Chapter XVI WINDING UP OF CO-OPERATIVE SOCIETIES

(1) If the Registrar, after audit under section 95 or an inquiry held under section 98, an inspection has been made under section 97 or 99 or on receipt of an application made by not less than three-fourths of the members of a co-operative society, is of opinion that the society ought to be wound up, he may issue an order directing it to be wound up: Provided that the Registrar shall ensure implementation of regulatory prescriptions of the Reserve Bank including winding up of Central Co-operative Banks and the Haryana State Co-operative Apex Bank Limited and appointment of liquidator within one month of being so advised by the Reserve Bank. (2) The Registrar may of his own motion make an order directing the winding up of a co-operative society– (a) where the number of members has been reduced to less than that specified under section 5; or (b) where the society has not commenced working or has ceased to function. (3) The Registrar may cancel an order for the winding up of a co-operative society at any time, in any case, where in his opinion, the society should continue to exist. (4) A copy of the orders under this section shall be communicated by registered post to the society (5) The winding up proceedings of a society shall be completed within a period of three 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 extend the period exceeding one year for the first time and two years as a whole. (6) Before taking action under sub-section (1) or sub-section (2) except where the society is brought under winding up process on application of members, the Registrar shall issue a notice to the concerned society and the financing institution, if any, and give a reasonable opportunity to show cause as to why the society be not brought under winding up process.

(1) Where the Registrar has made an order under section 105 for the winding up of a co-operative society, he shall appoint a liquidator for the purpose and fix his remuneration. (2) A liquidator shall take into his custody or under his control all the property, effects and actionable claims to which the society is or appears to be entitled and shall take such steps as he may deem necessary or expedient to prevent loss or deterioration of, or damage to, such property, effects and claims. He may carry on the business of the society so far as may be necessary with the previous approval of the Registrar. (3) Where an appeal is preferred under section 114, an order of winding up of the co-operative society made under section 105 shall not operate thereafter until the appeal is disposed of: Provided that the liquidator shall continue to have custody or control of the property, effects and actionable claims mentioned in sub-section (2) and have authority to take the steps referred to in that sub-section. (4) Where an order of winding up of a co-operative society is set aside in appeal, the property, effects and actionable claims of the society shall revest in the society.

(1) Subject to any rules made in this behalf, the whole of the assets of a co-operative society in respect of which an order for winding up has been made shall vest in the liquidator appointed under section 106 from the date on which the order takes effect and the liquidator shall have the powers to realize such assets by sale or otherwise. (2) Such liquidator shall also have powers, subject to the control of the Registrar – (a) to institute and defend suits and other legal proceedings on behalf of the co-operative society by the name of his office; (b) to determine from time to time the contribution (including debts due and costs of liquidation) to be made or remaining to be made by the members or past members or by the estates of nominees, heirs or legal representatives of deceased members or by any officer or former officers, to the assets of the society; (c) to investigate all claims against the co-operative society and subject to the provisions of this Act, to decide question of priority arising between claimants; (d) to pay claims against the co-operative society including interest upto 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 contract rate in any case; (e) to determine by what persons and in what proportion the costs of the liquidation are to be borne; (f) to determine whether any person is a member, past member or nominee of deceased member; (g) 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; (h) to carry on the business of the society so far as may be necessary for the beneficial winding up of the same; (i) 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; (j) to make any compromise or arrangement with any person between whom and the society there exists any dispute and to refer any such dispute to arbitration; (k) after consulting the members of the society, dispose of the surplus, if any, remaining after paying the claims against the society in such a manner as may be prescribed; and (l) to compromise all calls or liabilities to calls and debts and liabilities capable or 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 debtors or persons apprehending liability to the co-operative 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. (3) When the affairs of a co-operative society have been wound up, the liquidator shall make a report to the Registrar and deposit the records of the society in such place as the Registrar may direct.

Notwithstanding anything contained in the Provincial Insolvency Act, 1920, the contribution assessed by a liquidator shall rank next to debts due to the Government or to any local authority in order of priority in insolvency proceedings.

(1) The Registrar may after considering the report of the liquidator made to him under sub-section (3) of section 107, order the registration of the co-operative society to be cancelled. (2) An order passed under sub-section (1) shall be communicated to the financing institutions, if any, of which the society was a member and may notify as prescribed.