Chapter III Chapter III

Incorporation, Duties and Privileges of Registered Societies

Societies to be bodies corporate. – The registration of a society shall render it a body corporate by the name under which it is registered, with perpetual succession and a common seal and with power to acquire and hold property, to enter into contract, to institute and defend suits and other legal proceedings and to do all thing necessary for the purposes for which it is constituted.

13 A. Promotion of Cooperative movement by Government. –

1. (1) It shall be the duty of the State Government to encourage and promote the Cooperative movement in the State and to take such steps in this direction as may be necessary.
2. (2) Without prejudice to the generality of the provisions contained in sub-section (1), the State Government may –
   • (a) With a view to aid the growth of a registered society in general or of any class of registered societies subscribe directly to the share capital of a registered society;
   • (b) assist indirectly in the formation and augmentation of the share capital of a registered society;
   • (c) give loans of make advances to a registered society or guarantee repayment of principal and payment of interest on debentures issued by a registered society or guarantee repayment of principal and payment of interest on loans or advances to a registered society.

13 B. Display of Name. – Every Cooperative Society shall display name and address of its registered office as registered under the Bihar Cooperative Societies Act, 1935 in legible letters and as such conspicuous places of every such office where it carries its business and in the following also.

1. (a) Every information and authorised publication.
2. (b) All contracts, business, letters indents, Invoice, Statements of accounts, Money receipts, Vouchers etc.
3. (c) All Bills of Exchange, Promissory Notes, Endorsements, Cheques and pay orders which are signed by or on its behalf.

1. (2) Every registered Society must have the word/ words “ Cooperative” and “Limited/ unlimited” in its name in State language of synonymous words of other languages recognised in the State List.

Registered Societies to have a managing committee etc.-

1. (1) Every registered Society shall have an address, registered in accordance with rules, to which all notices and communications may be sent and send notice, in writing to the Registrar and to the financing Bank, if any, of which it is a share holder and to the Cooperative Federation, if any, of which it is a member, of any change in the said address within fifteen days of such change.
2. (2) The management of registered society shall be vested in a managing committee constituted in accordance with the provisions of this Act and rules/ byelaws of the society made under this Act. Notwithstanding any thing contained in any provision of this Act or Rules Byelaws of the Society the Maximum number of members including office bearer of office bearers in a managing committee of Society shall be seventeen in Apex and State level Society, fifteen in Central Cooperative Society and thirteen in Primary Society: Provided that in the Managing Committee of such societies or of class of societies and in such areas as the State Government may by general or special order direct, at least two seats shall be reserved for the members belonging to the Scheduled Castes or Scheduled tribes two seats for the ladies and one seat each for backward caste. The seats so reserved shall be filled up from amongst the members of scheduled castes or scheduled tribes, ladies and backward and other backward castes members either by election or/ and by cooption. The provision shall apply to all Societies form the primary Society and up to the Apex Society.
3. (3) An Officer of the State Government if deputed to a registered society either as a Managing Director, Executive Officer or in similar position shall be the chief Executive there of and subject to general direction and control the Managing Committee, shall have the following powers and functions :-
   • (i) to have genera control over the administration of the registered society;
   • (ii) to convene meeting of the Managing Committee;
   • (iii) to receive all moneys and securities on behalf of registered society and to make arrangement for the proper maintenance and custody of cash balances and other properties of the registered society;
   • (iv) to endorse and transfer promissory notes, Government and other Securities and to endorse, sign and negotiate cheques and other negotiable instrument on behalf of the registered society,
   • (v) to be responsible for the general conduct, supervision and management to the day-to-day business and affairs to the registered society;
   • (vi) to sign all deposits receipts and operate the accounts of the registered society with Bank;
   • (vii) to sign all bonds and agreements on behalf of the registered society;
   • (viii) to determine the powers, duties and responsibilities of the employees of the registered society;
   • (ix) to appoint, promote, transfer, punish, suspend, remove or dismiss any paid employee of the registered society except to the extent of the powers vested in the Managing Committee under the bye-laws of the registered society;
   • (x) to institute, conduct, defend; compound or to withdraw any suit or other legal proceedings for or against the registered society and also to compound and allow time for payment or satisfaction of any claims;
   • (xi) to delegate all or any of the powers to an employee or employees of the registered society subject to his control and supervision;
4. (4) Notwithstanding any thing contained in any provision of this Act, or of rules framed there under or the bye-laws of any registered Society where the State Government has Subscribed directly to the Share Capital or a registered Society an amount exceeding Rupees Thirty Lakh, in that case the State Government Shall have the right to nominate three persons as members on the Managing Committee of that Society: Provided that among the members so nominated two will be from the Government service the third one will be an officer of Cooperative/ Financing Institution connected with the affairs of the Society. Provided further that those ex-officio members as provided in the bye-laws of the society shall be counted in the quota/ numbers fixed/ provided for nomination. Provided further also that such nominated members shall participate in any meeting of the managing committee of ordinary general meeting of the share holders of the registered Society, convened in accordance with the provisions of the Act and Rules framed thereunder and its bye laws. They shall have right to vote in the meeting of the managing committee but shall have no right to vote in the ordinary general meeting of the share holders.”
5. (5) Notwithstanding any thing contained in any provision of this Act, Rules made there under and the bye-laws of the society the existing members and office bearers nominated by the Government shall cease to be a member of the managing committee within ninety days of the publication of this Amendment Act in the Official gazette; and such registered society shall have elections to the vacant posts for the remaining period of its term; Provided further that in superseded societies the Administrator of the society shall constitute new managing committee by election within twelve months from the date of publication in the official gazette of this Amendment Act 2002; otherwise the Registrar shall appoint a new Administrator for a further period f three months and get the managing committee constituted by election.
6. (7) Notwithstanding the provisions of sub-section
7. (9) the nominated members of the managing committee shall hold office during the pleasure of the State Government.
8. (9) Notwithstanding anything contained in the Rules or Bye-laws of any Registered Society, the term of the members and the office-bearers of the managing committee of a registered society shall not exceed five years form the date of election.
9. (10) If, for any reason, elections are not held within the said period after expiry of the term of the managing committee the committee shall be deemed to have been superseded with effect from the said date and the Registrar Cooperative Societies shall appoint any government servant as administrator for a period not exceeding six months for constitution of managing committee in accordance with law. Provided that if for certain special circumstances the election of the members an office bearer of the managing committee is not held within the stipulated period of six months, the Registrar after obtaining explanation from the administrator and after recording reasons in writhing may extend the period of supersession for a period not exceeding three months: Provided further that the term of the Managing Committee as provided in sub- section
10. (9) shall be effective if the election of the Managing Committee has been held after coming into force of this Amendment act. Provided further that the administrator appointed for superseded society prior to the commencement of this Amendment Act shall Continue to hold tution of a new managing committee by election whichever is earlier.’’
11. (11) Every registered society shall keep open to inspection free of charge at all reasonable times at its registered address-
    • (a) a copy of this Act.
    • (b) a copy of the rules governing such society.
    • (c) a copy of the bye-laws of such society, and
    • (d) a register of its members;

