The Andhra Pradesh Co-operative Societies Act, 1964

Preliminary

Short title, extent and commencement:—

1. (1) This Act may be called the Andhra Pradesh Co-operative Societies Act, 1964.
2. (2) It extends to the whole of the State of Andhra Pradesh.
3. (3) It shall come into force on such date as the Government may, by notification in the Andhra Pradesh Gazette, appoint.

Definitions:— [Rule(2)] :

In this Act, unless the context otherwise requires,—

1. (a) ‘Bye-laws’ means the registered bye-laws for the time being in force ;
2. (b) "Committee" means the governing body of a society by whatever name called, to which the management of the affairs of the society is entrusted; 2[(c)‘‘Co-operative year” means, the period commencing on the 1st day of April of any year and ending with the 31st day of March of the succeeding year ;]
3. (d) ‘Dividend’ means a share of the profits of a society divided among its members in proportion to the share capital held by each of them ;
4. (e) ‘Federal society’ means a society to which similar class of societies are affiliated ; 3[(f)‘Financing bank’ means a society, the main object of which is to assist any affiliated or other society by giving loans or advancing moneys ; and includes any scheduled bank as defined in the Reserve Bank of India Act, 1934 (Central Act 2 of 1934) and such other body corporate or financial institution as may be notified by the Government from time to time, which gives financial or other aid to a society ;]
5. (g) ‘General body’ in relation to the society means all the members of the society ;
6. (h) ‘General meeting’ means a meeting of the general body of a society;
   • (i) ‘Government’ means the State Government ; 1[(i-a)‘Gram Panchayat’ means, a gram panchayat constituted under Section 4 of the Andhra Pradesh Panchayat Raj Act, 1994 (Act 13 of 1994) ;] 2[(j)‘Member’ means a member of a society, and includes an associate member ;]

1[(j-i) ‘Mandal Parishad’ means a Mandal Parishad constituted under Section

148 of the Andhra Pradesh Panchayat Raj Act, 1994 (Act 13 of 1994) ; (j-ii)‘Municipal Corporation’ means a Municipal Corporation constituted under the relevant law for the time being in force relating to the Municipal Corporations in the State ; (j-iii)‘Municipal Council’ means a Municipal Council constituted under Section 5 of the Andhra Pradesh Municipalities Act, 1965 (Act VI of 1965) ;

3[(j-iv-) ‘Near relative’ means father, mother, brother, sister, husband, wife, son, son-in-law, daughter, daughter-in-law, father-in-law, mother-in-law, brother-in-law, sister-in-law, nephew and niece;]

1. (k) ‘Officer’ includes a person elected or appointed by a society to any office of such society according to its bye-laws and a president, vice- president, chairman, vice-chairman, secretary, assistant secretary, treasurer, manager, member of committee, liquidator or any other person elected or appointed under this Act, Rules or the bye-laws to give directions in regard to the business of the society. (k-i) 4[xxx]
2. (l) ‘Prescribed’ means as prescribed by rules made under this Act;
3. (m) ‘Rebate’ means a share of the profits of a society divided among its members in proportion to the value of business done by each of them with the society ;
4. (n) ‘Registrar’ means the Registrar of Co-operative Societies appointed under Section 3

1. (1) and includes any other person on whom all or any of the powers of the Registrar under this Act are conferred ;
   • (o) ‘Rules’ means the rules made under this Act ;
   • (p) ‘Society’ means a Co-operative society registered or deemed to be registered under this Act ;
   • (q) ‘Society with limited liability’ means a society in which the liability of its members for the debts of the society, in the event of its being wound up, is limited by its bye-laws:-
     • (i) to the amount, if any, unpaid on the shares held by each of them ; or
     • (ii) to such amount as they may undertake to contribute to the assets of the society ;
   • (r) ‘Society with unlimited liability’ means a society, the members of which are, in the event of its being wound up, jointly and severally liable for and in respect of all its obligations and to contribute to any deficit in the assets of the society ; ‘State’ means the State of Andhra Pradesh ;
   • (t) ‘Tribunal’ means a Tribunal constituted under Section 75 and having jurisdiction ; 1[(u)‘Zilla Parishad’ means a Zilla Parishad constituted under Section 177 of the Andhra Pradesh Panchayat Raj Act, 1994 (Act 13 of 1994).]

Registration of Societies

Appointment of Registrar and other persons for the purpose of this Act:—

1. (1) There shall be appointed a Registrar of Co-operative Societies for the State and as many other persons as the Government think fit for the purposes of this Act.
2. (2) Every other person appointed under sub-section
3. (1) shall exercise under the general superintendence of the Registrar, such powers of the Registrar, under this Act as the Government may, from time to time, confer on him.

Society which may be registered:— [Rule 2A, Rule 5] 2[(l)]A society which has, as its main object, the promotion of the economic interests of its members in accordance with the Co-operative principles 3[as may be prescribed], or a society established with the object of facilitating the operation of such a society, may be registered under this Act. 1[(2)Every Society registered or deemed to be registered under this Act shall function subject to such directions as may be issued by the Registrar, 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 with such directions.]

Registration with limited or unlimited liability:—(1)A society may be registered with limited or unlimited liability but a liability of a society of which any member is a society shall be limited : Provided that where a financing bank becomes a member of a society with unlimited liability, the liability of that society may continue to be unlimited.

1. (2) The liability of the Government, a financing bank or a federal society having shares in a society, whether with limited or unlimited liability, shall be limited to the share capital subscribed by the Government, such financing bank or federal society, as the case may be.
2. (3) The name of every society shall contain the expression ‘Co-operative' or its equivalent in any Indian language and in the case of every society with limited liability, the name of the society shall also have as its suffix the expression ‘Limited’ or its equivalent in any Indian language.

[xxx]Registration of a society:— [Rule 3, Rule 3A] (1) An application for the registration of a society shall be made to the Registrar in such form and with such particulars as may, from time to time, be specified by the Registrar.

1. (2) Every such application shall conform to the following requirements namely:—
   • (a) the application shall be accompanied by:—
     • (i) the original and one copy of the proposed bye laws of the society as adopted by the applicants ;
     • (ii) a true copy of the minutes of the meeting at which the bye laws were adopted duly signed by the applicants;
     • (iii) a sworn statement from each applicant that he is a member of a different family and particulars furnished in the application form prescribed are true to the best of his knowledge and belief;
   • (b) where all the applicants are individuals, the number of applicants shall not be less than ten, each being a member of a different family, and every one of them shall possess eligibility to become a member as required under sub-section
2. (1) of Section 19 : Explanation:— For the purposes of this clause, the expression “member of a family” means a wife, husband, father, mother, grand-father, grand-mother, step-father, step-mother, son, daughter, step-son, step-daughter, grand-son, grand-daughter, brother, sister, half-brother, half-sister and wife of brother or half-brother;
   • (c) Where the objects of the society include the raising of funds to be lent to its members and where all the applicants are individuals, the applicants shall reside or own immovable property in the same town, village or group of villages or belong to the same class or pursue the same occupation: Provided that in the case of a society with unlimited liability, the members thereof shall reside in the same town, village or group of villages ;
   • (cc) Where the objects of the Society include production and sales

activity by supplying raw material to members for production of

finished products and where all applicants are individuals, such

applicants shall reside in the area of operations proposed for

the society and belong to the same class or pursue the same occupation ; and it shall also be competent for the Government to specify by order such other class of societies, the applicants of which shall reside in the area of operations as aforesaid and belong to the same class or pursue the same occupation;

1. (d) the application shall be signed : —
   • (i) if the applicants are individuals by every one of such applicants, and
   • (ii) if the applicant is a society, by a member duly authorised in this behalf by such society.

1. (3) Where any question arises under clause
   • (c) of sub-section
2. (2) as to the residence, ownership, group of villages, class or occupation, such question shall be decided by the Registrar, whose decision thereon shall, subject to the provisions of Section 76, be final.
3. (4) Where the Registrar is satisfied,—
   • (a) that the application conforms to the requirements laid down by this Act and the rules made thereunder;
   • (b) that the objects of the Society seeking registration are in accordance with section 4;
   • (c) that such Society is likely to be economically sound and that its registration may not have an adverse effect on the development of the Co-operative movement;
   • (d) that the proposed bye-laws are not contrary to the provisions of this Act and the rules made thereunder; and
   • (e) that the applicants are aware of the objects of the society as specified in Section 4 of the Act and contents of the proposed bye-laws, he may register the Society and its bye-laws within such time as may be prescribed.
4. (5) Where the Registrar is not so satisfied, he shall communicate by registered post the order of refusal together with the reasons thereof to the applicants within such time as may be prescribed.

Registration certificate:— Where a society is registered the Registrar shall issue a certificate of registration signed and sealed by him which shall be conclusive evidence that the society mentioned therein, is a society duly registered under this Act, unless it is proved that the registration of the society has been cancelled.

Society to be a body corporate:— The registration of a society shall render it a body corporate by the name under which it is registered having perpetual succession and a common seal. The society is entitled to acquire, hold and dispose of property, to enter into contracts on its behalf, to institute and defend suits and other legal proceedings and to do all other things necessary for the purpose for which it was constituted.

Change of name of society:—

1. (1) A society may, by an amendment of its bye-laws, change its name.
2. (2) The change of name of a society shall not affect any rights or obligations of the society, or render defective any legal proceedings by or against it ; and any legal proceedings which might have been continued or commenced by or against the society by its former name may be continued or commenced by its new name.

Change of liability:— [Rule 7,8] Subject to the provisions of this Act and the rules, the society may, by a resolution, decide to amend its bye-laws to change the form or extent of its liability.

Transfer of assets and liabilities, division, amalgamation and conversion of a society:— [Rule 7,8]

1. (1) A society may, by a resolution decide to—
   • (a) transfer its assets and liabilities in whole or in part to any other society which agrees to such transfer by a resolution ; or
   • (b) divide itself into two or more societies ; or
   • (c) convert itself into a society of a class different from one to which it belongs.
2. (2) Any two or more societies may, by a resolution, decide to amalgamate themselves and form a new society. Provided that where a society under sub-section
3. (1) is a member of two or more societies under sub-section
4. (2) are members of a federal society or in receipt of assistance from a financing bank, such society or societies shall obtain prior consent of the federal society or financing bank for any resolution under sub-section
5. (1) or sub-section
6. (2) as the case may be ;
7. (3) Every resolution of a society under sub-section
8. (1) or sub-section
9. (2) shall be passed at the general meeting by a majority of not less than two-thirds of members present and voting, and such resolution shall contain all particulars of the transfer, division, amalgamation or conversion as the case may be.

Exercise of option by members and creditors:— [Rule 7,8]

1. (1) Where a society has passed a resolution under Section 11 or Section 12, it shall give notice thereof in the manner prescribed together with a copy of the resolution to all its members and creditors and notwithstanding any bye-law or contract to the contrary, any member or creditor shall, during a period of one month from the date of service of the notice upon him, have the option of withdrawing his shares, deposits or loans, as the case may be.
2. (2) Any member or creditor who does not exercise his option within the period specified in sub-section
3. (1) shall be deemed to have assented to the resolution.
4. (3) A resolution passed by a society under Section 11 or Section 12 shall not take effect until:—
   • (a) all the members or creditors have assented, or deemed to have assented, to the resolution under sub-section
5. (1) or sub-section
6. (2) of this section; and
   • (b) all claims of the members and creditors who have exercised the option referred to under sub-section
7. (1) within the period specified therein have been met in full or otherwise satisfied; and
   • (c) (i) in the case of change of liability or conversion, amendment of the bye-laws of the societies concerned is registered ;
     • (ii) in the case of transfer of assets and liabilities in whole or in part, the consent of the financing bank or federal society as the case may be, if applicable is obtained; or.
     • (iii) in the case of division or amalgamation, the certificate of registration of the societies or the society, as the case may be, is issued.

Effect of transfer, division and amalgamation:—

1. (1) Not-withstanding anything in any other law for the time being in force, where a resolution passed by a society under Section 12 involves a decision for the transfer of any assets and liabilities the resolution shall, when it takes effect, be a sufficient conveyance to vest the assets and liabilities in the transferee without any further assurance.
2. (2) The registration of a society shall stand cancelled and the society shall be deemed to have been dissolved and shall cease to exist as a corporate body—
   • (a) when the whole of the assets and liabilities of such society are transferred to another society ; or
   • (b) when such society divides itself into two or more societies.
3. (3) Where two or more societies are amalgamated into a new society, the registration of the societies so amalgamated shall stand cancelled and they shall be deemed to have been dissolved and shall cease to exist as corporate bodies.

