Chapter XI LIQUIDATION

1. (1) Except as otherwise provided in sub-section (2), if the Registrar,—
   • (a) after an inquiry has been held under section 92, or an inspection has been made under section 93 or section 94 on the report of the auditor;
   • (b) on receipt of an application made upon a resolution carried by three-fourths of the members of a society present at a special general meeting called for the purpose; or
   • (c) of his own motion, in the case of a society which—
     • (i) has not commenced working;
     • (ii) has ceased working;
     • (iii) possesses shares or member’s deposits not exceeding five thousand rupees;
     • (iv) has ceased to comply with any conditions as to registration and management as provided in this Regulation or the rules or the bye-laws, is of the opinion that a society ought to be wound up, he may make an interim order directing it to be wound up.
2. (2) Notwithstanding anything contained in sub-section (1), in case where the members of the society, after having discharged liabilities towards the debt and assets of the society, upon a resolution carried by three-fourths majority of the members of the society present at a special general meeting called for the purpose, suo motu, resolve to wind up the society and convey such resolution to the Registrar and the Registrar shall, after disposing of the surplus assets in accordance with the provisions of section 122, cancel the registration of such society under section 21.
3. (3) Where an interim order is made on a ground specified in clause (a) or sub-clause (iv) of clause (c) of sub-section (1), a copy thereof shall be communicated, in the prescribed manner, to the society calling upon it to submit its explanation to the Registrar within a period of one month from the date of issue of such order.
4. (4) The Registrar, after giving an opportunity to the society of being heard, shall make a final order, vacating or confirming the interim order.

1. (1) When an interim or final order is made under section 114 for the winding up of a society, the Registrar may, in accordance with the rules, appoint a person to be the Liquidator of the society and fix his remuneration.
2. (2) Where an interim order is made, the officers of the society shall hand over to the Liquidator the custody and control of all the property, effects and actionable claims to which the society is or appears to be entitled, and of all books, records and other documents pertaining to the business of the society and, shall have no access to any of them.
3. (3) When a final order is made confirming the interim order, the officers of the society—
   • (a) shall hand over to the Liquidator the custody and control of any property, effects and actionable claims and any books, records, and other documents pertaining to the business of the society which for any reason are not handed over to the Liquidator under sub-section (2) at the time when an interim order was made;
   • (b) shall vacate their offices and while winding up order remains in force, the general body of the society shall not exercise any powers.
4. (4) The Liquidator shall, subject to the general control of the Registrar, exercise all or any of the powers mentioned in section 117 and the Registrar may remove him from his office and appoint another in his place, without assigning any reason.
5. (5) The whole of the assets of the society shall on the appointment of the Liquidator vest in him and notwithstanding anything contained in any law for the time being in force in the Union territory, if any immovable property is held by him on behalf of the society, the title over the land shall be complete as soon as the mutation of the name of his office is effected and no court shall question the title on the ground of dispossession, want of possession or physical delivery of possession.
6. (6) In the event of the interim order being vacated, the Liquidator shall hand over the property, effects, actionable claims, books, records and other documents of the society to the officers who had delivered the same to him and the acts done, and the proceedings taken by the Liquidator, shall be binding on the society, and such proceedings shall, after the interim order has been vacated under section 114 be continued by the officers of the society. Explanation.—For the purposes of this section and section 117, the expression “actionable claims” means a claim to any debt, other than a debt secured by mortgage of immovable property or by hypothecation or pledge of movable property, or to any beneficial interest in movable property not in the possession, either actual or constructive, of the claimant, which the civil courts recognise as affording grounds for relief, whether such debt or beneficial interest by existent, accruing, conditional or contingent.

1. (1) The Committee or any member of the society may, within a period of two months from the date of the communication of the order made under section 114 for winding up, appeal, if the order is made by the Registrar or Additional Registrar or Joint Registrar to the Administrator, or if the order is made by any other person on whom the powers of the Registrar are conferred, to the Registrar: Provided that no appeal shall lie against an order issued under sub-clauses (i),
   • (ii) or (iii) of clause (c) of sub-section (1) of section 114: Provided further that no appeal shall lie against an order passed by the Registrar.
2. (2) No appeal under this section shall be entertained from a member unless it is accompanied by such sum as security for the costs of hearing the appeal, as may be prescribed.

Subject to the rules and the general supervision, control and direction of the Registrar, the Liquidator shall have the power,––

1. (a) to institute and defend suits and other legal proceedings, civil or criminal, on behalf of the society, in the name of his office;
2. (b) to carry on the business of the society, as may be necessary for the beneficial winding up of the same;
3. (c) to sell the movable and immovable property and actionable claims of the society by public auction or private contract, with power to transfer the whole or part thereof to any person or body corporate, or sell the same in parcels;
4. (d) to raise any money required on the security of the assets of the society;
5. (e) to investigate all claims against the society and, subject to the provisions of this Regulation, to decide questions of priority arising out of such claims, and to pay any class or classes of creditor in full or rateable according to the amount of such debts, the surplus being applied in payment of interest from the date of liquidation at a rate to be approved by the Registrar, but not exceeding the contract rates;
6. (f) to make any compromise or arrangement with creditors or persons claiming to be creditors, or having or alleging themselves to have any claim, present or future, whereby the society may be rendered liable;
7. (g) to compromise all calls or liabilities to calls and debts and liabilities capable of resulting in debts, and all claims present or future, certain or contingent, subsisting or supposed 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;
8. (h) to determine, from time to time, after giving an opportunity to answer the claim, the contribution to be made or remaining to be made by the members or past members or by the estate, nominees, legal heirs or legal representatives of deceased members, or by any officer, past officer or the estate or nominees, legal heirs or legal representatives of a deceased officer to the assets of the society, such contribution being inclusive of debts due from such members or officers;
   • (i) to make applications under section 109;
9. (j) to get disputes referred to the Registrar or his nominee or board of nominees;
10. (k) to determine by what persons and in what proportion the costs of the liquidation shall be borne;
11. (l) to fix the time or times within which the creditors shall prove their debts and claims or be included for the benefits of any distribution made before those debts or claims are proved;
12. (m) to summon and enforce the attendance of witnesses and to compel the production of any books, accounts, documents, securities, cash or other properties belonging to or in the custody of the society by the same means and in the same manner as provided in the case of a civil court under the Code of Civil Procedure, 1908;
13. (n) to do all acts, and to execute in the name and on behalf of the society, all deeds, receipts and other documents, as may be necessary to such winding up;
14. (o) to take such action as may be necessary under section 20, with the prior approval of the Registrar, if there is reason to believe that the society may be reconstructed.

