Chapter VIII CHARGES AND MORTGAGES

(1) Notwithstanding anything contained in any law for the time being in force, but subject to any prior claim of the Government in respect of land revenue or any money recoverable as land revenue or any prior claim of the Government, in respect of recovery of taxes under any law enacted by Parliament, any debts or outstanding demand owing to a co-operative society by any member or past member or deceased member shall be a first charge upon the crops and other agricultural produce, cattle fodder, agricultural or industrial implements or machinery or raw material for manufacture and any finished products manufactured from such raw materials, belonging to such member, past member or forming part of the estate of the deceased member, as the case may be. (2) No person shall transfer any property which is subject to a charge under sub-section (1) except with the prior permission in writing of the co-operative society which holds the charge. (3) Notwithstanding anything contained in any law for the time being in force, any transfer of property made in contravention of the provisions of sub-section (2) shall be void.

Notwithstanding anything contained in this Act or any other law for the time being in force – (a) it shall be lawful for a member, if he owns any land or any other immovable property or has interest of any land as tenant, to create a charge or mortgage in favour of a society as security for any financial assistance given to him by it; (b) where a mortgage or a charge is to be created under clause (a) the member shall make a declaration in the prescribed form which shall state that the applicant thereby creates a mortgage or charge on such land, building or immovable property or interest specified in the declaration for the payment of the amount of loan which the society may advance to the member in pursuance of the application and for all future advances, if any, required by him which the society may make to him subject to such maximum as may be determined by the society together with interest on such amount of the loan and advances; (c) a declaration made under clause (b) may be varied at any time by a member with the consent of the society in favour of which such mortgage or charge was created; (d) no member shall alienate the whole or any part of the property or interest therein specified in the declaration made under clause (b) until the whole amount borrowed by the member together with interest thereon is paid in full: Provided that for the purpose of paying in full to the society the whole amount borrowed by the members together with the interest thereon, the member may with the previous permission in writing of the society and subject to such conditions as the society may impose, alienate the whole or any part of such property or interest therein : Provided further that standing crops on any such land may be alienated without the previous permission of the society ; (e) any alienation made in contravention of the provisions of clause (d) shall be void; (f) subject to the prior claims of the Government in respect of land revenue or any money recoverable as land revenue, there shall be a first charge in favour of the society in the property or interest therein specified in the declaration made under clause (b) for and to the extent of the dues owned by him on account of loan and advances: Provided that a mortgage or charge created in favour of a society after the commencement of this Act shall have priority over any claim of the Government arising from a loan granted under the Land Improvement Loans Act, 1883 or the Agriculturists Loans Act, 1884, after the creation of the mortgage of charge.

(1) Notwithstanding anything contained in the Registration Act, 1908, mortgage or a charge in respect of which a declaration has been made under clause (b) of section 53 or in respect of which a variation has been made under clause (c) of that section in favour of a society shall be deemed to have been duly registered in accordance with the provisions of that Act with effect from the date of such mortgage, charge, or variation as the case may be. (2) The society shall send the declaration in duplicate, to the Sub-Registrar within the local limits of whose jurisdiction the whole or any part of the property mortgaged or charged is situated, by registered post, acknowledgement due, and shall retain a copy thereof for its own record. (3) The Sub-Registrar receiving the declaration referred in sub-section (2) shall record in a register to be maintained in this behalf the fact of the receipt of such declaration or variation for registration. After registration one copy of the declaration shall be returned to the society. (4) Whenever a charge or mortgage on land or interest therein is created in favour of a society by a member the society may give intimation to the Tehsildar or such revenue officer as may be designated in this behalf by the Government of the particulars of the charge or mortgage created in its favour. The Tehsildar or the other revenue official shall make a note of the particulars of charge or mortgage in the record of rights relating to the land over which the charge or mortgage has been created. (5) Notwithstanding anything contained in any law for the time being in force a member who has availed himself of financial assistance from a society by creating a charge or mortgage on land or interest therein shall not so long as the financial assistance continues to be outstanding, create any tenancy rights on such land or interest therein without prior permission in writing of the society.

A co-operative society shall have a charge upon the share or contribution or interest in the capital and on the deposits of a member or past member or deceased member and upon any dividend, bonus or profits payable to a member or past member or the estate of a deceased member in respect of any debt due from such member or past member or the estate of such deceased member to the society and may set off any sum credited or payable to a member or past member or the estate of a deceased member in or towards payment or any such debt.

Subject to the provisions of section 55, the share or contribution or interest of a member or past member or deceased member in the capital of a co-operative society shall not be liable to attachment or sale under any decree or order of any court in respect of any debt or liability incurred by such member and a receiver under the Provincial Insolvency Act, 1920, shall not be entitled to or have any claim on such share or contribution or interest.

Where a society borrows from another society for making advances to its members against mortgages or charges or transfer of its assets by such members, such mortgages or charges and assets shall be deemed to have transferred to the later society from the date of creation of the mortgages or charges or the date of transfer of assets, as the case may be.

Notwithstanding anything contained in the Transfer of Property Act, 1882 or any other law for the time being in force, the duration of any lease executed by a member, or property mortgaged or charged to a co-operative society, shall not exceed five years.

Notwithstanding anything contained in the Provincial Insolvency Act, 1920, a mortgage or charge created by a member in favour of a co-operative society shall not be called in question on the ground that it was not created in good faith, for valuable consideration or on the ground that it was executed in order to give the society a preference over the other creditor of the member.

Notwithstanding that a mortgage or charge created in favour of a co-operative society has been transferred or deemed to have been transferred to another society, under the provisions of section 57,– (a) all moneys due under the mortgage or charge shall, in the absence of any specific direction to the contrary issued by the other society or the trustee and communicated to the member, be payable to the society which has advanced loan to the member and such payment shall be as valid as if the mortgage and charge had not been so transferred ; and (b) such society shall, in the absence of any specific direction to the contrary issued by the trustee and communicated to such society, be entitled to sue on the mortgage or charge or take any other proceedings for the recovery of the moneys due under the mortgage or charge.

Where a mortgage or charge created in favour of a society is called in question on the ground that it was executed by a person governed by custom or the manager of Joint Hindu Family for a purpose not binding on the reversioners or the members thereof, whether major or minor, the burden of proving the same, notwithstanding any law to the contrary, be on the party raising it.