Amendment of bye-laws of a society:— [Rule 10, 11]

1. (1) No amendment of any bye-law of a society shall be valid unless [the resolution for such amendment is passed at its General meeting [by a majority of not less than two-thirds of the members present and voting] and] such amendment has been registered under this Act. Where such an amendment is not expressed to come into operation on a particular day, then it shall come into force on the day on which it is registered.
2. (2) Every proposal for such amendment shall be forwarded to the Registrar who shall, if he is satisfied that the proposed amendment fulfils the conditions specified in sub-section
3. (1) of Section 7, register the amendment within a period of thirty days from the date of receipt of such proposal; Provided that the Government may, for sufficient cause which shall be recorded in writing, extend the said period for a further period of [thirty days.]
4. (3) The Registrar shall forward to the society a copy of the registered amendment together with a certificate signed and sealed by him, and such certificate shall be conclusive evidence that the amendment has been duly registered.
5. (4) Where the Registrar is not so satisfied, he shall communicate by registered post the order of refusal together with the reasons therefor, to the society within the period specified in sub-section (2). [If no order of refusal is communicated within a week after the expiry of the period specified in sub-section
6. (2) it shall be deemed that the Registrar has not registered the amendment as on the last date of the period specified in sub-section (2).]
7. (5) If in the opinion of the Registrar, an amendment of the bye-laws of a society is necessary or desirable in the interest of such society or of the Co-operative movement, he may, in the manner prescribed, call upon the society to make any amendment within such time as he may specify. If the society fails to make such an amendment within the time so specified, the Registrar may, after giving the society an opportunity of making its representation, register such amendment and forward the society by registered post a copy of the amendment together with a certificate signed by him; such a certificate shall be conclusive evidence that the amendment has been duly registered ; and such an amendment shall have the same effect as an amendment of any bye-law made by the society.

Partnership of societies:—

1. (1) Any two or more societies may, by a resolution passed by a majority of not less than two-thirds of the members present and voting at a general meeting of each such society enter into a contract of a partnership for carrying out any specific business permissible under the bye-laws on such terms and conditions as may be agreed upon by such societies. Provided that where such societies are members of a federal society or are in receipt of assistance from a financing bank or State aid as specified in Section 43 of the Act, they shall obtain the prior consent of the federal society or the financing bank or the Registrar, as the case may be.
2. (2) No such resolution shall be passed by a society unless ten clear days’ written notice of the resolution and the date of the meeting has been given to each member of the society.
3. (3) The provisions of the Indian Partnership Act, 1932 shall not apply to such contracts of partnership.

Classification:— [Rule 12] The Registrar shall, in accordance with the rules, classify societies with reference to their objects, area of operation, membership or any other matter specified in the rules.

Members and their Rights and Liabilities

Eligibility for membership:— [Rule 13,14,59,12A]

1. (1) Subject to the provisions of Section 21,—
   • (a) an individual who attained majority and is of sound mind and who belongs to a class of persons, if any, for whom the society is formed as per its bye-laws and who possesses such qualifications as may be specified in the bye-laws or as may be prescribed for the concerned class of societies in the interest of Co-operative movement.
   • (b) a society registered, or deemed to be registered, [under this Act or the Andhra Pradesh Mutually Aided Co-operative Societies Act, 1995 (Act No. 30 of 1995)] [and which belongs to the class of societies, if any, for which the society is formed as per its bye-laws: [ Provided that the Co-operative Society registered under the Andhra Pradesh Mutually Aided Co-operative Societies Act, 1995 which were admitted into Central, Apex Level Co-operative Societies, shall not be entitled for voting rights.]
   • (c) the Government ; shall be eligible for admission as a member— [ Provided that no individual shall be eligible for admission as a member of any financing bank or federal society :] [ Provided further that an individual who was admitted as a member of the financing bank or federal society and continuing as such on the date of the commencement of the Andhra Pradesh Co-operative Societies (Amendment) Act, 1985, shall, on the commencement cease to be a member of such bank or society:] [Provided also that a society shall admit an individual or a society referred to in clauses
   • (a) and
   • (b) above as a member, subject to the condition that the society is in a position to extend its services to such individual or society.] [Provided also that the individual who seeks admission into an Agricultural Credit Society, shall hold agricultural land either as an owner or a tenant in the area of operation of the said society in such manner as may be prescribed.] Explanation [I] :— For the purpose of this sub-section ;
     • (i) ‘family’ means husband, wife, unmarried sons, unmarried daughters and other dependents in the house-hold ;
     • (ii) ‘weaver’ means any individual not being a master weaver, who attends to operations of weaving of cloth or fabric or product on the loom whether such operation is carried on in private dwelling house or any other place and is dependent on weaving as profession and income thereof. [Explanation II :— For removal of any doubts, it is hereby declared that Mutually Aided Co-operative Society registered or deemed to be registered under the Andhra Pradesh Mutually Aided Co-operative Societies Act, 1995 shall be entitled to all the rights and privileges of a member of a society except voting rights under the provisions of this Act on admission as such member.]
2. (2) Notwithstanding anything in sub-section (1),—
   • (i) any firm, company or any other body corporate constituted under any law for the time being in force, or a society registered under the relevant Societies Registration Act or a local authority or a public trust registered under any law for the time being in force relating to the registration of such trusts, which is immediately before the commencement of this Act, a member of a society deemed to be registered under this Act shall have, subject to the other provisions of this Act, the right to continue to be such member on and after such commencement ;
   • (ii) the requirements specified in [clauses
   • (c) and
   • (cc) in sub-section
3. (2) of Section 6] for individual signing the application for registration of a society referred to therein, shall also apply to individuals seeking admission as members of such society after its registration ;
   • (iii) any statutory body constituted for the purpose of development of a particular industry, may become a member of a co-operative marketing or processing society of growers or workers engaged in such industry;
   • (iv) persons who are minors, may, subject to such restrictions or limitations as may be applicable to a minor under the provisions of any law for the time being in force, be admitted as members of such class of societies as may be prescribed ; (2-A)Any person duly qualified for admission as a member under the provisions of this Act, the rules and the bye-laws, may apply through the Registrar for membership of such societies and in such forms as may be prescribed and such person shall be deemed to have been admitted as a member of the society from the date of receipt of the application in the office of the society. (2-B)Notwithstanding anything in this Act, the Registrar may either suo motu at any time or on any application by the society or any aggrieved person made within fifteen days from the date mentioned in sub-section (2-A) and after giving an opportunity to the person concerned and recording the reasons therefor declare such person as not eligible for membership of the society within thirty days from the date of receipt of the application by the Registrar.
4. (3) The General body of a society shall not without sufficient cause, refuse admission to membership to any person duly qualified therefor under the provisions of this Act and its bye-laws. Where admission is so refused, the decision, with reasons therefor, shall be communicated by the registered post to such person within fifteen days of the date of the decision, or within sixty days from the date of his application for membership, whichever is earlier :
5. (4) The name of every person admitted or deemed to have been admitted as a member of the society shall be entered in such records of the society as may be prescribed [and the member so admitted shall be issued a photo identity card.]
6. (5) The name of every associate member admitted or deemed to have been admitted, shall be entered in a separate register and a photo identity card shall be issued.

Associate Member:-

1. (1) Notwithstanding anything contained in Section 19, a society may admit any individual or informal group such as Self Help Group, Rythu Mithra Group, Non-Governmental Organisation , working for the welfare of farmer community in the area of operation as associate member but such member shall not be entitled to vote.
2. (2) The associate member shall not be entitled to any share in any form whatsoever in the profits or assets of the society. Such member shall not have privileges, rights and liabilities of a member except those specified in the bye-laws of the society:

Disqualification for membership of society Disqualification for membership of society:— [Rule 21B]

1. (1) A person shall be disqualified for being admitted as, and for being, a member, he -
   • (a) is an applicant to be adjudicated, an insolvent or is an undischarged insolvent ; or
   • (aa) is not eligible for membership under Section 19;] or
   • (b) has been sentenced for any offence involving more turpitude, such sentence not having been reversed and a period of three years has not elapsed from

the date of expiration of the sentence; or

1. (c) is a paid employee of the society or of its financing bank or of any society for which it is the financing bank ; or
2. (d) has been expelled from membership under this Act and a period of one year has not elapsed from the date of such expulsion; or
3. (e) is carrying on business of such kind as the Registrar may by general or special order, declare to be a business which is in conflict with the objects or interests of the society ; or
4. (f) as such member fails to transact such minimum business or utilise minimum services or facilities in a year as may be specified- in the bye-laws; or
5. (g) fails to attend two consecutive General body meetings in two years without leave of absence; or
6. (h) fails to give information relevant to him to the society as specified in the bye- laws.]

1. (2) The provisions of clause
   • (b) of sub-section
2. (1) shall not apply to a person seeking admission to, or to a member of, a society exclusively formed for the reclamation of such class of persons as may from time to time be notified by the Government in the Andhra Pradesh Gazette. The provisions of clause
   • (c) of sub-section
3. (1) shall not apply to a person seeking admission to, or to a member of—
   • (i) a society which has as its principal object the provision of employment to its members ; or
   • (ii) such other society as may be prescribed.]
4. (3) Where any person, who is not eligible for being admitted as member has been admitted as member or where the member who is disqualified to continue as such under sub-section
   • (I) is continued as member, he shall be removed by the General body on its own motion or on a representation made to it by any member of a society or its federal society or its financing bank: Provided that no member shall be removed under this sub-section unless he had an opportunity of making a representation against the proposed action. A copy of the resolution removing the member shall be communicated to such person and on such communication, he shall be deemed to have ceased to be a member of the society.

Right of members to services by society and application for redress:—

1. (l) Every member on his admission as such member shall be entitled to the services available to the members of the society and such services shall, subject to availability, be rendered to him on his application to the committee.]

1. (2) If any member is refused any service, or where the decision of the committee on his application for services is not communicated to him within a period of thirty days from the date of such application, he may make an application to the Registrar for redress, within thirty days from the date of receipt of the decision of refusal, or within sixty days from the date of application to the society, as the case may be.
2. (3) If the Registrar is satisfied that the refusal of any service is unreasonable, improper or discriminatory, he may after giving the committee an opportunity of making its representation by order, direct the committee to render the service.

Expulsion of Members:—

1. (1) Any member who has acted adversely to the interests of the society may be expelled upon a resolution of the general body passed as its meeting by the votes of not less than 1[two-thirds of the members of the society present and voting.]
2. (2) No member shall be expelled under sub-section
3. (1) without being given an opportunity of making his representation to the General Body. A copy of the resolution expelling the member shall be communicated to the member

Members not to exercise rights till payments are made:— No member shall, save as otherwise provided in Section 31, exercise the rights of a member unless he has made such payment to the society, in respect of membership or has acquired such interest in the society, as may be specified in the rules made in this behalf or

2[as may be specified in the bye-laws].

Vote and manner of its exercise:— [Rule 18]

1. (1) [Subject to such rules as may be made in this behalf, every member] shall have one vote in the affairs of the society and shall exercise his vote in person and not by proxy : [ Provided that no member of a society belonging to such class of societies and who failed to transact such minimum business or utilise such minimum services or facilities as may be prescribed taking into consideration the nature of business transacted or the services or facilities made available by the society, shall have the right to stand as a candidate or to vote in any election to the society.] (1-A) A member of a society shall be eligible to exercise the right to vote only if he:
   • (a) contributes a minimum share capital as may be prescribed.
   • (b) [xxx]
   • (c) [is a member of the society for a continuous period as may be prescribed.]
   • (d) is not in default in the payment of any amount due in cash or kind to the society for such period as may be prescribed.
2. (2) [xxx]Every person nominated to the committee by the Government or where the financing bank is a member, every person representing such financing bank, shall have one vote : Provided that no nominee of the Government or the representative of the financing bank, as the case may be, [shall be entitled] to participate in, or vote at any election.
3. (3) In the case of equality of votes, the chairman of the meeting shall have a second or casting vote.
4. (4) [xxx]

Restriction on holding of shares:Where the liability of the members of a society is limited, no member other than a society or the Government, shall hold more than such portion of the share capital of the society, subject to a maximum of one-fifth thereof, as may be prescribed . [xxx] Provided that the Government may, by notification in the Andhra Pradesh Gazette, fix in respect of any society or class of societies, a higher maximum than one-fifth of the share capital. [xxx]

Restrictions on transfer of shares or interest:

1. (1) No transfer by a member of his share or interest in a society shall be valid unless
   • (a) the member has held such share or interest for not less than one co-operative year ; and
   • (b) the transfer is made to a member of the society.
2. (2) Not with standing anything in Sub - section(1), no member of a financing

bank or federal society shall tranfer his share or interest in such bank or

society to an individual member, his heir or legal representative.

