Chapter V PRIVILEGES OF CO-OPERATIVE SOCIETIES

The registration of co-operative society shall render it a body corporate by the name under which it is registered having perpetual succession and a common seal, and with power to hold property, enter into contract, institute and defend suits and other legal proceedings and to do all things necessary for the purposes for which it is constituted. A member of the committee shall cease to hold his office as such if he:

(a) continues to be in default in respect of any sum due from him to the co-operative society for such period as may be laid down in the bye-laws:

(b) Ceases to be a member of the society;

(c) is declared insolvent;

(d) becomes of unsound mind;

(e) is convicted of an offence involving dishonesty or moral turpitude; and

(f) becomes subject to any of disqualification which would have prevented him from seeking election, had he incurred that disqualification before election.

(1) Notwithstanding anything contained in any law for the time being in force, but subject to any prior claim of the Government in respect of land revenue or any money recoverable as land revenue, any debt or outstanding demand due to a co-operative society by any member or past member or deceased member shall be a first charge upon the crops and other agriculture produce, cattle, fodder for cattle, agricultural or industrial implements or machinery, raw materials for manufacture and any finished products manufactured from such raw material belonging to such member, past member or forming part of the estate of the deceased member, as the case may be. (2) No person shall transfer any property which is subject to a charge under sub-section (1) except with the previous permission in writing of the co-operative society which holds the charge. (3) Notwithstanding anything contained in any law for the time being in force, any transfer of property made in contravention of the provisions of sub-section (2) shall be void. (4) The charge created under sub-section(1) shall be available as against any claim of the Government arising from a loan granted under the land Improvement Loans Act, 1883, (19 of 1883)or the agriculturists loans act 1884, (12 of 1884) after the grant of the loan by the co-operative society. The Registrar may in cases as he thinks fit, divide the area of operation of a co-operative society into zones not exceeding in number than the number of members to be elected for the committee.

Notwithstanding anything contained in this Regulation or in any other law for the time being in force- (i) any person who makes an application to a society of which he is a member for a loan shall, if he own any land or has interest in any land as a tenant, make a declaration in the prescribed form which shall state that the applicant thereby creates a charge on such land or interest specified in the declaration for the payment of the amount of the loan which the society may make to the member in pursuance of the application and for all future advances, if any, required by him which the society may make to him as such member subject to such maximum as may be determined by the society together with interest on such amount of the loan and advances; (ii) any person who has borrowed a loan from a society of which he is a member before the commencement of this Regulation, and who owns any land or has any interest in any land as a tenant shall, in a case where such loans subsists immediately before such commencement, make a declaration in the form and to the effect referred to clause (i); (iii) a declaration made under clause (i) or clause 9ii) may be varied at any time by a member with the consent of the society in favour of which a charge referred to in clause (i) is created; (iv) no member shall alienate the whole or any part of the land or interest therein, specified in the declaration made under clause (i) or clause (ii) until the whole amount borrowed by the member together with interest thereon is paid in full; Provided that for the purpose of paying in full the whole amount borrowed by the member together with interest thereon to the society, the member may, with the previous permission in writing of the society and subject to such conditions as the society may impose, alienate the whole or any part of such land or interest therein; Provided further that the standing crops on any such land may be alienated with the previous permission of the society; (v) any alienation made in contravention of the provision of clause (iv) shall be void; (vi) subject to the prior claims of the Government in respect of land revenue or any money recoverable as land revenue, there shall be a first charge in favour of the society on the land or interest specified in the declaration made under clause (i) or clause (ii) for and to the extent of the dues owing by him on account of the loan and address; (vii) the record of rights shall also include the particulars of every charge on land or interest created under a declaration under clause (i) or clause(ii). Explanation:- For the purpose of this section, “society” means any co-operative society or class of co-operative societies specified in this behalf by the Chief Commissioner by a general or special order. (1) The qualification and conditions of service subject to which any persons may be employed by a co-operative society or a class of co-operative societies shall be such as may be determined by the Lieutenant Governor (Administrator), A&N Islands.

(2) Where the Lieutenant Governor (Administrator) is of the opinion that it is necessary or expedient so to do, he may by order for reasons to be recorded in writing, relax the provisions of this rule with respect to any co-operative society or class of co-operative societies to such extent as he may consider proper. (1) The qualification and conditions of service subject to which any persons may be employed by a co-operative society or a class of co-operative societies shall be such as may be determined by the Lieutenant Governor (Administrator), A&N Islands. (2) Where the Lieutenant Governor (Administrator) is of the opinion that it is necessary or expedient so to do, he may by order for reasons to be recorded in writing, relax the provisions of this rule with respect to any co-operative society or class of co-operative societies to such extent as he may consider proper.

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 member 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 such member or past member or the estate of such deceased member to the society, and may set-off any sum credited or payable to a member or past member or the estate of a deceased member in or towards payment of any such debt. For the purpose of section 36, a copy of an entry in the books of a co-operative society shall be certified by a certificate written at the foot of such copy declaring that it is true copy of such entry and that the book containing the entry is still in the custody of the co-operative society: Provided that such certificate shall be dated and signed by an officer of the co-operative society.

(1) Subject to the provisions of section 33, the share or contribution or interest of a member or past member or deceased member in the capital of a co-operative society shall not be liable to attachment or sale under any decree or order of any court in respect of any debt or liability incurred by such member, and an official assignee or a receiver under any law relating to insolvency shall not be entitled to or have any claim on such share or contribution or interest. (2) The reserve fund, or the bad debt reserves, or the provident fund of the employees, of a co-operative society invested by such society in accordance with the provision of this Regulation and the rules shall not be liable to attachment under any decree or order of a court in respect of any debt or liability incurred by the society. Loans and subsidies to a co-operative society or class of co-operative societies may be granted by Government on such terms and conditions as may be laid down by the Government by general or special order from time to time.

