Chapter X WINDING UP AND DISSOLUTION OF CO-OPERATIVE

(1) The Registrar may, and if the rules in any case so prescribe, shall, by an order in writing, direct that a co-operative society shall be wound up, if- (a) after an inspection has been made under section 65 or section 66 or any inquiry has been held under section 67; or (b) on an application made upon a resolution carried by three-fourth of the members of the society present at a special general meeting called for the purpose; or (c) on his own motion in the case of a society which- (i) has not commenced working; or (ii) has ceased working; or (iii) has share capital and members deposits not exceeding rupees one thousand; or (iv) has ceased to comply with any condition as to registration in this Act or in the rules or bye-laws; he is of the opinion that society ought to be wound up. (2) A copy of such order shall be communicated in the prescribed manner to the society and to the financing bank, if any, of which the society is a member. (3) The order shall take effect- (a) where no appeal is preferred under section 93 on the expiry of the time allowed for preferring an appeal; or (b) where an appeal is preferred, upon the rejection of the appeal by the appellate authority.

(1) Where the Registrar has made an order under section 78 for the winding up of a society, he may, in accordance with rules, appoint a liquidator and may remove him and appoint another in his place and may also fix his remuneration. (2) The Registrar may, if the circumstances require, appoint by nomination from the share holders of the society, a liquidation committee, comprising not more than seven and not less than three share holders, to advise and assist the liquidator, and may at any time remove any member of the committee or the whole committee and appoint another in his or its place, as the case may be. (3) A liquidator shall, on appointment, 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, damage to, such property, effects and claims. (4) Where an appeal is preferred under section 93, the liquidator shall, pending the decision of the appeal, continue to have custody or control of the property, effects and actionable claims mentioned in sub-section (3) and have authority to take the steps referred to in that sub-section. (5) Where an order of winding up of a society is set aside in appeal, the property, effects and actionable claims of the society shall re-vest in the society.

(1) Subject to any rules made in this behalf, the whole of the assets of a society in respect of which an order for winding up has been made, shall vest in the liquidator appointed under section 79 from the date on which the order takes effect and the liquidator shall have power to realise such assets by sale or otherwise. (2) Such liquidator shall also have power subject to control of the Registrar- (a) to institute and defend suits and other legal proceedings on behalf of the society by the name of his office; (b) to determine, from time to time, the contribution (including debts due) to be made or remaining to be made by the members or the past members or by the estates, or nominees, heirs or legal representatives of deceased members or by any officers or former officers, to the assets of the society; (c) to investigate all claims against the society and subject to the provisions of this Act, to decide questions of priority arising between claimants; (d) to pay claims against the 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 calculate the cost of liquidation and to determine by what person and in what proportions they 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 of the affairs of the society; (h) to carry on 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, to dispose of the surplus, if any, remaining after paying the claims against the society; and (l) 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. (3) Any private transfer or delivery of, or an encumbrance or charge on, property, made or created after the order of the liquidator under this section shall be null and void as against the society under liquidation.

Notwithstanding anything contained in the Provincial Insolvency Act, 1920 (5 of 1920), the contribution assessed by liquidator shall rank next to debts due to the Government or to any local authority in order of priority insolvency proceedings.

When the affairs of a 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.

(1) The Registrar may cancel an order for the winding up of the society in any case where, in his opinion, the society should continue to exist. (2) In any other case, the Registrar shall, after considering the report of the liquidator, if any, order the registration of the society to be cancelled.

Save in so far as it is expressly provided in this Act, no civil court shall take cognizance of any matter connected with the winding up or dissolution of a society under this Act and when a winding up or order has been made, no suit or other legal proceeding shall lie or be proceeded with against the society except by leave of the Registrar and subject to such terms as he may impose.

After all the liabilities including the paid up share capital of a cancelled society have been met, the surplus assets shall not be divided amongst its members but they shall be devoted to any object or objects described in the bye-laws of the society and when no object is so described to any object of public utility, determined by the general meeting of the society and in case of failure of the general meeting to determine the aforesaid object within the prescribed period, they may be assigned by the Registrar either in whole or in part to any or all of the following:- (a) an object of public utility of local interest including co-operative education fund; (b) a charitable purpose as defined in section 2 of the Charitable Endowments Act, 1890 (5 of 1890); (c) financing bank until such time as a new society with similar object is registered in the same or neighbouring area when with the consent of the Registrar such surplus may be credited to the reserve fund of such new society.