Transfer of interest on death of a member: [Rule 16,17]

1. (1) On the death of a member, the society shall transfer his share or interest to the person or persons nominated in accordance with the rule, or if no person has been so nominated, to such person as may appear to the committee to be the heir or legal representative of the deceased member only on such nominee, heir or legal representative, as the case may be, becoming a member of the society, subject to such conditions as may be prescribed : Provided that nothing in this sub-section shall prevent a minor or a person of unsound mind from acquiring by inheritance or otherwise the share or interest of a deceased member in a society.
2. (2) Notwithstanding anything in sub-section (1), any such nominee, heir, or legal representative, as the case may be, may require the society to pay to him the value of the share or interest of the deceased member as ascertained in the manner prescribed.
3. (3) A society shall pay all other moneys due to the deceased member from the society to such nominee, heir or legal representative, as the case may be, subject to such conditions as may be prescribed.
4. (4) All transfers and payments made by a society in accordance with the provisions of this section shall be valid and effectual against any demand made upon the society by any other person.

Liability of past member and estate of deceased member:

1. (1) Subject to the provisions of sub-section (2), the liability of a past member, or of the estate of a deceased member, 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.
2. (2) Where a society is ordered to be wound up under Section 64, the liability of a past member who ceased to be a member or of the estate of a deceased member who died, within two years immediately preceding the date of the order of winding up, shall continue until completion of the liquidation proceedings but such liability shall be limited only to the debts of the society as they existed on the date of cessation of membership or death, as the case may be.

Management of Societies

Ultimate authority of society: [Rule 21]

1. (1) (a) Subject to the provisions of this Act, the rules and the bye-laws, the ultimate authority of a society shall vest in the general body : Provided that nothing in this clause shall affect the exercise by the committee or any officer of a society or any power conferred on such committee or officer by the Act, the rules or the bye-laws.
   • (b) Notwithstanding anything in clause (a), where the area of operation of a society is not less than such area as may be prescribed, or where the society consists of not less than such number of members as may be prescribed, the society-may and if so directed by the Registrar shall provide in its bye-laws for the Constitution of smaller general body designated as the representative general body consisting of such number of members of the society as may be specified in and elected in accordance with, the rules, to exercise all or any of the powers of the general body except the power to conduct elections of members of the committee as may be specified in the bye-laws ; and thereupon any reference in this Act to the general body meeting thereof shall be construed as a reference to the representative general body or its meetings : Provided that the representative general body shall not alter any provision in the bye-laws relating to its Constitution or powers.
   • (c) The exercise of any power by representative general body shall be subject to such restrictions and conditions as may be specified in the rules or the bye-laws,
2. (2) Subject to the other provisions of this Act, the following matters shall be dealt with by the 1[General Body in the manner prescribed]-
   • (i) election and removal of members of the committee and members
   • (ii) annual report to the Registrar ;
   • (iii) consideration of the audit report and the annual service ;
   • (iv) disposal of the net profits ;
   • (v) amendment to bye-laws ;
   • (vi) expulsion of a member ;
   • (vii) approval of the annual budget of income and expenditure ;
   • (viii) affiliation of the society to the financing bank or other societies ; 1[xxx]
   • (ix) 2[election of delegates to the financing Bank or other societies] 3[ Provided that where a delegate is not elected under this item the President shall be the delegate to the Financing Bank or other society until a delegate is elected ; Provided further that where a President is elected by direct election, he shall represent the society as a delegate to the Financing Bank or other Societies.] 4[(x) review of the loans and advances sanctioned to or the business done with the society by the members of the committee or their such near relatives as may be prescribed, and report to the Registrar about any default in the recovery of the amounts due to the society.] Provided that the general body may delegate, by a resolution, to the committee its powers in respect of 5[items
   • (viii) and (ix)] or to withdraw by a resolution such powers at any time. 6[(xi) appointment of two internal auditors from among its members other than the members of the committee ;
   • (xii) consideration of the report of the internal auditors appointed by it.] 7[(xiii) contribution to Cooperative Education Fund;
   • (xiv) consideration of report of inquiry under Section 51 or Inspection under Section 52 or under Section 53 or Special report of Audit under Section 50;
   • (xv) decision on bad debts considered irrecoverable;
   • (xvi) management of deficits in stocks or cash;
   • (xvii) appointment of members of supervisory council, entrustment of duties to the supervisory council and consideration of its reports; (xviii) decision on transfer of assets and liabilities, on division or amalgamation;
   • (xix) review of attendance of Committee members;
   • (xx) review of membership;
   • (xxi) review of the report on the disqualification of the members and the committee members;
   • (xxii) review of all overdue loans and defaulters; (xxiii) approval of the staffing pattern, pay and other allowances of the employees of the society and contingencies, subject to the availability of administrative and contingent fund and approval of the Registrar.

Constitution of committees: [Rule 22,22A,22B,22C,22D,25] (1)

1. (a) The general body of a society shall constitute a committee in accordance with the bye-laws and entrust the management of the affairs of the society to such committee : Provided that in the case of a society registered after the commencement of the Andhra Pradesh Co-operative Societies (Second Amendment) Act, 2001 the persons who have signed the application for the registration of the society shall conduct the affairs of the society for a period of one month from the date of registration and shall cease to conduct the affairs of the society after duly constituting a committee as per the provisions of the Act thereafter: Provided further that where the bye-laws so provide, the Government or the Registrar may nominate all or any of the members of the committee for such period as may be specified therein ;
2. (b) On the Committee of such society or class of societies other than the societies formed exclusively for the persons belonging to the Scheduled Castes, Scheduled Tribes or Backward Classes as may be notified by the Government, such number of seats as may be specified by them shall be reserved for the members of the Weaker Section : Provided that in the case of such classes of Societies as may be prescribed, two seats shall be reserved for women in the manner prescribed and such reservation may be made in the reserved and unreserved categories also ; Provided further that in the case of a Primary Agricultural Co-operative Credit Society, a Fanners Service Co-operative Society a Co-operative Farming Society, a Co-operative Central Bank and a District Co-operative Marketing Society, not more than one-half of the total number of seats to be filled by elected members on the committee thereof shall be reserved to be filled by members of the Scheduled Castes, Scheduled Tribes Backward Classes and Women in such proportion as may be prescribed: Provided also that where no such members are elected in the proportion specified in the foregoing proviso the persons elected as members of the committee shall choose in the prescribed manner the members required to fill up the short fall in the said proportion, from amongst the persons belonging to the Scheduled Castes, Schedules Tribes, Backward Classes or Women, as the case may be, who are members of the general body of the society : Provided also that in a committee where the number of members elected as aforesaid was fallen short of the said proportion, in respect of any of the categories of the weaker sections, namely, Scheduled Castes, Scheduled Tribes or Backward Classes, the persons elected as members of the Committee shall choose in the prescribed manner the members required to fill up the short fall in the said proportion, from amongst the persons belonging to the other categories of weaker sections in such order of priority as may be prescribed. Explanation: For the purposes of this clause

1. (1) the expression ‘members of the weaker sections shall mean the persons belonging to the Scheduled Castes, Scheduled Tribes, Backward Classes and such other socially and economically backward sections of the community as the Government may, from time to time, notify in this behalf ;
2. (2) in the determination of ‘one half of the total number of members’ any fraction arrived at shall be counted as one.
   • (c) Two women members shall be nominated by the Registrar to the Committee of such class of societies and in such manner as may be prescribed from among the women members belonging to Self-Help Groups, Rythu Mithra Groups and Non-Governmental organizations. Such nominated women members, notwithstanding anything contained in this Act, may take part in proceedings of the meetings of the committee but shall not have the right to vote.
   • (d) One member belonging to minority community, shall be nominated by the Registrar to the Committee of such class of societies and in such manner as may be prescribed from among the members belonging to minority communities. Such nominated members, notwithstanding anything contained in this Act, may take part in proceedings of the meetings of the committee but shall not have the right to vote. (1-A)Notwithstanding anything in this Act or in the bye-laws the societies referred to in Clause
   • (b) of sub-section (1), the Government may, for the purpose of effective implementation of the reservation specified in Clause(b), by rules made in this behalf, provide for the constitution of, and election to, the committees of such societies and all other matters relating thereto, including the division of constituencies, allocation of seats and the choice of persons belonging to weaker sections of the society as members of the committee of any central society from amongst the members of the committees of the societies affiliated to such central society, by the members of the central society in cases where no such person is a member of the general body of such central society.
3. (2) (a) Save as otherwise provided in this Act, the term of office of the committee or any of its members or of the President elected in accordance with the provisions of sub-section
4. (5) shall be five years from the date of election of the members of the committee : Provided that the term of office of five years specified in this clause shall be applicable only to a committee or its members or the President elected in any ordinary election conducted after the commencement of the Andhra Pradesh Co-operative Societies (Second Amendment) Act, 1995 and the term of office of any committee or its members or the President holding office at such commencement shall be the same for which they were elected under the law in force when they were elected.
   • (b) It shall be the duty of the Registrar to hold elections to the office of the members of the committee of a society which received State aid as specified in Section 43 of the Act before the expiry of their term.
   • (c) In respect of other societies it shall be the responsibility of the incumbent committee of such society to hold elections to the office of the members of the committee in the manner specified in the byelaws before the expiry of the term: Provided that where the committee of a society requests the Registrar to hold elections to the office of the members of the committee, the Registrar shall hold elections to the office of the members of the committee in the manner prescribed on payment of costs in advance. (3)
   • (a) In the case of the committee of Co-operative Central Bank, a District Marketing Society, a District Co-operative Wholesale Store, a Centrally sponsored Consumer Co-operative Stores, an apex society and a society formed for a sugar factory or for a spinning mill, such officer of the co-operative department, not below the rank of a Deputy Registrar, as may be authorised by the Registrar in this behalf shall be the election officer and the election of the members of the committee shall be in such manner as may be prescribed.
   • (b) In any other case, the election officer and the manner of election of the members of the committee shall be such as may be prescribed; Provided that where a requisition signed by not less than one-fifth of the total number of members is received by the Registrar to appoint the election officer to conduct the election, the Registrar shall appoint the election officer to conduct the election.
5. (4) (a) For the purpose of electing members to its committee, a society may provide in its bye-laws, for the division of the area of operation of a society into territorial constituencies, or the membership of the society into electoral groups on any other basis, for the number or proportion of members who may be elected to represent each such territorial constituency or electoral group on the committee, and for the manner of election of such representatives.
   • (b) In the absence of such bye-laws, the society may elect members to its committee from among all the members of the society.
6. (5) In the case of such classes of Co-operative Societies as may be prescribed, the President shall, subject to the provisions of Section 21-A, be elected by the members of the committee from among themselves in the manner prescribed.