Restrictions on borrowing. –A registered society shall receive deposits and loans from members and non-members only to such extent and under such conditions as may be prescribed by the rules or bye-laws.

Restrictions on lending. –

1. (1) Except with the general of special sanction of the Registrar and subject to such restrictions as he may impose, a registered society shall not –
   • (a) make a loan to any person other than a member, or
   • (b) lend money on the security of movable property, “Provided if any reference is received, the Registrar shall dispose off the reference within three months of its receipt.”
2. (2) The State Government may, by general or special order, prohibit or restrict the lending of money or mortgage of immovable property by registered society or class of registered societies.
3. (3) Where the Registrar has accorded sanction to a financing Bank under the provisions of sub-section (1), a registered society which is member of such financing Bank may, subject to the terms of the sanction and such other terms and conditions as may be prescribed by the Registrar, act as agent for the financing Bank and as such agent carry out, with or without any commission, all or any transactions connected with loans or advances made or to be made by the financing Bank.

Restrictions on other transactions with non-member.- The transactions of a registered society with persons other than members shall be subject to such further prohibitions and restrictions.

Reserve fund Reserve fund. –

1. (1) At least twenty five percent of the net profits of a registered society shall each year be deposited to reserved provided that the State Government may by rule increase or decrease this proportion for any work of any society or class of societies.
2. (2) The reserve fund shall not be used in the business of the society except to such extent and in such manner as may be prescribed by the rules.
3. (3) At least ten precent of the net profit shall be transferred to “Cooperative Education & Development fund” by all registered societies.
4. (4) In such registered societies where there is State contribution to share capital, at least ten percent of the net profit shall be transferred to an “Equity Redemption Fund” till such time the amount of this fund becomes equal to the share capital.
5. (4) Any portion of the reserve fund not sued in the business of the society shall be invested of deposited in one more of the ways specified in section 19 subject to such rules as the State Government may make in this behalf.