Any register or list of members or shares kept by any co-operative society shall be prima facie evidence of any of the following particulars entered therein, namely: (a) the date on which any person entered in such register or list became a member; (b) the date on which any such person ceased to be a member. An application by a co-operative society for a loan or subsidy or both from a Government department or a Government sponsored agency shall be made through the Registrar. While forwarding the application the Registrar shall record his opinion regarding the eligibility of the co-operative society for the said loan or subsidy or both, its financial position and the desirability of sanctioning to the co-operative society, the said loan or subsidy or both.

A copy of any entry in a book of a co-operative society regularly kept in the course of its business, shall, if certified in such manner as may be prescribed, 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 every case where, and to the same extent as, the original entry itself is admissible. (2) No officer of a co-operative society and no officer in whose office the books of co-operative society are deposited after liquidation shall, in any legal proceedings to which the society or the liquidator is not a party, be compelled to produce any of the society’s books or documents the contents of which can be proved under this section, or to appear as witness to prove the matter, transactions and accounts therein recorded, except under an order of a court or an arbitrator made for special cause. A co-operative society receiving Government loan or subsidy or a co-operative society in which a share or shares have been subscribed or liability by way of guarantee or borrowing not less than fifty percent of the working capital of the co-operative society has been undertaken by the government shall furnish such information and submit such returns as the sanctioning authority or the Registrar may, from time to time, require.

Nothing in clauses (b) and (c) of sub-section 17 of the Registration Act, 1908 (16 of 1908) shall apply to – (1) any instruments relating to shares in a co-operative society notwithstanding that the assets of the society consist in whole or in part of immovable property; or (2) any debenture issued by any such society and not creating declaring, assigning, limiting or extinguishing any right, title or interest to or in immovable property to except in so far as it entitles the holder thereof to the security afforded by a registered instrument whereby the society has mortgaged, conveyed, or otherwise transferred the whole or part of its immovable property or any interest therein to trustees upon trust for the benefit of the holders or such debentures; or (3) an endorsement upon or transfer of any debentures issued by any such society. (1) the Reserve fund of a Co-operative society or class of co-operative societies may with the specific approval of the Registrar in writing, be utilised in the business of the co-operative society. (2) Reserve Fund shall be indivisible and no member shall be entitled to claim specified share in it. Provided that in exceptional circumstances and with the prior approval of the Registrar the reserve fund may be utilized in meeting losses. (3) No co-operative society whose reserve fund has been invested or deposited in the manner prescribed in section 44, shall draw upon pledge or otherwise employee such fund except with the sanction of the Registrar previously obtained in writing.

If the Chief Commissioner is of opinion that it is necessary in the public interest so to do, he may, by notification in the Official Gazette: (a) remit in respect of any class of co-operative societies any fee payable under any law for the time being in force relating to the registration of documents or court-fees; (b) exempt any class of co-operative societies from payment of – (i) land revenue; (ii) taxes on agricultural income; (iii) taxes on sale or purchase of goods; or (iv) taxes on professions, trades, callings and employments, (1) in no co-operative society the dividend shall exceed ten percent per annum on paid up share capital. (2) In a co-operative society with an unlimited liability, on dividend or bonus shall be paid, until a period of five years has elapsed from the date of registration. (3) No dividend shall be paid by the co-operative society while any claim due from the co-operative society to a depositor or lender remains unsatisfied. (4) The Registrar may by general or special order direct that a co-operative society shall not pay dividend or shall pay dividend at reduced rate so long as it receives loans and deposits from non members.

(1) Notwithstanding anything contained in any law for the time being in force a member of co-operative society may execute an agreement in such form as may be prescribed in favour of the society providing that his employer or the officer disbursing his salary or wages shall be competent to deduct every month from the salary or wages payable to him, such amount as may be specified in the agreement but not exceeding one-third of the salary or wages and to pay the amount so deducted to the society in satisfaction of any debt or other demand owing by the member to the society. (2) On the execution of such agreement, the employer 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 and the 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. The net profit of a co-operative society shall be the profit remaining after allowing for the following charges in addition to those specified in clause (h) of rule 2, namely: (a) all other usual working charges such as repairs, rent, taxes, depreciation and irrecoverable amounts written off; (b) capital expenditure written off, either wholly or in part; (c) capital loss actually incurred and not adjusted against any fund created out of profits; (d) provisions for estimated bad debts, doubtful debts if any; (e) expenses incurred in connection with the meetings and elections; and (f) any other revenue expenditure.

Notwithstanding anything contained in any law for the time being in force, the Government may:- (a) subscribe to the share capital of a co-operative society; (b) give loans or make advances to a co-operative society; (c) guarantee the repayment of principal and payment of interest on debentures issued by a co-operative society; (d) guarantee the repayment of share capital of a co-operative society and dividends thereon at such rates as may be specified by the Government; (e) guarantee the repayment of principal and payment of interest on loans and advances to a co-operative society; and (f) give financial assistant in any other form, including grants and subsidies, to a co-operative society. Every co-operative society shall contribute three percent, out of its net profit of the year to the co-operative education fund to be administered by State Co-operative Union. The contributions payable by a co-operative society shall be a charge on funds of co-operative society and shall be recoverable in the manner as provided for in section 67. The State Co-operative Union shall prepare regulations with the approval of the Registrar for the utilization and administration of the fund.