General meetings and committee meetings General meetings and committee meetings: [Rule 23, 23A, 23B, 23AA, 26]

1. (1) The committee may, at any time, call not less than two general meetings of a society in a co-operative year: Provided that one meeting shall be held in each half year. (1-A) If the general meeting is not convened in accordance with the provisions of sub-section (1), the members of the Committee shall cease to hold office on the day next after the 1st day on which the general meeting should have been held, and it shall be competent for the Registrar, notwithstanding anything in the bye-laws, to call such general meeting in such manner as may be prescribed.
2. (2) The committee shall call a general meeting of the society within thirty days of the date of receipt of a requisition in writing from
   • (i) such number of members or proportion of the total number of members, as may be specified in the bye-laws ;
   • (ii) the financing bank to which the society is indebted ;
   • (iii) a federal society to which the society is affiliated ; or
   • (iv) the Registrar.
3. (3) It shall be the duty of the President of the society to call the meetings of the committee so that atleast one meeting of the committee is held in every three months. If the President fails to discharge that duty with the result that no meeting is held, within such period of three months or within one month following such period, he shall with effect from the date of expiration of one month aforesaid cease to be the President : Provided that it shall also be the duty of the President to call such meetings within fifteen days of the date of receipt of requisition in writing in that behalf from any of the requisitionists specified in sub-section (2).
4. (4) The requisition referred to in sub-section
5. (2) or sub-section
6. (3) shall specify the purpose for which the meeting is to be called, and shall be signed by the requisitionists and delivered in person or by registered post at the registered address of the society.
7. (5) (a) If for any reason, a meeting is not called in accordance with the requisition delivered under sub-section (4), or if, in the opinion of the Registrar there is no committee or officer competent under this Act, the rules or the bye-laws to call a meeting, or if there be a dispute regarding the competence of the committee to function, then notwithstanding anything in the bye-laws of the society, the Registrar shall have the power to call such meeting in the manner prescribed, and to determine the time for such meeting and the subjects to be considered thereat. The Registrar or a person authorised by him in writing in this behalf shall preside at such meeting, but he shall not be entitled to vote.
   • (b) (i)If, at any general meeting of the society called by the Registrar himself under clause (a), otherwise than in pursuance of the requisition, there is no quorum, the meeting shall stand adjourned to such other date and time as the Registrar may determine.
     • (ii) If at the adjourned meeting also there is no quorum for holding the meeting, the members present shall constitute the quorum.
   • (c) If at any general meeting of the society called by the Registrar himself under clause
   • (a) in pursuance of the requisition, there is no quorum, the requisition shall lapse.
8. (6) Notwithstanding anything in this Chapter, if at any time the Government are satisfied that circumstances exist which render it necessary for them to call a general meeting for election of members of the committee to be held in accordance with the provisions of this Act, the Government or any person authorised by them in this behalf shall have power to call such meeting and to determine the place, time and the period of notice for such meeting. If at such meeting, there is no quorum, the meeting shall stand adjourned to such other date and time as the Government or person authorised may determine. If at the adjourned meeting also there is no quorum for holding the meeting, the members present shall constitute the quorum. When the meeting is called by the Government it shall be presided over by a person appointed by them in that behalf and if the meeting is called by the person authorised by the Government, the person so authorised shall preside at such meeting ; but the person presiding shall not be entitled to vote at the meeting so called or adjourned.
9. (7) (a)(i) If there is no committee or in the opinion of the Government or, the Registrar, it is not possible to call a general meeting for the purpose of conducting election of members of the committee, the Government, in respect of such class of societies as may be prescribed and the Registrar in all other cases may appoint a person or persons to manage the affairs of the society for a period not exceeding six months and the Government may, on their own and the Registrar with the previous approval of the Government, extend, from time to time, such period beyond six months, so however that the aggregate period include the extended period if any, shall not exceed three years.
   • (ii) Notwithstanding anything contained in this Act, in the special circumstances and for the reasons to be recorded, if in the opinion of the Government, it is not possible to hold the elections to the societies or class of societies, the Government may by order extend the term of the person or the persons appointed to manage the affairs of the society or class of societies beyond three years but not exceeding five years in aggregate.
   • (b) The person or persons so appointed shall, subject to the control of the Government or as the case may be, of the Registrar and subject to such instructions or directions as they may issue, from time to time, have power to exercise all or any of the functions of the committee or any officer of the society and to take all such actions as may be required in the interest of the society.
   • (c) The Registrar may fix the remuneration payable to the person or persons so appointed. The amount of such remuneration and other costs if any, incurred in the management of the society shall be payable out of the funds of the society.
   • (d) The Registrar may at any time, and shall at the expiration of the period of appointment of person or persons so appointed, arrange for calling of a general meeting for the election of a new committee in such manner as may be prescribed. The person or persons so appointed shall cease to manage the affairs of the society on the new committee entering upon its office.
10. (8) All the expenses incurred in connection with a meeting held under this section shall be paid out of the funds of the society : Provided that the Registrar may by order direct that such expenses shall, in a case falling under sub-section
11. (5) be recovered from any person who is, in the opinion of the Registrar, responsible for the failure to call the meeting.

Nominee of the Government on the Committee: [Rule 34]

1. (1) Where the Government,
   • (a) have subscribed to the share capital of a society, or
   • (b) have assisted indirectly in the formation or augmentation of the share capital of a society as provided in Section 43, or
   • (c) have guaranteed the repayment of principal and payment of interest on debentures issued by a society, or
   • (d) have guaranteed the repayment of principal and payment of interest on loans and advances to a society, the Government or any authority specified by the Government in this behalf shall have the right to nominate to the committee not more than [three persons as members] or one third of the total number of members of the committee, whichever is less, [notwithstanding anything contained in the bye-laws of society.]
2. (2) A member nominated to the committee under sub-section (1), shall, hold office during the pleasure of the Government or the specified authority, as the case may be.
3. (3) Any nominee of the Government may refer to the Government, through the Registrar, any resolution the execution of which, in the opinion of the nominee, is likely to be prejudicial to the interests of the Government and the decision of the Government thereon shall be final and binding on the committee :

Supersession of the committee Supersession of the committee:

1. (1) If in the opinion of the Registrar, the committee is not functioning properly or wilfully disobeys or fails to comply wilfully with any lawful order or direction issued by the Registrar under this Act or the rules, he may, after giving the committee an opportunity of making its representation, by order supersede the committee from a specified date ; and appoint either a person (hereinafter referred to as the special officer) or a committee of two or more persons (hereinafter referred to as the managing committee) to manage the affairs of the society for a period not exceeding two years, 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 shall not exceed three years.
2. (2) Such order shall take effect from the date specified therein unless it is stayed by the Government. Where such order is reserved by the Government, the special officer or the managing committee shall forthwith handover the management of the society to the committee.
3. (3) The special officer or the managing committee shall, subject to the general control of the Registrar and to such directions 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.
4. (4) The Registrar may fix the remuneration payable to the special officer or the managing committee. The amount of remuneration so fixed and such other expenditure incidental to the management of the society during the period of the supersession as may be approved by the Registrar shall be payable from the funds of the society.
5. (5) At the expiration of the period of appointment of the special officer or the managing committee, the Registrar shall arrange for the calling of a general meeting for the election of a new committee in accordance with the provisions of sub-section
6. (5) of Section 32.
7. (6) Where a society is indebted to any financing bank, the Registrar shall, before taking any action under sub-section
8. (1) in respect of that society, consult the financing bank.

Rights and Privileges of Societies

("First charge of a society on certain movable assets of a member for the amount due by him")

1. (1) Notwithstanding anything in any law for the time being in force, but subject to any claim of the Government in respect of land revenue, any debt or other amount due to a society by any member including a past or deceased member shall be a first charge upon the crop or other agricultural produce, cattle fodder for cattle, agricultural or industrial implements or machinery, raw materials for manufacture and any finished products manufactured from such raw materials owned by such member.
2. (2) Such charge shall be available even as against any amount recoverable by the Government as if it were an arrear of land revenue or any claim of the Government arising from a loan granted under the Land Improvement Loans Act, 1883, subsequent to the incurring of the debt of the liability for the other amount due to the society referred to in sub-section (1).
3. (3) No person shall transfer any property which is subject to such charge except with the previous permission in writing of the society which holds the charge and any transfer, without such permission shall, notwithstanding anything in any law for the time being in force, be void.
4. (4) The charge under this section shall not be available against the following articles of such members:-
   • (a) the necessary wearing apparel, cooking vessels, beds and bedding and such personal ornaments of a woman as in accordance with religious usage cannot be parted with by her ;
   • (b) ploughs, implements of husbandry, one pair of ploughing cattle, such manure and seed grain stocked by him, as may be necessary for the due cultivation of his lands in the ensuring year.

("Charge on the immovable property of a member for the loans borrowed")

1. (1) Notwithstanding anything in this Act or in any law for the time being in force, but subject to any claim of the Government in respect of land revenue and to any claim of an agricultural development bank in respect of its dues, in either case, whether prior in time or subsequent any member owning any land or having interest in any land as a tenant, who applies to a society for a loan, shall make a declaration in the form prescribed creating a charge in favour of the society, on the land or interest specified in the declaration, for the payment of the loan to be granted to him by the society in pursuance of the application and for all future advances, if any, required by him, which the society may grant to him, subject to such maximum as may be determined by the society, together with the interest on such amount of the loan and advances.
2. (2) Such declaration may be varied or cancelled at any time by the member with the consent of the society.
3. (3) Subject to the provisions of sub-section
4. (1) and to the claim of any person in whose favour a mortgage or a charge has been created before the date of registration of the declaration made under sub-section (1), no land in respect of which such declaration has been made or any part of or any interest in such land shall be sold or otherwise transferred until the entire amount of the loan or advance taken by the member from the society together with interest thereon is paid to the society; and any transaction made in contravention of this sub-section shall be void : Provided that, if a part of the amount borrowed by a member is paid, the society may, on application from the member and with the approval of the financing bank, release from the charge created under the declaration made under sub-section (1), such part of the land or interest in such land specified in the said declaration, as it may deem proper, with due regard to the security of the balance of the amount remaining outstanding from the member : Provided further that, nothing in this sub-section shall apply in respect of a mortgage created in favour of an agricultural development bank, subsequent to the date of Registration of the declaration made under sub- section (1).
5. (4) The declaration made under sub-section
6. (1) or any variation or cancellation thereof under sub-section
7. (2) shall be sent by registered post by the society to the Sub-Registrar having jurisdiction over the area in which the land is situated. He shall, if it is in order, register such declaration or variation or cancellation and return it to the society and where it is not in order, he shall return it to the society without registering it. Where it is registered, it shall take effect from the time of its registration and where it is not registered, it shall be of no effect. Explanation:- For the purposes of this section, the expression “Society” means-
   • (i) any society, the majority of members of which are agriculturists and the primary object of which is to obtain credit for its members of any agricultural purpose ; or
   • (ii) any society or any class of societies specified in this behalf by the

Deduction from salary or wages

Deduction from salary or wages:— [Rule 33]

1. (1) Notwithstanding anything in any other law for the time being in force, a member of a society may execute an agreement in favour of that society providing that his employer shall be competent, on a requisition in writing from the society, to deduct every month from the salary or wages payable to him such amount as may be specified in the requisition towards the amount due by him to the society in respect of any debt or other amount due by the member to the society, from time to time.
2. (2) (a)Where such agreement has been executed by a member, the employer of such member shall, on receipt of a requisition from the society, make the deduction from the salary or wages payable to the member in accordance with the requisition, and pay, within such time as may be specified in the rules in respect of any society or class of societies, the amount so deducted, to the society.
   • (b) Where the amount to be deducted in any month in accordance with the requisition made by a society, or where a requisition has been made by two or more societies in respect of the same person, the total amount to be deducted in accordance with all the requisitions, exceeds one-third of his entire gross salary or wages for the month, the employer shall deduct from the salary or wages of such person only a sum representing one-third of his entire gross salary or wages for the month. The amount deducted shall, where deductions have been made against requisitions received from two or more societies be paid by the employer to all the societies in proportion to the amounts to be deducted according to their requisitions : Provided that where any amount is due to such class of societies as may be specified in the rules, the entire gross salary or wages for the month on such portion thereof as may be specified in the rules in respect of any such class of societies may be deducted and paid as aforesaid.
3. (3) The employer shall maintain such registers as may be prescribed.
4. (4) The provisions of this section shall apply to all such agreements of

the nature referred to in sub-section

1. (1) as are in force at the commencement of this Act.
2. (5) If such employer fails to comply with any of the provisions of this section, he shall be punishable with fine which may extend to five hundred rupees.
3. (6) Where a requisition in writing from any society registered or deemed to be registered in any reciprocating State in respect of a member of that society who for the time being is employed in this State, is received by his employer, the requisition shall be acted upon as if it had been made by a society in this State. Explanation:-For the purposes of this sub-section ‘reciprocating State’ means any State which the Government may, by notification in the Andhra Pradesh Gazette, declare to be a reciprocating State.
4. (7) Nothing in this section shall apply to establishments under a railway administration operating any railway as defined in clause
5. (20) of Article 366 of the Constitution or to any industry to which the Payment of Wages Act, 1936 is applicable. Explanation:- For the purposes of this section, employer shall include an officer disbursing salary or wages of a member,

Charge and set-off in respect of shares or interest of members in the capital, etc., of a society:- A society shall have a charge upon the share or interest in the capital, deposits, dividend, bonus or profits payable to a member or a past member or the estate of a deceased member in respect of any debt or other amount due by him to the society and may set off any sum credited or payable to such member against payment of any such debt or other amount due : Provided that no financing bank to which a society is affiliated shall have a charge upon or set-off against any debt due from such society-

1. (i) any sum invested in the financing bank as reserve fund by the society if the bank is not the sole creditor of the society ; or
2. (ii) any sum invested in it by the society as provident fund of its employees established under Section 49.

