Chapter VI PRIVILEGES OF CO-OPERATIVE SOCIETIES

A society shall have a charge upon the share or interest in the capital, and on the deposits of a member or a past member or deceased member and upon any dividend, bonus or profits payable to a member, past member or deceased member in respect of any debt or outstanding demand owing to the co-operative society and the society may set off any sum credited or payable to such member in or towards payment of any such debt: Provided that no co-operative bank shall have a charge upon any sum invested with it by a society out of the provident fund established by it under section 56 or its reserve fund; and no co-operative bank shall be entitled to set off any such sum towards any debts due from the society.

Any register or list of members or shares kept by any registered society shall be prima facie evidence of any of the following particulars entered therein:-(a) the date on which the name of a person was entered in such register or list as a member; (b) the date on which any such person ceased to be a member.

(1) A copy of any entry in a book of a registered society, regularly kept in the course of its business, shall if certified in such manner as may be prescribed, be received in any suit or legal proceedings, 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 as, the original entry itself is admissible. (2) No officer of a society and no officer in whose office the books of a society are deposited after liquidation shall, in any legal proceedings to which the society or the liquidator is not a party, be compelled to produce any of the society's books or documents, the contents of which can be proved under this section, or to appear as a witness to prove the matters, transactions and accounts therein recorded, except under the order of the court or the arbitrator made for special cause.

Nothing in clauses (b) and (c) of sub-section (1) of section 17 of the Indian Registration Act, 1908 (16 of 1908), shall apply to-(1) any instrument relating to share in a society notwithstanding that the assets of the society consist in whole or in part of immovable property; or (2) any debenture 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 thereof to the security afforded by 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 (3) any endorsement upon or transfer of any debenture issued by any such society.

(1) Notwithstanding anything contained in any law for the time being in force, a member of a society may execute an agreement in favour of the society; providing that his employer shall be competent to deduct from the salary or wages payable to him by the employer, such amount as may be specified in the agreement, and to pay to the society the amount so deducted in satisfaction of any debt or other demand of the society against the member. (2) On the execution of such agreement, the employer shall, if so required by the society by a requisition in writing, and so long as the society does not intimate that the whole of such debt or demand has been paid, make the deduction in accordance with the agreement and pay the amount so deducted to the society within fourteen days from the date of deduction. (3) If after the receipt of requisition made under the foregoing sub-section, the employer at any time fails to deduct the amount specified in the requisition from the salary or wages payable to the member concerned, or makes default in remitting the amount deducted, to the society, the employer shall be personally liable for the payment thereof; and the amount shall be recoverable on behalf of the society from him as an arrear of land revenue, and the amount so due shall rank in priority in respect of such liability of the employer as wages in arrears.

Notwithstanding anything contained in this Act or in any other law for the time being in force,-(i) any person who makes an application to a society of which he is a member for a loan, if he owns any land or has interest in any land as a tenant shall make a declaration in the form prescribed. Such declaration shall state that the applicant thereby creates a charge on such land or interest specified in the declaration for the payment of the amount of the loan which the society may make 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 as such member subject to such maximum as may be determined by the society together with interest on such amount of the loan and advances; (ii) any person who has taken a loan from a society of which he is a member, before the date of coming into force of this Act, and who owns any land or has interest in any land as a tenant and who has not already made such a declaration before the aforesaid date shall, as soon as possible, thereafter, make a declaration in the form and to the effect referred to in clause (i), and no such person shall, unless and until, he has made such declaration, be entitled to exercise any right as a member of the society; (iii) a declaration made under clause (i) or (ii) may be varied at any time by a member, with the consent of the society in favour of which such charge is created; (iv) no member shall alienate the whole or any part of the land or interest specified in the declaration made under clause (i) or (ii) until the whole amount borrowed by the member together with interest thereon is repaid in full: Provided that standing crops on any such land may be alienated with the previous permission of the society: Provided further that if a part of the amount borrowed by a member is paid, the society may, on an application from the member, release from charge created under the declaration made under clause (i) or (ii), such part of the movable or immovable property specified in the said declaration, as it may deem appropriate, with due regard to the security of the balance of the amount remaining outstanding from the member : Provided further that no charge on land need be created if the amount of loan advanced is less than such amount as may be fixed by the State Government from time to time by a notification and such loan may be allowed to any member on his furnishing two sureties from the fellow members; (v) any alienation made in contravention of the provisions of clause (iv) shall be void; (vi) subject to the prior claims of the Government in respect of land revenue, there shall be a first charge in favour of the society on the land or interest specified in the declaration made under clause (i) or (ii), for and to the extent of the dues owing by him on account of the loans and advances; and (vii) the record-of-rights shall include the particulars of every charge on land or interest created under a declaration under clause (i) or (ii). The halka patwari shall note such charge in the village records within one week after the receipt of the declaration and shall thereafter return the declaration to the society concerned.

Notwithstanding anything contained in any law for the time being in force, the Government may,-(a) subscribe to the share capital of a co-operative society; (b) give loans or make advances to a co-operative society; (c) guarantee the repayment of share capital of a co-operative society and dividends thereon at such rates as may be specified by the Government; (d) guarantee the repayment of principal and payment of interest on loans and advances to a co-operative society; and (e) give financial assistance in any other form, including subsidies to any society.

(1) Notwithstanding any other provisions of the Limitation Act, 1963 (36 of 1963), the period of limitation for the institution of a suit to recover any sum including interest thereon due to a society by a member thereof shall be computed from the date on which such member dies or ceases to be a member of the society.

(1) The Central Government may, by notification in the Official Gazette, remit the income tax payable in respect of the profits of any class of co-operative societies or the dividends or other payments received by members of any class of such societies on account of profits. (2) The Government may, by notification, remit in respect of any society or class of societies,- (a) the stamp duty chargeable under any law for the time being in force in respect of any instrument executed by or on behalf of a co-operative society or by an officer or member thereof and relating to the business of such society or any class of such instruments or in respect of any award or order made under this Act, in cases, where, but for such remission, the co-operative society, officer or member, as the case may be, would be liable to pay such stamp duty; (b) any fee payable under any law for the time being in force relating to the registration of documents or court fees. Explanation.- In this sub-section, “Government” means in relation to stamp duty in respect of bills of exchange, cheques, promisory notes, bills of lading, letters of credit, policies of insurance, transfer of shares, debentures, proxies and receipts, the Central Government and save as aforesaid, the State Government. (3) The Government may, by notification, exempt any society or class of societies from,- (a) land revenue; (b) taxes on agricultural income; (c) taxes on sale or purchase of goods; and (d) taxes on profession, trades, callings and employments.

Notwithstanding anything contained in the Provincial Insolvency Act, 1920 (5 of 1920), or any corresponding law for the time being in force, the dues of a society from a member, in insolvency proceedings against him shall rank in order of priority next to the dues payable by him to Government or to a local authority.

(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 the land revenue or any money recoverable as land revenue, any debt or outstanding demand owing to a co-operative society by any member or past member or deceased member shall be a first charge upon movable property the crops and 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, belonging to such member, past member or forming a 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 previous 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. (4) The charge created under sub-section (1) shall be available as against any claim of the Government arising from a loan granted under the Land Improvement Loans Act, 1883 (19 of 1883), or the Agriculturists' Loans Act, 1884 (12 of 1884), after the grant of loan by the society.