Chapter IV MANAGEMENT OF CO-OPERATIVE SOCIETIES

(1) The final authority in a co-operative society shall vest in the general body members: Provided that where the bye-laws of a co-operative society provide for the constitution of a smaller body consisting of delegates of members of the society elected or selected in accordance with such bye-laws, such smaller body shall exercise such powers of the general body as may be prescribed or as may be specified in the bye-laws of the society. (2) Notwithstanding anything contained in sub-section(2) of section19, each delegate shall have only one vote in the affairs of the society. (1) In a co-operative society with unlimited liability, a member who is not indebted to the co-operative society and is not a surety for an unpaid debt may withdraw from the co-operative society after giving such notice to the secretary of the co-operative society as may be laid down in the bye-laws of the co-operative society. (2) In a co-operative society with unlimited liability a member, who withdraws or otherwise removed or expelled from the co-operative society shall be entitled to repayment, without interest, any money paid by him or his predecessor-in-interest towards the purchase of shares after such period as may be laid down in the bye-laws of the co-operative society. (3) No member of a co-operative society with limited liability shall ordinarily be permitted to seek withdrawals or refund of his shares. Provided that where the society has created a share transfer fund out of its earned profits its managing committee may, keeping in view the over-all interest of the co-operative society, allow withdrawals of shares. Provided further that such withdrawal of shares at any time shall not exceed five percent of the aggregate paid up share capital of the co-operative society, excluding Government contribution as it stood on the thirtieth June of the preceding year. (4) Irrespective of nature of liabilities of a co-operative society the share capital subscribed by the Government or by a central or apex co-operative financing institution will be retired in such manner and during such period as may be determined by the Registrar from time to time. (1) In a co-operative society with unlimited liability, a member who is not indebted to the co-operative society and is not a surety for an unpaid debt may withdraw from the co-operative society after giving such notice to the secretary of the co-operative society as may be laid down in the bye-laws of the co-operative society.

(2) In a co-operative society with unlimited liability a member, who withdraws or otherwise removed or expelled from the co-operative society shall be entitled to repayment, without interest, any money paid by him or his predecessor-in-interest towards the purchase of shares after such period as may be laid down in the bye-laws of the co-operative society.

(3) No member of a co-operative society with limited liability shall ordinarily be permitted to seek withdrawals or refund of his shares.

Provided that where the society has created a share transfer fund out of its earned profits its managing committee may, keeping in view the over-all interest of the co-operative society, allow withdrawals of shares.

Provided further that such withdrawal of shares at any time shall not exceed five percent of the aggregate paid up share capital of the co-operative society, excluding Government contribution as it stood on the thirtieth June of the preceding year.

(4) Irrespective of nature of liabilities of a co-operative society the share capital subscribed by the Government or by a central or apex co-operative financing institution will be retired in such manner and during such period as may be determined by the Registrar from time to time.

A general meeting of a co-operative society shall be held once in a year for the purpose of (a) approval of the programme of the activities of the society prepared by the committee for the ensuing year; (b) election, if any, of the members of the committee other than nominated members: (c) consideration of the audit report and the annual report; (d) disposal of the net profit: (e) consideration and approval of the annual budget ; and (f) consideration of any other matter which may be brought forward in accordance with the bye-laws. (1) Every member of a co-operative society shall nominate a person or persons to whom his share or interest referred to in section 21 or such sums out of share or interest as may be specified by the member, shall, on the death of the member be transferred or paid as laid down in the bye-laws.

(2) Such nomination may, from time to time, be revoked or modified by the member.

(3) The number of persons who may be nominated by a member shall not exceed the number of shares held by him.

(4) When a member of a co-operative society nominates more than one person, he shall, as far as practicable, specify the amount to be paid or transferred to each nominee in terms of whole share and the interest accruing thereon.

(5) The record of nomination shall be kept by a co-operative society in such manner as may be laid down in the bye-laws.

(6) The value of the share or interest transferred or paid to a nominee or nominees shall be determined on the basis of the sum paid by the member to acquire such share or interest, unless the bye-laws of the co-operative society provide for calculation on different basis.

(1) The committee of a co-operative society may, at any time, call a special general meeting of the society and shall call such meeting within one month after the receipt of a requisition in writing from the Registrar or from such number of members or a proportion of the total number of members, as may be provided in the bye-laws. (2) If a special general meeting of a co-operative society is not called in accordance with the requisition referred to in sub-section (1), the Registrar or any person authorized by him in this behalf shall have the power to call such meeting and that meeting shall be deemed to be a meeting called by the committee. Every co-operative society shall maintain a register of member showing:

(a) the name, address and occupation of each member and a statement of shares held by him.

(b) the date on which the member’s name was entered in the register:

(c) the date on which any person ceased to be a member; and

(d) the nominee appointed by a member.