Share or interest, etc., not liable to attachment:— The share or interest, of a member in the capital of a society or of an employee in the provident fund established under Section 49 or the contribution made by a member or past member or from the estate of a deceased member or by any officer or former officer under Section 66, or the reserve fund of a society [or the bad debts reserve of a Society] or the Provident Fund of its employees invested under Section 46, 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 officer; 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, interest, contribution or fund.

Right to set-off where a registered society purchases immovable property at a sale under the Andhra Pradesh Revenue Recovery Act, 1864, for any amount due to it:—

1. (1) Where, under this Act or any rule made thereunder, any amount due to a society from any person is recoverable as an arrear of the land revenue and immovable property of such person is brought to sale under the provisions of the Andhra Pradesh Revenue Recovery Act, 1864, and the society is the purchaser at such sale, the provisions of Section 36 of the said Act shall apply thereto subject to the modification that for the third and fourth clauses thereof, the following clauses were substituted, namely:— “Third:— The sum due to the purchaser shall be set-off, in whole or in part, against the purchase money and the remainder, if any, of the purchase money shall be paid to the Collector or other officer empowered by the Collector in that behalf within thirty days of the date of sale.” “Fourth:— Where the purchaser refuses or fails to make the payment of the remainder, if any, of the purchase money the amount of loss or expense consequent on such refusal or failure shall be a charge on the property purchased, and shall be recoverable from such purchaser in the same manner as arrears of land revenue. The amount so recovered shall be paid to the owner of the immovable property.”
2. (2) Where a sale is conducted under Section 71, Section 103 or Section 104 by the Registrar or any other person authorised by him, the provisions of sub-section
3. (1) shall apply as if it were a sale for the recovery of an arrear of land revenue.

Exemption from certain taxes, duties and fees:— The Government, if in their opinion it is necessary in the public interest so to do, may, by notification in the Andhra Pradesh Gazette, and subject to such restrictions and conditions as may be specified in such notifications, reduce or exempt in respect of any class of societies—

1. (a) the taxes on professions, trades, callings and employments ;
2. (b) the stamp duty with which, under any law for the time being in force, instruments executed by or on behalf of a society or by an officer or member and relating to business of such society or any class of such instruments or decisions or orders of the Registrar or arbitrator or liquidator under this Act, are respectively chargeable ; or
3. (c) any fee payable under the law relating to registration for the time being in force or Court-fees.

Exemption from compulsory registration of instruments:— Nothing in clauses

1. (b) and
2. (c) of sub-section
   • (I) of Section 17 of the Indian Registration Act, 1908 shall apply to—
3. (a) any instruments relating to shares in a society notwithstanding that the assets of the society consist in whole or in part of immovable property;
4. (b) any debentures issued by any such 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 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 of such debentures ; or
5. (c) any endorsement upon or transfer of any other debenture issued by any such society.

Properties and Funds of Societies

("State aid to Societies") The Government may, subject to the rules,—

1. (a) give loans or advance moneys to a society ;
2. (b) subscribe to the share capital of a society ;
3. (c) provide moneys to a society-
   • (i) for the purchase of shares of other societies ; or
   • (ii) to enable it to provide moneys to another society to purchase shares in other societies ;
4. (d) guarantee the repayment of principal and payment of interest on debentures issued by a society ;
5. (e) guarantee the repayment of share capital of a society and dividends thereon at such rates as may be specified by the Government ;
6. (f) guarantee the repayment of principal and payment of interest on loans and advance of moneys to a society ;
7. (g) guarantee the repayment of deposits received by a society and payment of interest on such deposits subject to such terms and conditions as may be laid down by the Government ; and
8. (h) give financial aid in any other form including subsidies to any society.

("Funds other than net profits not to be divided among members") No part of the funds other than the net profits of a society shall be paid by way of bonus or dividend or otherwise distributed among its members: Provided that a member may be paid remuneration from the funds on such scale as may be prescribed for any service rendered by him to the society :

Disposal of profits Disposal of profits:— [Rule 36,64,36A,36B]

1. (1) A society shall, subject to such limits as may be prescribed, credit one percent of gross profit or gross income in a year, as the case may be, to the Cooperative Education Fund.
2. (2) A society shall credit an amount not being more than 30 percent of gross profit or 2 percent of working capital, whichever is less, in a year to the administrative and contingent fund towards pay and other allowances of its employees and contingencies in the manner prescribed;
3. (3) A society shall, out of its net profits in any co-operative year,—
   • (a) transfer an amount not being less than twenty-five per cent of the profits as may be prescribed, to the reserve fund : Provided that when the total amount so transferred becomes equal to the amount of paid-up share capital, the amount to be transferred may, with the previous permission of the Registrar, be reduced to a sum not less than ten per cent of such profits;
   • (b) [xxx]
   • (c) credit such portion of the profits, as may be prescribed, to the bad debts reserve ;
   • (d) pay towards dividend to members on their paid-up share capital, an amount not being less than fifteen per cent of the net profit;
   • (e) pay an amount not being less than fifteen per cent of the net profit towards rebate to members on the amount or volume of business done by them with the Society in the manner specified in the bye-laws.
4. (4) The balance of the net profits may be utilised for all or any of the following purposes, namely:— (a&b) [Omitted by the Act No. 21 of 1985]
   • (c) constitution of or contribution to, such special funds as may be specified in the bye-laws ;
   • (d) payment of bonus to employees of the society or remuneration to a member for services rendered by him to the society to the extent and the manner specified in the bye-laws ;
   • (e) donation of moneys, not exceeding ten per cent of the net profits to be utilised within the area of operation of the society for any charitable purpose as defined in Section 2 of the Charitable Endowments Act, 1890:

Investment of funds

Investment of funds:— [Rule 37,38,39]

A Society may by a resolution of majority of committee with due care and diligence, invest or deposit its funds which are not immediately required for the business of the society,-

1. (a) in the Postal Savings Banks ;
2. (b) in any of the securities specified in Section 20 of the Indian Trust Act, 1982 ;
3. (c) in the shares of securities of any other society :
4. (d) with any Nationalised Bank or Scheduled Bank ; or the concerned District Co-operative Central Bank.
5. (e) [xxx] Provided that every primary agricultural credit society and every Co-operative Central Bank shall invest or deposit in each co-operative year towards the bad debts reserve of the said society or bank, a sum equal to one-fourth percentum of the amount granted by it as short term loans or medium term loans to its members during the co-operative year from out of the amounts borrowed by it from other co-operative financial institutions for granting such loans ; so however that no such investment or deposit shall be necessary when the total amount so invested or deposited towards bad debts reserve becomes equal to the total amount of bad debts of the society as estimated by the auditor appointed under Section 50.

Restrictions on borrowings and loans:— [Rule 40,41,41A,41B,41C]

1. (1) A society shall receive deposits and raise loans only to such extent and under such conditions as may be specified in the bye-laws.
2. (2) A society shall not grant a loan to any person other than a member, but it may grant loans to another society with the general or special sanction of the Registrar or to its employees on such terms as may be specified in the bye-laws: Provided that a society may make a loan to a depositor on the security of his deposit.
3. (3) (a)Subject to such directions as the Reserve Bank of India may give to Co-operative Banks in this behalf, primary agricultural credit societies shall, during a co-operative year, disburse to small farmers such proportions, having regard to the class of societies and the strength of membership of small farmers therein, as may be prescribed, out of the total amounts borrowed by them from the co-operative financial institutions, for granting short term loans or medium term loans to their members during that year, so however that the amount of any such loans that may be granted to each of their members, whether or not he is a small fanner, shall not in the aggregate exceed such amount or amounts as the Government may, from time to time, by notification in the Andhra Pradesh Gazette, specify in relation to the various classes of members and having regard to the purposes for which loans are required. Explanation:-For purposes of this sub-section, ‘small farmer’ means a member who holds not more than such extent of land as may be notified by the Government from time to time, and Government may notify different standards for different districts or parts of districts.
   • (b) Every primary agricultural credit society shall, in such areas as may be prescribed disburse the amount granted by it to any of its members towards a short term loan or a medium term loan by way of cheque in favour of the loanee or at the request of the loanee by money order ; and no such cheque shall be endorsed by the loanee in favour of any officer of the society.

Restrictions on other transactions with non-members:—[Rule 48]

1. (1) Save as otherwise provided in Section 47, the transactions of a society, with persons other than members shall be subject to such restrictions, as may be prescribed.
2. (2) Every Primary Weavers’ Co-operative Society shall produce cloth only through the members of the society by supplying raw materials to the members and receiving back cloth or fabric or product and shall not produce or purchase cloth or fabric or product from any source other than the members of the society either for sale on its own account or for sale through Federal Society or others.

Provident Fund Provident Fund:— [Rule 44]

1. (1) A society may, subject to the rules, establish a contributory provident fund for the benefit of its employees to which shall be credited all the contributions made by them and the society in accordance with its bye-laws.
2. (2) The provident fund so established shall not,—
   • (a) be used in the business of the society ;
   • (b) form part of the assets of the society ; or
   • (c) be liable to attachment or be subject to any other process of any Court or other authority.
3. (3) Notwithstanding anything in this section, a provident fund established, by a society to which the Employees Provident Fund Act, 1952, is applicable, shall be governed by that Act.

Audit, Inquiry, Inspection and Surcharge

Audit:— [Rule 45,46]

1. (1) There shall be a separate wing for audit in the Co-operative Department headed by the Chief Auditor who will work under the general superintendence and control of the Registrar of Co-operative Societies. The Chief Auditor shall audit or cause to be audited by a person authorised by him by a general or special order in this behalf, the accounts of a society at least once in every year and shall issue or cause to be issued an audit certificate with such particulars as may be prescribed, before the end of the succeeding co-operative year. Such audit shall primarily cover an examination of the debts, overdue, if any, verification of the cash balance and securities and valuations of the assets and liabilities of the society, [including prudent management of the affairs of the society in accordance with the Act, rules and byelaws.] [ Provided that in respect of a society not in receipt of State aid as specified in Section 43 of the Act, the committee of such society shall cause the audit of accounts of the society, every year as per the audit manual prescribed by the Registrar, either through the Chief Auditor or a Chartered Accountant [authorized by the Chief Auditor, and the Chief Auditor or the officer authorized by him shall issue Audit Certificate of such society.] Where such society opts to get the accounts of the society audited by the Chief Auditor, the later shall audit or cause to be audited the accounts of such society in the manner prescribed.]
2. (2) Every person who is, or has at any time being, an officer or employee of the society and every member including a past member shall furnish such information in regard to, any transaction, working and affairs of the society as Chief Auditor or such person authorised by him may require.

[(3) The committee shall prepare and submit or cause to be prepared and submitted within such period not exceeding six months as may be prescribed for different classes of societies after the end of the co-operative year, to the Chief Auditor or the person authorised by him as the case may be, such statements and reports as may be prescribed for the purpose of the audit of accounts of the Society for the Co-operative year.

1. (4) The audit shall be completed within a period of six months from the close of the Co-operative year of the registered society concerned and such other further period not exceeding six months as the Chief Auditor may permit for reasons to be recorded in writing.]

