Chapter VIII WINDING UP OF CO-OPERATIVES

Winding up of a Co-operative. (1) On an application made by not less than one-fifth of the members of a Co-operative to wind up the affairs of the said Co-operative, the board shall convene a general meeting by issuing a notice to each member. Such notice alongwith a notice to attend the general meeting shall also be issued to the Registrar union Co-operative, creditors, auditor and to the subsidiary organisation of the Co-operative, who shall also have a right to make a representation at the general body. (2) The general body shall approve the resolution to wind up the Co-operative and to appoint a liquidator after the same is passed by two-thirds of the members present in the general meeting and voting. Such resolution shall contain the details of the assets and liabilities of the Co-operative, the claims of any creditors, the number of members and the nature and extent of interest of each member in the Co-operative. A copy of resolution after approval by the general body shall be sent by registered Provided that in the case of a Co-operative Bank, no action in terms of sub-sections (1) and (2) shall be taken unless a copy of the application referred to in sub-section (1) is sent to the Reserve Bank or National Bank, as the case may be, and its consent obtained and. Explanation.- In this section “interest” means interest of a member in a Co-operative and includes shares, member loans, deposits and obligations of any kind that,- (i) arise by virtue of the bye-laws of the Co-operative; and (ii) are owed by the Co-operative to the member. (3) The Registrar may require from a Co-operative, liquidator or any other person who is required to furnish information, an annual or other returns showing,- (a) the progress of winding up; (b) the distribution of any undistributed surplus or reserves; and (c) any other information that he may require. (4) The Registrar after consideration of the information under sub-section (3) may approve the resolution to wind up the Co-operative and communicate the same to the said Co-operative and the Federal Co-operative. Such resolution shall take effect from the date of approval by the Registrar.

Duties of Liquidator. (1) The liquidator immediately after he assumes the charge of office of liquidator, shall intimate the same to the Registrar and Federal Co-operative, to each claimant, share holder and to each creditor of the Co-operative. the Liquidator, as so appointed, shall take the charge and enlist the asset and liabilities of the co-operative and obtain approval for the priority list from the Registrar and shall commence the liquidation process after such approval only. A notice of his appointment shall also be published in the Gazette once in a week for two consecutive weeks and in the newspaper published or distributed in the place where the registered office of the Co-operative is situated. He shall also take reasonable steps to give notice of the liquidation of such Co-operative in the area where the Co-operative carried on its business. (2) The notice issued under subsection (1) shall specify,- (i) the amount indebted to the Co-operative and the time and place for payment of amount due to the Co-operative by the debtor to the liquidator; and (ii) the time and place of delivery of the property of the Co-operative to the liquidator; and (iii) the present or future position of the claims against the Co-operative whether liquidated or otherwise, and shall require all the persons concerned to comply with such notice not later than two months after the first publication of the notice. (3) The liquidator shall,- (a) take into custody and control the property of the Co-operative; (b) prepare a statement of assets and liabilities of the Co-operative under liquidation and send a copy of such statement to the Federal Co-operative and to the Registrar and in the case of a Co-operative Bank, also to Reserve Bank (c) open and maintain a trust account for the money of the Co-operative; (d) keep accounts of the money of the Co-operative received and paid out by him; (e) maintain separate lists of the members, creditors and other persons having claims against the Co-operative; (f) where at any time, he determines that the co-operative or the co-operative bank is unable to pay or adequately provide for the discharge of its obligations, apply in the case of a Co-operative Bank to Reserve Bank, and in other cases to the Registrar for directions; (g) deliver to the Registrar atleast once in every six months, period or more often as the the Registrar may require, financial statements of the Co-operative in any form that the liquidator considers proper or that the the Registrar may require and in the case Cooperative Bank, deliver such financial statement also to the Reserve Bank. (h) The liquidation process of winding up of a Souhardha cooperative and Souhardha Cooperative banks under sub-section (4) of section 47 and sub-section (5) and (7) of section 48 shall be completed within two years, which may, however be extended by the Registrar for the reasons to be recorded in writing for a further period of one year: Provided that the State Government shall, on a report made by the Registrar shall have power to extend the period, for the reasons to be recorded if it is satisfied that, there are genuine grounds for the extension. (i) The procedure to be adapted by the Liquidator shall be such as may be prescribed.

Powers of Liquidator. (1) The liquidator may,- (a) retain lawyers, accountants, engineers, appraisers and other professional advisors; (b) defend or take part in any civil, criminal or administrative action or proceeding in the name and on behalf of the Co-operative; (c) carry on the business of the Co-operative as required for an orderly liquidation; (d) sell by public auction any property of the Co-operative; (e) do all acts and execute any documents in the name and on behalf of the Co-operative; (f) borrow money on the security of the property of the Co-operative; (g) settle or compromise any claims by or against the Co-operative; and (h) take all such steps that are necessary for the liquidation of the Co-operative. (2) Where a liquidator has reason to believe that any person has in his possession or under his control or has concealed, withheld or misappropriated any property of the Co-operative, he shall inform the Registrar to take further action against such person. (3) No liquidator or his relatives shall purchase directly or indirectly any part of the stock-in-trade, debts or assets of the Co-operative under liquidation.

(2) After paying or making adequate provision for all claims against the Co-operative, the liquidator shall apply to the Registrar for approval of his final accounts and for permission to distribute in cash or in kind the amounts due to the members out of the remaining property of the Co-operative in accordance with the bye-laws. (3) Where the the Registrar approves the final accounts rendered by a liquidator in pursuance of sub-section (2), he shall,- (a) issue directions regarding the custody or disposal of the documents and records of the Co-operative; and (b) discharge the liquidator. (4) Where the Registrar discharges the liquidator under sub-section (3), he shall issue a certificate of winding up of the Co-operative and cancel the registration of such Co-operative. (5) The Co-operative ceases to exist as a corporate body from the date on which the certificate of registration is cancelled.

After preparation of a statement of assets and liabilities by the liquidator under clause (b) of subsection (3) of section 49 with a view to realise optimum value for the assets of the Co-operative under liquidation, the liquidator may also invite the Federal Co-operative or other Co-operatives or Co-operative societies to purchase the assets of such Co-operative. (1) If any difficulty arises in giving effect to the amendments made by this Act, the State Government may, by order published in the official Gazette, make such provisions not inconsistent with the provisions of the Principal Act and the Constitution (Ninety seventh Amendment) Act, 2011 as appear to it to be necessary or expedient for removing the difficulty. Provided that no such order shall be made under this section after the expiry of two years from the date of commencement of this Act. (2) Every order made under this Section shall, as soon as may be, after it is made, be laid before the State Legislature.