Investment of funds. - Subject to the provisions of sub-section

1. (2) of section
2. (16) a registered society shall invest or deposit its funds-
   • (a) in a Government Saving Bank: or
   • (b) in its own financial Bank or
   • (c) in any of securities specified in section 20 of Indian Trust Act, 1882 (2 of 1882)
   • (c) in sanction specified by reserve Bank of India, or
   • (e) with the general or special sanction of the Registrar and on such conditions as he may impose.
     • (i) in shares or securities of any other registered society.
     • (ii) in any scheduled Bank or with the sanction or Registrar in other registered societies carrying Banking business.
   • (f) may invest or deposit in any other mode permitted by the rules.

Contribution to charitable purpose. – Any registered society may, after the amount required by sub-section

1. (1) of section 18 or by any rule has been carried to the reserve fund, contribute an amount not exceeding ten percent of the net profits to any charitable purpose, as defined in section 2 of the Charitable Endowments Act, 1890 (6 of 1890) :

Restrictions on division of funds Restrictions on division of funds. – No part of the funds of a registered society shall be divided by law or dividend or otherwise among its members: Provided that after the amount required by sub-section

1. (6) of section 18 or by any rule has been carried to the reserve fund, the balance of the net profits, if any, together with any available profits of past years, may be distributed as dividend among members or paid as bonus or remuneration to a member for any specific service rendered to the society or used for the common benefit or members to such extent and under such conditions as may be prescribed by the rules or bye-law.

Charge and set off in respect of shares of interest of member. – A registered society shall have a charge upon the share or interest in the capital and on the deposits or contribution of a member, past member or deceased member and upon any amount payable out of profits to a member or past member or to the estate of a deceased or the estate of such deceased member to the society, and may set-off any sum credited or payable to a member, past member of the estate of a deceased member in or towards payment of any such debt.

²³ Prior claim of society

Prior claim of society. – subject to claim of the Government in respect of land revenue or any money recoverable as land revenue or as a public demand or any claim of landlord in respect or rent or any money recoverable as rent, any debt or outstanding demand due to a registered society from any member, past member, or the estate of deceased member, shall be a first charge –

1. (a) If the demand as due in respect of the supply or any loan grant for the purchase of seed or manure upon the crops or other agricultural produce of such member or past member or belonging to the estate of such deceased member, at any time within two years from the date on which the last installment of such supply or loan shall become re-payable;
2. (b) If the demand is due in respect of the supply of or any loan granted for the purchase of cattle, fodder for cattle, agriculture or industrial implements or machinery or raw materials for manufacture upon any cattle or things so supplied, or purchased, the whole or any part from any such loan or upon any articles manufactured from raw materials so supplied or purchased.

23 A. Application of section 23 to non-members.- Any debt to outstanding demand due to a registered society, authorised under clause

1. (a) of sub-section

1. (1) of section 16, from any non-member or estate of a deceased non-member, shall be a first charge on the property of the non-member or belonging to the deceased non-member to the same extent and subject to the same claims, conditions and restrictions as debt or outstanding demand due to a registered society from any member or the estate of a deceased member is under section 23 a first charge on the property of the member or belonging to the estate of the deceased member.]

Transfer of interest on death of member.-

1. (1) A registered society may on the death of a member, transfer his share of interest in the capital of the society to the person nominated in accordance with the rules or, if there is no person so nominated, to such person as may appear to the society or, managing committee to be the heir or legal representative, as the case may be, a sum representing the value of such member’s share or interest, as ascertained in accordance with the rules or bye-laws : Provide that –
   • (i) In the case of society with unlimited liability, such nominee, heir of legal representative as the case may be, may require payment by society or the value of the share or interest of the deceased member ascertained, after deduction the amount of any charge existing under section 22:
   • (ii) in the case of a society with limited liability, the society shall transfer, subject to any charge existing under section 22 , the share or interest of the deceased member to such nominee, heir of legal representative, as the case may be, being qualified in accordance with the rules and bye-laws for membership of the society or in his application within three months of the death of the decease member, to any person specified in the application who is so qualified : Provided further that no payment of sum in excess of rupees one hundred shall be made to any such heir or legal representative who has not been nominated in accordance with the rule, until after the decision under section 48 of any claim which may, within that period, be made by any other person.
2. (2) Subject as aforesaid, a registered society may pay all other money due to deceased member from the society to such nominee heir or legal representative, as the case may be.
3. (3) All transfers and payments, made by a registered 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.