Inquiry:— [Rule 47,50] The Registrar, may of his own motion and shall, on the application of a society to which the society concerned is affiliated, or of not less than one third of the members of the Committee, or of not less than one fifth of the total number of members of the society, hold an inquiry or direct some person authorised by him by an order in this behalf to hold an inquiry into the constitution, working and financial condition of a society. Such inquiry shall be completed within a period of four months and the report of inquiry along with the findings of the Registrar thereon shall be communicated to the managing committee of the society. It shall be the responsibility of the managing committee to place the inquiry report before the General Body or Special General Body convened for the purpose for its information, within a period of one month from the communication of the inquiry report by the Registrar. The Registrar shall be competent to initiate action under the provisions of this Act, if the committee fails to take action as aforesaid: Provided that notwithstanding anything contained in this Act and the Rules made thereunder, the bye-laws of a society and the action of the society in placing the inquiry report alongwith the findings of the Registrar, the Registrar shall not be precluded from taking follow up action as may be required on the basis of inquiry report : Provided further that such action shall not be nullified even if the General Body of the Society passes a resolution negativing the findings of the inquiry: Provided also that the Registrar may for reasons to be recorded in writing extend the period of four months for completion of inquiry for a further period not exceeding two months. Explanation:— For the purposes of this section, “Managing Committee” includes a Committee constituted under Section 31(l)(a), and a person-in- charge appointed under Section 32(7)(a) and also a special officer appointed under Section 34 of the Act.]

Inspection:— [Rule 59,60]

1. (1) The Registrar may, of his own motion or on the application of a creditor of a society, inspect or direct any person authorised by him by a general or special order in this behalf to inspect the books of the society. Such inspection shall be completed within a period of three months from the date of order of inspection. Provided that no such inspection shall be made or directed on the application of a creditor unless the creditor:—
   • (a) satisfies the Registrar that the debt is a sum then due and that he has demanded payment thereof and has not received satisfaction within a reasonable time ; and
   • (b) deposits with the Registrar such sum as security, for the costs of the proposed inspection as the Registrar may require.
2. (2) The Registrar or any person authorised by him under sub-section
3. (1) shall prepare a report of inspection which shall be communicated to the Managing Committee of the Society together with the findings of the Registrar thereon. It shall be the responsibility of the Managing Committee to place the inspection report together with the findings of the Registrar before the General Body or Special General Body convened for the purpose for its information, within a period of one month of the communication of the inspection report by Registrar. The Registrar shall be competent to initiate action under the provisions of this Act, if the Committee fails to take action as aforesaid: Provided that notwithstanding anything contained in this Act and Rules made thereunder, the bye-laws of a society and the action of the society in placing the inspection report along with the findings of the Registrar, the Registrar shall not be precluded from taking, follow up action as may be required on the basis of inspection report: Provided further that such action shall not be nullified even if the General Body of the Society passes a resolution negativing the findings of the Registrar: Provided also that the Registrar may for reasons to be recorded in writing extend the period of three months for completion of inspection for a further period not exceeding two months. Explanation:— For the purposes of this section, “Managing Committee” includes an Adhoc Committee constituted under Section 31(l)(a), and a person-in-charge appointed under Section 32(7)(a) and also a Special Officer appointed under Section 34 of the Act.

Inspection of books by financing bank or federal society:— [Rule 50] A financing bank or a federal society shall have the right to inspect the books of any society which is indebted to it. The inspection may be made either by an officer of the financing bank or federal society authorised by the committee of such bank or society or by a member of its paid staff certified by the Registrar as competent to undertake such inspection. The officer or member so authorised to conduct inspection] shall at all reasonable times have free access to the books, accounts, documents, securities, cash and other properties belonging to or in the custody of the society and may also call for such information, statements and returns as may be necessary to ascertain the financial condition of the society and the safety of the sums lent to it by such bank or society. [The Officer or Member so authorised to conduct the inspection shall prepare a report of inspection which shall be communicated to the Managing Committee of the society together with the findings of the Registrar thereon. It shall be the responsibility of the Managing Committee to place the Inspection Report together with the findings of the Registrar before the General Body or Special General Body convened for the purpose for its information, within a period of one month of the communication of the Inspection Report by the Registrar. The Registrar shall be competent to initiate action under the provisions of this Act, if the Committee fails to take action as aforesaid: Provided that such action shall not be nullified even if the General Body of the Society passes a resolution negativing the findings of the Registrar: Provided further that notwithstanding anything contained in this Act and Rules made thereunder the bye-laws of a Society and the action of the Society in placing the Inspection Report alongwith findings of the Registrar, the Registrar shall not be precluded from taking, follow up action as may be required on the basis of Inspection Report. Explanation:- For the purposes of this section, “Managing Committee” includes a Committee constituted under Section 31(l)(a), and a person-in-charge appointed under Section 32(7)(a), and also a Special Officer appointed under Section 34 of this Act.

Rectification of defects in audit, inquiry or inspection:— The Registrar shall draw the attention of the society to the defects noticed in every audit conducted under Section 50 or inquiry held under Section 51 or inspection made under Section [52, or Section 53] and if the society is affiliated to another society, also the attention of that other society and may make an order directing the society or its officers to take such action and within such time as may be specified therein to remedy such defects.

Power to summon and examine documents and persons etc.:— [Rule 50]

1. (1) The Registrar, or the Chief Auditor or any person authorised by either of them to exercise any powers under this Act, shall at all reasonable times, have free access to the books, accounts, documents, records, securities, cash and other properties belonging to, or in the custody of the society and may summon any person in possession of, or responsible for the custody of any such books, accounts, documents, records, securities, cash or other properties, to produce all or any of them at any place at the headquarters of the society or any branch thereof.
2. (2) The Registrar or any person authorised by him to exercise any powers under this Act,—
   • (a) may summon any person who, he has reason to believe has knowledge of any of the affairs of the society to appear before him at any place at the headquarters of the society or any branch thereof or at any other place specified by the Registrar, and may examine that person on oath :
   • (b) may seize the books, accounts or documents belonging to, or in the custody of, the society, if he considers that such seizure is necessary to ensure safety of such books, accounts or documents, and shall give the person from whose custody the books, accounts or documents have been seized, a receipt for the same : Provided that the books, accounts or documents so seized shall be retained by him only for so long as may be necessary :

Surcharge Surcharge:— [Rule 51]

1. (1) If in the course of an audit under section 50, an inquiry under section 51, an inspection under section 52 or 53, or the winding up of a society, it appears that any person who has taken part in the organisation or management of the society or any past or present officer or servant of the society has misappropriated or retained or become liable or accountable for any money or property of the society or has been guilty of misfeasance or breach of trust in relation to the society, the Registrar may, on his own motion or on the application of the committee, liquidator or any creditor, inquire himself or direct any person authorised by him, by an order in writing in this behalf, to inquire into the conduct of such person.
2. (2) On the completion of the inquiry under sub-section (1), the Registrar may, if he is satisfied that there are good grounds for so doing, make an order requiring such person to repay or restore the money or property or any part thereof with interest at such rate as the Registrar may think just (not exceeding the current market rate) or to contribute such sum to the assets of the society by way of compensation in respect of the misappropriation, misfeasance or breach of trust as the Registrar thinks just: Provided that an order shall be made under this sub-section against any such person only after giving him an opportunity of making his representation.
3. (3) This section shall apply notwithstanding that such person may have incurred criminal liability by his act.

("Winding up of societies")

1. (1) If the Registrar, after an inquiry has been held under section 51 or an inspection has been made under section 52 or on the receipt of an application made by not less than three-fourths of the members of a society, is of the opinion that the society ought to be wound up, he may, after giving the society an opportunity of making its representation, by order direct it to be wound up.
2. (2) The Registrar may of his own motion and after giving the society an opportunity of making its representation, make an order directing the winding up of a society—
   • (a) where it is a condition of the registration of the society that the society shall consist of a minimum number of members and the membership falls short of such minimum; or
   • (b) where the society has not commenced working within a reasonable time or has ceased to work; or
   • (c) where the society has ceased to comply with any condition as to registration or management in this Act or the rules or the bye-laws.
3. (3) The Registrar may cancel an order for the winding up of a society, at any time, in any case where, in his opinion, the society should not be wound up.
4. (4) A copy of an order under this section shall be communicated in the prescribed manner to the society and to the financing bank, if any, of which the society is a member.

("Appointment of liquidator and his powers")

1. (1) Where the Registrar has made an order under section 57 for the winding up of a society, he may appoint a liquidator for the purpose and fix his remuneration.
2. (2) On the appointment of a liquidator, all the property, assets, effects and actionable claims or liabilities of the society as on the date of such order, shall vest in or devolve on the liquidator. He shall take such steps as he may deem necessary or expedient to prevent loss or deterioration of, or damage to, such property, assets, effects and actionable claims.
3. (3) Subject to the control of the Registrar, the liquidator shall have the power—
   • (a) to institute and defend suits and other legal proceedings on behalf of the society by the name of his office;
   • (b) to realise the assets of the society, by sale or otherwise;
   • (c) to determine from time to time the contribution to be made or remaining to be made and the debts due by the members or past members or by the estates or nominees, heirs or legal representatives of deceased members or by any officers or former officers to the society;
   • (d) to investigate all claims against the society, and subject to the provisions of this Act, to decide questions of priority arising between claimants;
   • (e) to pay claims against the society including interest up to the date of winding up according to their respective priorities, if any, in full or rateably, as the assets of the society may permit; the surplus, if any, remaining after payment of the claims, being applied in payment of interest from the date of such order of winding up at a rate fixed by him but not exceeding the contractual rate in any case;
   • (f) to determine by what persons and in what proportion the costs of liquidation are to be borne;
   • (g) to determine whether any person is a member, past member or nominee of deceased member;
   • (h) to give such directions in regard to the collection and distribution of the assets of the society as may appear to him to be necessary for winding up the affairs of the society;
     • (i) with the previous approval of the prescribed authority, to make any compromise or arrangement with creditors or persons claiming to be creditors or having or alleging to have any claim present or future, whereby the society may be rendered liable; and
   • (j) with the previous approval of the prescribed authority, to compromise all calls or liabilities to any calls and debts and liabilities capable of resulting in debts and all claims present or future, certain or contingent, subsisting or alleged to subsist between the society and a contributory or alleged contributory or other debtor or person apprehending liability to the society and all questions in any way relating to or affecting the assets or the winding up of the society on such terms as may be agreed and take any security for the discharge of any such call, liability, debt or claim and give a complete discharge in respect thereof.
4. (4) Any sum ordered under this section to be recovered as a contribution to the assets of a society or as costs of liquidation may be recovered, on a requisition being made in this behalf by the Registrar to the Collector in the same manner as arrears of land revenue.
5. (5) Save as provided in sub-section (4), orders made under this section shall, on application, be enforced by any Civil Court having local jurisdiction in the same manner as a decree of such Court.
6. (6) The liquidator shall continue to exercise his powers until the affairs of the society are completely wound up when he shall make a report to the Registrar and deposit the records of the society in such place as the Registrar may direct.

Liquidation of societies:—

1. (1) If the Registrar, after an inquiry has been held under Section 51 or an inspection has been made under Section 52 or 53 or upon receipt of an application made by not less than three-fourths of the members of a society or of his own motion in the case of a society which has not commenced working or has ceased to work, or has ceased to comply with any condition as to registration and management in this Act or the rules or the bye-laws, is of the opinion that the society ought to be wound up, he may, after giving the society an opportunity of making its representation, by order, direct it to be wound up.
2. (2) The Registrar may cancel an order for the winding up of a society at any time, in any case where in his opinion the society should not be wound up.
3. (3) A copy of such order shall be published in the Andhra Pradesh Gazette.

Power to cancel registration of a society:— Where the affairs of a society in respect of which a liquidator has been appointed have been wound up or, where no liquidator has been appointed, after two months from the date of an order under Section 59, or after disposal of an appeal against that order, if any, the Registrar shall make an order cancelling the registration of the society and the society shall cease to exist as a corporate body from the date of such order.