(1) The members of the committee of a co-operative society shall be elected in the prescribed manner and no person shall be so elected unless he is a shareholder of the society. (2) Notwithstanding anything contained in sub-section (1)- (a) where the Government has subscribed to the share capital of a co-operative society, the Chief Commissioner or any person authorized by the Chief Commissioner in this behalf shall have the right to nominate on the committee such number of persons not exceeding three or one-third of the total number of members thereof, whichever is less, as the Chief Commissioner or such authorized person may determine: (b) Where the industrial Finance Corporation established under section 3 of the industrial Finance Corporation Act, 1948(15 of 1948) or any credit agency has provided finance to a co-operative society, the said Industrial Finance Corporation, or such credit agency, as the case may be, shall have the right to nominate one person on the committee, (3) A person nominated under sub- section (2) shall hold office during the pleasure of the Chief Commissioner or the said Industrial Finance Corporation or such credit agency, as the case may be. Without prejudice to the provisions of section 24, the general meeting of a co-operative society, alone shall have the power to transact the following business:-

(a) Fixing the maximum credit limit of the co-operative society, subject to the approval of the Registrar; and

(b) Expulsion of members.

(1) If, in the opinion of the Registrar, the committee of any co-operative society persistently makes default or it is negligent in the performance of the duties imposed on it by this Regulation or the rules or bye-laws, or commits any act which is prejudicial to the interest of the society or its members, the Registrar may, after giving committee an opportunity to state its objection, if any, by order in writing remove the committee; and (a) order fresh election of the committee ; or (b) appoint one or more administrators, who need not be members of the society, to manage the affairs of the society for such period not exceeding one year as may be specified in the order which period may at the discretion of the Registrar, be extended from time to time, so however, that the aggregate period does not exceed three years. (2) The Registrar may fix such remuneration for the administrator or administrators as he may think fit and such remuneration shall be paid out of the funds of the co-operative society. (3) The administrator shall, subject to the control of the Registrar and to such instructions as he may from time to time give, have power to exercise all or any of the functions of the committee or of any officer of the society and take all such actions as may be required in the interest of the society. (4) The administrator shall, at the expiry of his term of office, arrange for the constitution of a new committee in accordance with the bye-laws of the society. (5) Before taking any action under sub-section (1) in respect of a co-operative society indebted to a credit agency, the Registrar shall consult the Credit agency, to which it is indebted regarding such action. The members of the committee of a co-operative society shall be elected in accordance with the rules given in appendix ‘F’.

(1) If:- (a) in the opinion of the Registrar, the records (including registers and books of account) of a co-operative society are likely to be tampered with or destroyed or the funds or other property of a co-operative society are likely to be misappropriated or misapplied; (b) the committee of a co-operative society is reconstituted at a general meeting of the society ; or (c) the committee of a co-operative society is removed by the Registrar under section 27; or (d) a co-operative society is ordered to be wound up under section 57 and the outgoing members of the committee thereof refuse to hand over charge of the records and property of the society to those having, or entitled to receive, such charge, the Registrar may apply to the Magistrate within whose jurisdiction the society functions for securing such records and property of the society. (2) On receipt of an application under sub-section (1), the Magistrate may, by a warrant, authorize any police officer, not below the rank of a sub-inspector to enter and search any place where such records and property are kept or are believed to be kept and to seize such records and property, and the records and property so seized shall be handed over to the new committee or administrator of the society or the liquidator, as the case may be. in a co-operative society, the membership of which is not exclusively confined to individuals, the representative of the individuals and co-operative societies on the committee and the general body shall be such as may be laid down in the bye-laws of the co-operative society.

No act of a co-operative society or of any committee or any officer of the society shall be deemed to be invalid by reason only of the existence of any defect in procedure or in the constitution of the society or of the committee or in the appointment or election of an officer or on the ground that such officer was disqualified for his office. No person shall be eligible for election as a member of the committee if:

(a) he is in default in any co-operative society in respect of any sum due from him to the co-operative society or owes to any co-operative society an amount exceeding maximum credit limit;

(b) he has directly, or indirectly any interest in any contract to which the co-operative society is a party except in transactions made with the co-operative society as a member in accordance with the objects of the co-operative society as stated in the bye-laws;

(c) he has at any time during a period of one year prior to the date of scrutiny of nomination papers engaged in any private business, trade or profession of any description which is carried on by the co-operative society.

(d) he has committed any offence involving dishonesty or moral turpitude during a period of five years immediately preceding to the date of scrutiny of nomination papers;

(e) he is subject to any of the disqualifications contained in rule 30;

(f) he has during a period of twelve months immediately preceding the date of filing nomination papers remained inactive as member or has been carrying on, through agencies other than a co-operative society of which he is a member, same business as is being carried on by the co-operative society.

(g) he incurs any other disqualification laid down in the bye-laws of the co-operative society.