, Power of Registrar to sanction compromise between a registered society and its creditors. –

1. (1) Notwithstanding anything contained in this Act, where a compromise or arrangement is proposed between a registered society and its creditors or any class of them, the Registrar may on the application in a summary way of the society or of any creditor, or in the case of a society in respect of which an order of winding up has been passed, if the liquidator, order a meeting of the creditors or class of creditors as the case may be, to be called, held and conducted in such manner as may be prescribed by rules.
2. (2) If a majority in number representing three-fourth in value of the creditors, of class of creditors, as the case may be present either in person or by proxy at the meeting, agree to any compromise or arrangement, the compromise or arrangement shall, if sanctioned by an order of the Registrar, be binding on all the creditors or the class of creditors as the case may be and also on the society, in the case of a society in respect of which an order of winding up has been passed, on the liquidator and on all persons who have been or may be required by the liquidator acting under clause
   • (c) of sub-section
3. (3) of section 44 to contribute to the assets of the society.
4. (3) If at any time it appears to the Registrar that it is expedient that any compromise or arrangement between a registered society and its creditors or any class of them, which has become final in accordance with the law in force on the date of the commencement of the Bihar Cooperative Societies (Amendment) Act, 1942 (Bihar Act 7 of 1942) or which was, after the date sanctioned by the Registrar under sub-section
5. (2) of this Section, should, in the interest of society or of its creditors or of the said class of creditors, be revised or replaced by a fresh compromise or arrangement, he may either of his own motion or on the application of the society, order a meeting of the creditors or class or creditors as the case may be, present either in person or by proxy at the meeting, agree to the revision of the previous compromise or arrangement, or to any fresh compromise or arrangement, the Registrar may sanction such revised compromise or arrangement or such fresh compromise or arrangement.
6. (4) Any revised compromise or arrangement or fresh compromise or arrangement sanctioned under sub-section
7. (3) may be revised or replaced by a fresh compromise or arrangement in the like manner and subject, to the like conditions as a compromise or arrangement any be revised or replaced by a fresh compromise of arrangement under sub-section (3).
8. (5) Any revised compromise or arrangement or fresh compromise or arrangement sanctioned by the Registrar under sub-section
9. (3) or sub-section
10. (4) be binding on all the creditors or the class of creditors, as the case may be, and also on the society.
11. (6) A compromise or arrangement under sub-section
12. (2) or a revised compromise or arrangement or a fresh compromise or arrangement under sub-section
13. (3) or sub-section
14. (4) shall not be liable to be challenged, set aside, modified, revised or declared void in any Court, upon merits or upon any ground whatsoever except want of jurisdiction.
15. (7) The order of the Registrar calling a meeting of creditors or class of creditors, as the case may be, under sub-section
16. (1) or sub-section (3), and the order of the Registrar sanctioning a compromise or arrangement under sub-section
17. (2) or a revised compromise or arrangement or a fresh compromise or arrangement under sub-section (3), or sub-section
18. (4) shall be published in the official Gazette.]

Amendment of the bye-laws of a registered society. –

1. (1) No amendment of the bye-laws of a registered society shall be valid until the amendment has been registered under this Act.
2. (2) If the Registrar is satisfied that an amendment to the byelaws is not contrary to this Act or to the rules, he shall register the amendment within ninety days from the date of submission of the proposal for amendment.
3. (3) When the Registrar registers an amendment of the bye-law of a registered society, he shall issue to the society a copy of the amendment certified by him, which shall be conclusive evidence that the amendment has been duly registered.
4. (4) If the conditions specified in sub-section
5. (2) have not been fulfilled the Registrar shall dispatch refusal order with reasons by registered post within ninety days from the submission of the proposal
6. (5) In case of non-dispatch of the refusal order within ninety days, the amendment shall be deemed registered. In such cases it will be essential for the Registrar to issue the certificate of registration under his seal and signature, which will be conclusive evidence that amendment has been duly registered.
7. (6) On receipt of the refusal order under sub-lection
8. (4) and on non-receipt of the conclusive evidence relation to the amendment as specified under sub-section
9. (5) an appeal shall lie before the Registrar if the conclusive evidence or refusal order relates to the Registrar having been delegated with the power of Registrar and if such order has been passed by the Registrar Cooperative Society himself then appeal shall lie before the state Government:

Power of Registrar to direct amendment of the bye-laws of a registered society Power of Registrar to direct amendment of the bye-laws of a registered society.-

1. (1) If it appears to the Registrar that an amendment of the byelaws of a registered society is necessary or desirable in the interest of such society, after taking the opinion of affiliating society/federation of that society, he may, by order in writing to be issued to the society, by registered post, require the society to make the amendment within such time as he may specify in such order.
2. (2) If any society fails to make any such amendment within the time specified, the Registrar may, after giving the society an opportunity of being heard, register such amendment, and issue to the society by registered post a copy of the amendment, certified by him, which shall be conclusive evidence that the amendment has been duly registered, and such amendment shall be binding on the members of such society.
3. (3) An appeal shall lie to the State Government from any order of the Registrar passed under sub-section
4. (2) within two months from the date of the issue of such order. The order of the State Government on appeal and, subject to the result of such appeal, if any, the decision of the Registrar shall be final.