("Disputes which may be referred to the Registrar")

1. (1) Notwithstanding anything in any law for the time being in force, if any dispute touching the constitution, management or the business of a society arises—
   • (a) among members, past members and persons claiming through members, past members and deceased members; or
   • (b) between a member, past member or person claiming through a member, past member or deceased member and the society, its committee or any officer, agent or employee of the society; or
   • (c) between the society or its committee and any past committee, any officer, agent or employee, or any past officer, any past agent or past employee or the nominee, heirs or legal representatives of any deceased officer, deceased agent or deceased employee of the society; or
   • (d) between the society and any other society; such dispute shall be referred to the Registrar for decision.
2. (2) For the purposes of sub-section (1), the following shall be deemed to be disputes touching the constitution, management or the business of a society, namely:—
   • (a) a claim by the society for any debt or other amount due to it from a member, past member or the nominee, heir or legal representative of a deceased member, whether such debt or amount be admitted or not;
   • (b) a claim by a surety against the principal debtor where the society has recovered from the surety any amount in respect of any debt or other amount due to it from the principal debtor as a result of the default of the principal debtor, whether such debt or amount due be admitted or not;
   • (c) a claim by a society for any loss caused to it by a member, past member or deceased member, by any officer, past officer or deceased officer, by any agent, past agent or deceased agent, or by any servant, past servant or deceased servant, or by its committee, past committee or by any officer, past officer or deceased officer of the financing bank;
   • (d) a dispute arising under sub-section
3. (2) of Section 37;
   • (e) a dispute regarding the election of the members of the committee: Provided that the Registrar may, where the dispute in his opinion is of a complicated nature, refer it to a Civil Court for decision.
4. (3) If any question arises whether any person or property is or is not included in the definition of a dispute touching the constitution, management or the business of a society, the decision thereon of the Registrar shall be final and shall not be called in question in any Court.

("Limitation")

1. (1) Notwithstanding anything in the Limitation Act, 1963, but subject to the specific provisions made in this Act, the period of limitation for referring any dispute of the nature referred to in Section 61 shall—
   • (a) if the dispute relates to the recovery of any sum, including interest thereon, due to a society by a member thereof, be six years computed from the date on which such member dies or otherwise ceases to be a member of the society;
   • (b) if the dispute relates to any act or omission specified in clause
   • (c) of sub-section
2. (2) of Section 61, be six years from the date on which the act or omission alleged to have taken place or occurred;
   • (c) if the dispute relates to any matter other than those specified in clauses
   • (a) and (b), be six years from the date on which the act or omission with reference to which the dispute arises, took place.
3. (2) The Registrar may admit a dispute after the expiry of the period of limitation specified in sub-section (1), if the applicant satisfies the Registrar that he had sufficient cause for not referring the dispute within such period.

("Disposal of disputes")

1. (1) If any dispute touching the constitution, management or the business of a society, by which is meant,—
   • (a) a claim by the society for any debt or other amount due to it from a member, past member or the estate of a deceased member or a nominee, heir or legal representative of a deceased member, whether such debt or amount be admitted or not;
   • (b) a claim by a surety against the principal debtor where the society has recovered from the surety any amount in respect of any debt or other amount due to it from the principal debtor as a result of the default of the principal debtor, whether such debt or amount be admitted or not;
   • (c) a claim by a society for any loss caused to it by a member, past member or deceased member, by any officer, past officer or deceased officer, by any agent, past agent or deceased agent, or by any servant, past servant or deceased servant, or by its committee, past or present, whether such loss be admitted or not;
   • (d) a dispute made by a member, past member or the estate of a deceased member or a nominee, heir or legal representative of a deceased member against the society, its committee or any officer, agent or servant of the society;
   • (e) a dispute, between a society and another society or between a society and a liquidator of another society;
   • (f) a dispute, between a society and its creditors or between a society and the financing bank; arises, it shall be referred to the Registrar for decision.
2. (2) The Registrar may, on receipt of the reference of dispute under sub-section (1),—
   • (a) elect to decide the dispute himself; or
   • (b) transfer it for disposal to any person who has been invested by the Government with powers in that behalf; or
   • (c) refer it for disposal to an arbitrator appointed by the Registrar.
3. (3) The Registrar may, pending the decision of the dispute, make such interlocutory orders including orders of attachment as he may deem necessary in the interests of justice.
4. (4) The decision of the Registrar, or the person or the arbitrator to whom the dispute is referred, shall, subject to such rules as may be prescribed, be final and conclusive and shall not be liable to be called in question in any court.

("Power to direct revival of defunct societies")

1. (1) Where the Registrar is of opinion that a society which has ceased to function and which has no chance of revival, should not be wound up, he may notwithstanding anything in this Act, direct that the society shall be revived and may issue such directions as he deems fit to the committee of the society to ensure its proper functioning.
2. (2) If the society fails to comply with the directions issued under sub-section
3. (1) within the time specified by the Registrar, the Registrar may take such action as he deems necessary for the winding up of the society under the provisions of this Act.

Settlement of disputes:—

1. (1) Notwithstanding anything in any law for the time being in force, if any dispute touching the constitution, management or the business of a society, other than a dispute regarding disciplinary action taken by the society or its committee against a paid employee of the society, arises—
   • (a) among members, past members and persons claiming through members, past members and deceased members; or
   • (b) between a member, past member or person claiming through a member, past member or deceased member and the society, its committee or any officer, agent or employee of the society; or
   • (c) between the 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, heir or legal representative of any deceased officer, deceased agent or deceased employee of the society; or
   • (d) between the society and any other society; such dispute shall be referred to the Registrar for decision. Provided that no dispute shall be referred under this sub-section unless the disputant has deposited in the society the amount, if any, admitted to be due from him to the society.
2. (2) Where any question arises whether for the purposes of sub-section (1), any person is or is not a member of a society, or whether any matter referred to for decision under this section is a dispute or not, the question shall be for the decision of the Registrar and his decision thereon shall be final.
3. (3) The Registrar may, on receipt of such reference,—
   • (a) decide the dispute himself; or
   • (b) transfer it for disposal to any person who has been invested by the Government with powers in that behalf; or
   • (c) refer it for disposal to an arbitrator appointed by the Registrar.
4. (4) The Registrar may, pending the decision of the dispute, make such interlocutory orders as he may deem necessary in the interest of justice.
5. (5) Any person aggrieved by an award or decision of an arbitrator or a person appointed under clause
   • (b) or clause
   • (c) of sub-section
6. (3) may within two months from the date of the award or decision, appeal to the Tribunal.
7. (6) The decision or award of the Registrar, or the arbitrator or the person appointed under sub-section
8. (3) shall, subject to any appeal under sub-section (5), be final and shall not be liable to be called in question in any court.

Execution of decisions, decrees and orders:—

1. (1) Every decision, award or order duly passed by the Registrar, or any person authorised by him or by an arbitrator or the Tribunal under this Act shall, if not carried out,—
   • (a) on a certificate issued by the Registrar, be deemed to be a decree of a Civil Court and shall be executed in the same manner as a decree of such Court; or
   • (b) be executed according to the law for the time being in force for the recovery of arrears of land revenue: Provided that any application for the recovery in such manner shall be made to the Collector and shall be accompanied by a certificate signed by the Registrar or by any person authorised by him in this behalf; or
   • (c) be executed by the Registrar or any other person subordinate to him empowered by the Registrar in this behalf, by attachment and sale or by sale without attachment of any property of the person or a society against whom the order, decision or award has been obtained or passed.
2. (2) Any private transfer or delivery of, or encumbrance or charge on, property made or created after the issuance of a certificate by the Registrar under sub-section
3. (1) shall be null and void as against the society on whose application the certificate was issued.

("Execution of decisions etc., of arbitrator or liquidator")

1. (1) Every decision or order made under Section 60, Section 62, Section 70 or Section 71 shall, if not carried out,—
   • (a) on a certificate signed by the Registrar or any person authorised by him in this behalf, be deemed to be a decree of a Civil Court and shall be executed in the same manner as a decree of such Court; or
   • (b) be executed by the Registrar, or any other person subordinate to him empowered by the Registrar in this behalf, by the recovery of a sum of money, by the attachment and sale, or by the sale without attachment, of any property of the person or society against whom such order or decision has been obtained or passed.
2. (2) Every order made by the liquidator under Section 66 shall be executed as if it were an order made by the Registrar under Section 71.

("Attachment of property before award etc.")

1. (1) Where the Registrar is satisfied on a reference made to him under Section 61 or on an inquiry made under Section 51, or an inspection made under Section 52 or 53, or an examination of an auditor’s report under Section 50, that any person with intent to defeat or delay the execution of any decision that may be passed thereon is about to dispose of the whole or any part of his property, the Registrar may, unless adequate security is furnished, direct the conditional attachment of the said property or such part thereof as he thinks necessary; and such attachment, if effected by him, shall have the same effect as if it had been made by a competent Civil Court.
2. (2) Under the provisions of this section, it shall be open to the Registrar to attach any property, if he is satisfied that the person with intent to defeat or delay the execution of any decision, is about to dispose of the whole or any part of the property.

Recovery of debts:—

1. (1) Notwithstanding anything to the contrary in any law for the time being in force, the Registrar may, on the application of a society, a financing bank or a federal society, as the case may be, and after giving an opportunity of being heard to the parties, pass an order for the recovery of any amount due and payable by a member, a past member, a deceased member or a nominee, heir or legal representative of a deceased member to the society, the financing bank or the federal society, as the case may be: Provided that the decision of the Registrar under this sub-section shall not be subject to any suit in a civil court after the expiry of the period of limitation prescribed under this Act.
2. (2) Where an order is passed under sub-section (1), the Registrar or any person authorised by him shall, on the application of the society, the financing bank or the federal society concerned, recover the amount specified in the order together with interest and the costs, if any, by the attachment and sale of the property of the person against whom such order has been passed.
3. (3) Any amount ordered to be recovered under this section or any other section of this Act shall be recoverable in the same manner as an arrear of land revenue.

Registrar’s power to enforce performance of obligations:—

1. (1) It shall be the duty of a society, its committee and its officers to perform the obligations imposed upon them by this Act, the rules and the bye-laws.
2. (2) Where a society, its committee or any of its officers fails to perform any obligation imposed under this Act, the rules or the bye-laws, the Registrar may, by order, direct the society, committee or officer concerned to perform the obligation within such time as may be specified in the order.
3. (3) If the society, committee or officer fails to comply with the direction issued under sub-section (2), the Registrar may take such measures as he deems necessary for the enforcement of the obligation, including the appointment of a person to perform such obligation at the expense of the society.
4. (4) Any expense incurred in the performance of such obligation shall be recoverable from the society as an arrear of land revenue.

Recovery of sums due to Government:—

1. (1) All sums due from a society to the Government including any cost awarded to the Government under any provision of this Act may, on a certificate for the amount due issued by the Registrar in the prescribed form, be recovered as if they were arrears of land revenue and the Registrar or any person authorised by him in this behalf shall have the powers of a Collector under the Andhra Pradesh Revenue Recovery Act, 1864.
2. (2) Any sum due from a society to the Government and recoverable under sub-section
3. (1) may be recovered, in accordance with the provisions of non-attachment of property as provided in the Code of Civil Procedure, 1908 or any other law for the time being in force, by attachment and sale of the property of the society or in the case of default by the society, by attachment and sale of the property of any person who in the opinion of the Registrar is responsible for the default of the society:

Register of members Register of members:—

1. (1) Every society shall maintain a register of members and enter therein such particulars as may be prescribed.
2. (2) The register shall be prima facie evidence of any matter entered therein as provided under this Act.

("Proof of entries in society’s books")

1. (1) A copy of any entry in a book of a society regularly kept in the course of business shall, if certified in such manner as may be prescribed, be received in any suit or legal proceeding 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 to which, the original entry itself is admissible.
2. (2) No officer of a society shall, in any legal proceeding to which the society is not a party, be compelled to produce any of the society's books the contents of which can be proved under sub-section (1), or to appear as a witness to prove the matters, transactions and accounts therein recorded, unless by order of the Court or the arbitrator made for special cause.

("Evidence of documents, etc.") A copy of any document or other material fact recorded in the registers or the books of a society shall, if certified in such manner as may be prescribed, be received in any suit or legal proceeding as prima facie evidence of such document and shall be admitted as evidence of the transaction or other matter therein recorded in every case where, and to the same extent to which, the original document is admissible.