1. (1) After the expiry of the period for appeal under section 116 against the order made under sub-section (3) of section 114, or where the appeal has been dismissed, the order for winding up shall be effective and shall operate in favour of all creditors and the contributories of the society, as if it has been made on the joint petition of creditors and contributories.
2. (2) When a winding up order becomes effective, the Liquidator shall proceed to realise the assets of the society, by sale or otherwise, and no dispute shall be commenced, or if pending at the date of the winding up order, be proceeded with, against the society, except with leave of the Registrar and subject to such terms as the Registrar may impose and the Registrar may of his own motion, however, entertain or dispose of any dispute by or against the society.

Save as expressly provided in this Regulation, no civil court shall have jurisdiction on any matter connected with the winding up or dissolution of a society under this Regulation, and when a winding up order has been made, no suit or other legal proceedings shall lie or be proceeded with against the society or the Liquidator, except by leave of the Registrar, and subject to such terms as he may impose: Provided that where the winding up order is cancelled, the provisions of this section shall cease to operate so far as the liability of the society and of the members thereof to be sued is concerned, but they shall continue to apply to the person who acted as Liquidator.

1. (1) The Liquidator shall, during his tenure of office, at such times as may be prescribed, but not less than twice each year, present to the Registrar an account in the prescribed form of his receipt and payments as Liquidator and the Registrar shall cause the accounts to be audited in such manner as he thinks fit and for the purpose of audit, the Liquidator shall furnish the Registrar with such vouchers and information as he, or the person appointed by him, may require.
2. (2) The Liquidator shall cause a summary of audited accounts to be prepared, and send a copy of such summary to every contributory.
3. (3) The Liquidator shall pay such fees as the Registrar may direct, for the audit of the accounts of books kept by him in such manner as may be prescribed.
4. (4) The Liquidator shall be held liable for any irregularities which might be discovered in the course or as a result of audit in respect of transactions subsequent to his taking charge of the affairs of the society, and may be proceeded against, as if, it were an act against which action may be taken under section 99: Provided that no such action shall be taken unless the irregularities have caused or are likely to cause loss to the society, and have occurred due to gross negligence or want on omission by the Liquidator, in carrying out the duties and functions.

1. (1) The winding up proceedings of a society shall be closed within five years from the date of the order of the winding up, unless the period is extended by the Registrar: Provided that the Registrar shall not grant any extension for a period exceeding one year at a time and five years in the aggregate, and shall, immediately after the expiry of ten years from the date of the order for winding up of the society, the liquidation proceedings shall be deemed to have been terminated, and pass an order terminating the liquidation proceedings. Explanation.—For the purposes of this section, it is hereby clarified that in the case of a society which is under liquidation at the date of the commencement of this Regulation, an order for the winding up of the society shall be deemed to have been passed for the purpose of this section on the said date.
2. (2) Notwithstanding anything contained in sub-section (1), the Registrar shall terminate the liquidation proceedings on receipt of the final report from the Liquidator and the final report of the Liquidator shall state that the liquidation proceedings of the society have been closed, and also state how the winding up has been conducted and the property and claims of the society have been disposed of, and include a statement showing a summary of the account of the winding up including the cost of liquidation, the amount, if any, standing to the credit of the society, after paying off its liabilities including the share or interest of members, and suggest how the surplus may be utilised.
3. (3) The Registrar, on receipt of the final report from the Liquidator, shall direct him to convene a general meeting of the members of the society for recording the report.

Any surplus assets, shown in the final report of the Liquidator, shall not be divided, amongst its members but shall be devoted to any object or objects provided in the bye-laws of the society, if they specify that such a surplus shall be utilised for the particular purpose and where the society has no such bye-law, the surplus shall vest in the Registrar, who shall hold it in trust and shall transfer it to the reserve fund of a new society registered with a similar object, and serving more or less an area which the society to which the surplus belonged was serving: Provided that where no such society exists or is registered within three years of the cancellation of the registration of the society whose surplus is vested in the Registrar, the Registrar may distribute the surplus in the manner he thinks best, among any or all of the following, namely:—

1. (a) an object of public utility and of local interest as may be recommended by the members in general meeting held under section 121 or where the society has ceased to function and its record is not available or none of its members is forth coming, as the Registrar thinks proper;
2. (b) a federal society with similar objects to which the cancelled society was eligible for affiliation; and
3. (c) any charitable purpose as defined in section 2 of the Charitable Endowments Act, 1890 or any other law for time being in force in the Union territory.