time fails to deduct the amount specified in the requisition or makes default in remitting the amount deducted to the society, the society shall be entitled to recover any such amount from such employer or officer, as the case may be, as arrears of land revenue and the amount due from such employer or official shall rank in priority in respect of the liability of such employer or officer equal to that of the salary or wages in arrears. (4) The employer or the officer disbursing the salary or wages shall maintain such registers as may be prescribed by the Chief Commissioner or the Registrar from the time to time. (5) When a requisition in writing from any co-operative society registered or deemed to be registered in any State in respect of a member of that society who for the time being is employed in the Union Territory, is received by his employer, the requisition shall be acted upon as if it has been made by a co-operative society in the Union Territory. (1) No person shall be eligible for admission as a member, if he: (a) has applied to be adjudicated and insolvent or is an un-discharged insolvent; or (b) has been sentenced for any offence, other than an offence of a political character or an offence not involving moral turpitude and a period of five years has not elapsed from the date of expiry of the sentence. (2) if a member becomes subject to any disqualification specified sub-rule(1), he shall be deemed to have ceased to be a member from the date when the disqualification was incurred.

(1) Every member of a co-operative society shall exercise his vote in person and no member shall be permitted to vote by proxy. (2) Notwithstanding anything contained in sub section (1), a co-operative society which is a member of another co-operative society, may subject to the rules, appoint one of its member to vote on its behalf in the affairs of that other society; (1)No individual being a member of primary co-operative society having one of the objects of creation of funds to be lent to its members shall be a member of any other such co-operative society without the general or special permission of the Registrar, and where an individual has become a member of two such co-operative societies, either or both of the co-operative societies shall be bound to remove him from membership upon a written requisition from the Registrar to that effect. (2)No individual who is an officer of a co-operative society shall without the general or a special permission of the Registrar be a member of any other co-operative society whose objects are similar to the objects of the society of which he is an officer and where such an individual has become a member of another society with similar objects, either or both of the co-operative societies shall be bound to remove him from membership upon written requisition from the Registrar to that effect. If any question arises as to whether or not two co-operative societies have similar objects, the decision of the Registrar on the point shall be final.

The transfer of the share or interest of a member in the capital of a co-operative society shall be subject to such conditions as to maximum holding as are specified in section 6. No co-operative society shall admit members within fourteen days prior to an annual general meeting.

On the death of member, a co- operative society may transfer the share or interest of the deceased member to the person so nominated in accordance with the rules made in this behalf, or if, there is no person so nominated , to such person as may appear to the committee to be the heir on legal representative of the deceased member, or pay to such nominee, heir of legal representative, as the case may be, a sum representing the value of such member’s share or interest as ascertained in accordance with the rules or bye-laws: Provided that- (i) in the case of a co-operative society with unlimited liability, such nominee, heir or legal representative, as the case may be, may require payment by the society of the value of the share or interest of the deceased member ascertained as aforesaid; (ii) in the case of a co-operative society with limited liability, the society shall transfer the share or interest of the deceased member to such nominee, heir or legal representative, as the case may be, being qualified in accordance with rules and bye-laws for membership of the society, or on his application within one month of the death of the deceased member to any person specified in the application who is so qualified; and (iii) no such transfer or payment shall be made except with the consent of the nominee, heir or legal representative, as the case may be. (2) A co-operative society shall subject to the provisions of section 31 and unless, within six months of the death of the member prevented by an order of a competent court, pay such nominee heir or legal representative, as the case may be, all other moneys due to the deceased member from the society. (3) All transfers and payments made by a co-operative society in accordance with the provisions of this section be valid and effectual against any demand made upon the society by any other person. (5) The Registrar or the person authorised by him under sub-section (1) to audit the accounts of a co-operative society shall have power, where necessary – (a) to summon at the time of his audit any officer, agent, servant or member of the society, past or present, who , he has reason to believe, can give valuable information in regard to transactions of the society or the management of its affairs ; and (b) to require the production of any book or document relating to the affairs of, or any cash or securities belonging to, the society by any officer, agent, servant or member of the society in possession of such books, documents, cash or securities and in the event of serious irregularities discovered during audit, to take them into custody. (6) If at the time of audit the accounts of a society are not complete, the Registrar or the person authorised by him under sub-section (1) to audit, may cause the accounts to be written up at the expense of the society. (7) Audit fee, if any, due from any co-operative society shall be recoverable in the same manner as is provided in section 67. No member of a co-operative society shall participate in the general meeting of the co-operative society or vote in the election to the committee, unless he has made all such payments to the co-operative society as are due from him.

(1) Subject to the provisions of sub-section (2) the liability of a past member or the estate of a deceased member of a co-operative society for the debts of the society as they existed,- (a) in the case of a past member, on the date on which he ceased to be a member; (b) in the case of a deceased member, on the date of his death, shall continue for a period of two years from such date; Provided that the liability of the Government or of a credit agency which has takes shares in a co-operative society shall cease on the date on which the Government or the credit agency ceases to be a member. (2) Where a co-operative society is ordered to be wound up under section 57, the liability of a past member who ceased to be a member or of the estate of a deceased member who died within two year immediately preceding the date of the order of winding up, shall continue until the entire liquidation proceedings are completed, but such liability shall extend only to the debts of the society as they existed on the date of cessation of membership or death, as the case may be. A co-operative society other than a producers co-operative society shall dispose of an application received for admission as a member as early as possible and in no case later than the expiration of a period of one month from the date of receipt of the application by the co-operative society. In case of refusal to admit, such co-operative society shall communicate its decision together with reasons thereof, to the applicant.