Constitution of Tribunal:—

1. (1) The Government shall constitute a Tribunal for such area or areas as may be specified, for the purpose of performing the functions assigned to it by or under this Act.
2. (2) The Tribunal shall consist of three members, namely:—
   • (a) A Chairman, who shall be a person who is or has been a District Judge;
   • (b) a member, who shall be an officer of the Co-operative Department not below the rank of a Joint Registrar;
   • (c) a member, who shall be a Chartered Accountant or a person who has served as a senior officer in the Co-operative Department or a person, who has been atleast for five years, an Advocate or a person who has worked as a Professor of Law or Economics in a University for atleast five years.
3. (3) The members of the Tribunal shall be appointed by the Government for such period as may be prescribed.
4. (4) The Tribunal shall have the power to regulate its own procedure, and shall be guided by the principles of natural justice.
5. (5) The Tribunal shall have the same powers as are vested in a Civil Court under the Code of Civil Procedure, 1908 (Central Act 5 of 1908) while trying a suit in respect of the following matters:—
   • (a) summoning and enforcing the attendance of any person and examining him on oath;
   • (b) requiring the discovery and production of any document;
   • (c) receiving evidence on affidavit;
   • (d) issuing commissions for the examination of witnesses.

Appeals:—

1. (1) Any person or society aggrieved by any decision passed or order made or proceedings taken under sub-section
2. (1) of section 17, section 21, sub-section (2-B) of section 21, section 23, section 27, section 30, section 32, section 34, section 34-A, sub-section
3. (3) of section 37, section 60, section 62, section 64, section 66, section 70, section 71, section 73 or section 117 may appeal to the Tribunal: Provided that nothing in this sub-section shall apply to any decision or order under sub-sections
4. (3) and
5. (4) of section 32, section 34-A, sub-section
6. (3) of section 71.
7. (2) No appeal shall be preferred after the expiry of sixty days from the date of the decision, order or proceeding complained of: Provided that the Tribunal may admit an appeal preferred after the expiry of the period of sixty days mentioned in sub-section (1), if it is satisfied that the appellant had sufficient cause for not preferring the appeal within the said period.
8. (3) The Tribunal may pass such interim orders pending the decision of the appeal as it may deem fit.
9. (4) The Tribunal may award costs of any appeal out of the funds of the society concerned or fix the liability for costs on the person responsible for the order appealed against.
10. (5) Any order passed by the Tribunal under this section shall be final and shall not be called in question in any Court.

("Power of Tribunal and Registrar to call for proceedings of subordinate officers")

1. (1) The Tribunal or the Registrar may call for and examine the record of any proceeding heard and disposed of by any officer subordinate to it or him, for the purpose of satisfying themselves or himself as to the correctness, legality or propriety of any decision or order passed and as to the regularity of the proceedings of such subordinate officer; and if in any case it appears to the Tribunal or the Registrar that any such decision or order should be modified, annulled or reversed or remitted for reconsideration, the Tribunal or the Registrar may pass orders accordingly : Provided that the Tribunal or the Registrar shall not pass any order prejudicial to any party under this sub-section without making an inquiry or giving such party an opportunity of making a representation.
2. (2) The Tribunal or the Registrar may stay the execution of any such decision or order pending the exercise of its or his powers under sub-section
3. (1) in respect thereof.

("Revision")

1. (1) Any person or society aggrieved by any decision passed or order made under this Act may apply to the Government for revision, and the Government may, at any time, for the purpose of satisfying themselves as to the correctness, legality or propriety of any decision or order passed by any authority acting under this Act, call for and examine the record and pass such order in reference thereto as they think fit: Provided that the Government shall not pass any order prejudicial to any party under this sub-section without giving such party an opportunity of making a representation.
2. (2) The Government may stay the execution of any such decision or order pending the exercise of their powers under sub-section
3. (1) in respect thereof.

Review:-

1. (1) The Government or the Registrar may, either of their own motion or on an application made by any of the parties to the dispute, review any order passed by them under this Act, if they consider that there is an error apparent on the face of the record: Provided that no such application shall be entertained if the period of limitation prescribed for an appeal has expired: Provided further that nothing in this sub-section shall be construed as limiting or restricting the power of the Government or the Registrar to correct any clerical or arithmetical error in any order passed by them.
2. (2) Every application for review under sub-section
3. (1) shall be made within such time and in such manner as may be prescribed.
4. (3) The Government or the Registrar shall not pass any order under sub-section (1) adversely affecting the interests of any party unless such party has had an opportunity of making a representation.
5. (4) A review order passed by the Registrar shall not be reviewed by him.

Offences and penalties:-

1. (1) Any person who—
   • (a) willfully makes a false return or furnishes false information or willfully fails to furnish any information required by this Act or the rules or the bye-laws;
   • (b) willfully or without any reasonable excuse disobeys any summons, requisition or lawful written order issued under the provisions of this Act or does not produce or cause to be produced any document or book, account, record or other material required for the production of which an order has been made under this Act;
   • (c) knowingly acts as an officer or member of a committee when not eligible to do so;
   • (d) willfully fails to comply with any order issued under sub-section
2. (5) of Section 16;
   • (e) willfully fails to comply with any order issued under sub-section
3. (2) of Section 37;
   • (f) willfully fails to comply with any order of the Registrar issued under Section 54, Section 55 or Section 71;
   • (g) being a member of a committee, fails to take immediate action to initiate prosecution of any person for co-operative offence or any other offence under any other law applicable;
   • (h) willfully fails to handover the books, accounts, records or other property to the new committee or to the special officer or the managing committee or any other person appointed under this Act, on the expiry of the term of the committee or on dissolution, supersession or de-registration of the society;
     • (i) being a member of a committee, willfully refuses to carry out the resolutions of the general body;
   • (j) willfully misuses or misapplies the property and funds of the society; shall be punishable with imprisonment for a term which may extend to six months, or with fine which may extend to five thousand rupees, or with both.
4. (2) Every officer or employee of a society who willfully makes, or causes to be made, any false entry in any book, account, record or document which a society is required to maintain under this Act or the rules, shall be punishable with imprisonment for a term which may extend to six months, or with fine which may extend to five thousand rupees, or with both.
5. (3) No court shall take cognizance of any offence under this Act except with the previous sanction of the Registrar, in writing.
6. (4) No court inferior to the court of a Magistrate of the First Class shall try any offence under this Act.

Cognizance of offences:

1. (1) No court inferior to that of a Magistrate of the First Class shall try any offence under this Act.
2. (2) No prosecution shall be instituted, under this Act, without the previous sanction of the Registrar and such sanction shall not be given without giving to the person concerned a reasonable opportunity to represent his case.

Punishment for offences not otherwise provided for: If any person or society contravenes any provision of this Act or the rules or the bye-laws made thereunder for which no punishment has been provided in this Act, such person or the society shall, on conviction, be punishable with fine which may extend to five hundred rupees.

("Constitution of co-operative service")

1. (1) The Government may constitute a co-operative service for the whole of the State of Andhra Pradesh and may frame rules for the regulation of the recruitment and conditions of service of persons appointed to such service.
2. (2) Every person who is a member of any such service shall be appointed by such authority as may be prescribed and shall receive his salary and allowances from the Co-operative Service Fund.
3. (3) The Government may constitute a Co-operative Service Fund which shall be maintained in such manner as may be prescribed and every society shall contribute to the said fund such part of its net profits as may be prescribed.

("Societies to be bodies corporate")

The registration of a society shall render it a body corporate by the name under which it is registered having perpetual succession and a common seal, and the society shall be entitled to acquire, hold and dispose of property, to enter into contracts on its behalf, to institute and defend suits and other legal proceedings, and to do all such things as are necessary for the purpose for which it is constituted.

Companies Act, 1956 not to apply:— The provisions of the Companies Act, 1956 shall not apply to a society.

Power to make rules:—

1. (1) The Government may, by notification in the Andhra Pradesh Gazette, make rules for carrying out all or any of the purposes of this Act.
2. (2) In particular, and without prejudice to the generality of the foregoing power, such rules may provide for,—
   • (a) all matters expressly required or allowed by this Act to be prescribed ;
   • (b) the entry of new members, the check of the list of members and the procedure for their admission and the entry of the name of every person admitted or deemed to have been admitted as a member of the society in such records of the society as may be prescribed ;
   • (c) the procedure for the removal of members including associate members ;
   • (d) the procedure to be followed in proceedings before the Registrar or arbitrator or other person deciding disputes ;
   • (e) the procedure to be followed by the liquidator and for the disposal of surplus assets ;
   • (f) the procedure to be followed for the custody and preservation of records of the societies, for the grant of certified copies of such records and for the fees to be charged for the grant of such copies ;
   • (g) the qualifications and the method of appointment of auditors ;
   • (h) the preparation and submission of annual reports and financial statements by the societies and the publication of such reports and statements ;
     • (i) the procedure for the conduct of elections to the committees and other bodies of societies, including the reservation of seats for members of the weaker sections [and women], and for the settlement of election disputes ;
   • (j) the procedure for the inspection of the books of a society by the Registrar or financing bank ;
   • (k) the procedure for the recovery of sums due to a society from a member ;
   • (l) the mode of serving summons and notices and of publishing orders ;
   • (m) the procedure for the registration of Societies and amendment of bye-laws ;
   • (n) the procedure for the determination of the class of societies and the conditions for the registration of societies.
3. (3) Every rule made under this section shall, immediately after it is made, be laid before the Legislative Assembly of the State if it is in session and if it is not in session, in the session immediately following for a total period of fourteen days which may be comprised in one session or in two successive sessions, and if, before the expiration of the session in which it is so laid or the session immediately following, the Legislative Assembly agrees in making any modification in the rule or in the annulment of the rule, the rule shall, from the date of notification of such modification or annulment in the Andhra Pradesh Gazette have effect only in such modified form or shall stand annulled, as the case may be ; so however that any such modification or annulment shall be without prejudice to the validity of anything previously done under that rule.

Power to remove difficulties:— If any difficulty arises in giving effect to the provisions of this Act, the Government may, by order published in the Andhra Pradesh Gazette, do anything not inconsistent with the provisions of this Act or the rules which appears to them to be necessary or expedient for the purpose of removing the difficulty.

Repeals and savings:—

1. (1) The Andhra Pradesh (Andhra Area) Co-operative Societies Act, 1932, the Andhra Pradesh (Andhra Area) Co-operative Land Mortgage Banks Act, 1934, the Madras Co-operative Societies Act, 1932 as in force in the territories transferred from the State of Madras to this State, the Madras Co-operative Land Mortgage Banks Act, 1934 as in force in the territories transferred from the State of Madras to this State, the Andhra Pradesh (Telangana Area) Co-operative Societies Act, 1952 and the Hyderabad Co-operative Land Mortgage Banks Act, 1349 Fasli are hereby repealed.
2. (2) The repeal of the Acts specified in sub-section
3. (1) shall not affect—
   • (a) the previous operation of any Act so repealed or anything duly done or suffered thereunder;
   • (b) any right, privilege, obligation or liability acquired, accrued or incurred under any Act so repealed;
   • (c) any penalty or punishment incurred in respect of any offence committed against any Act so repealed;
   • (d) any investigation, legal proceeding or remedy in respect of any such right, privilege, obligation, liability, penalty or punishment as aforesaid, and any such investigation, legal proceeding or remedy may be instituted, continued or enforced, and any such penalty or punishment may be imposed as if this Act had not been passed.
4. (3) Subject to the provisions of sub-section (2), anything done or any action taken (including any appointment or delegation made, notification, order, instruction or direction issued, rule, form, bye-law or scheme framed, certificate obtained, patent, permit or licence granted, or registration effected) under any such Act shall be deemed to have been done or taken under the corresponding provision of this Act and shall continue to be in force accordingly unless and until superseded by anything done or any action taken under this Act.
5. (4) Any reference in any enactment or in any other instrument to any Act so repealed shall be construed as a reference to the corresponding provision of this Act. Provided that the Co-operative Land Mortgage Banks which were registered or deemed to be registered under the Andhra Pradesh (Andhra Area) Co-operative Land Mortgage Banks Act, 1934 or the Madras Co-operative Land Mortgage Banks Act, 1934 or the Hyderabad Co-operative Land Mortgage Banks Act, 1349 Fasli shall continue to function as Agricultural Development Banks under this Act and shall be subject to the provisions of this Act: Provided further that the provisions of this Act shall apply to the Co-operative Land Mortgage Banks aforesaid as if they were registered under this Act.