Chapter V STATE AID TO SOCIETIES

The State Government may subscribe directly to the share capital of a society with limited liability, upon such terms and conditions as may be agreed ' upon.

The State Government may, under appropriation made by law, provide moneys to a society for the purchase directly or indirectly of shares in other societies with limited liability. (A society to which money are so provided for the aforesaid purpose is hereinafter in this

Principal State Partnership Fund.—

1. (1) An Apex society which is provided with moneys as aforesaid shall, with such moneys, establish a Fund to be called the "Principal State Partnership Fund".
2. (2) An Apex society shall utilize the Principal State Partnership Fund for the purpose of
   • (a) directly purchasing shares in other societies with limited liability;
   • (b) providing money to a society to enable that society (hereinafter in this Chapter referred to as a "Central Society") to purchase shares in other societies with limited liability the latter societies being hereinafter in this Chapter referred to as "Primary societies";
   • (c) Making payments to the State Government in accordance with the provisions of this chapter; and for no other purpose.

1. (1) A Central Society which is provided with moneys by an Apex Society from the Principal State Partnership Fund shall with such moneys, establish a fund to be called the "Subsidiary State Partnership Fund".
2. (2) A Central society shall utilize the Subsidiary State Partnership Fund for the purpose of
   • (a) Purchasing shares in Primary Societies;
   • (b) Making payments to the Apex Society in accordance with the provisions of this

Approval of State Government for purchase of shares.—

Liability to be limited in respect of certain shares.— Where any shares are purchased in a society by-

1. (a) the State Government; or
2. (b) an Apex society from the Principal State Partnership Fund, or a Central society from the Subsidiary State Partnership Fund, as the case may be, the liability in respect of such shares shall, in the event of the society of which the shares are purchased being wound up, be limited to the amount paid in respect of such shares

An Apex society which has purchased shares in other societies from the moneys in the Principal State Partnership Fund, and a Central society which has purchased shares in Primary societies from the moneys in the Subsidiary State Partnership Fund, shall be entitled only to such dividend on the said shares as is declared by the society concerned and is payable to other shareholders of that society.

1. (1) If a society in which shares are purchased from the Principal State Partnership Fund is wound up, or is dissolved, the State Government shall not have any claim against the Apex society which purchased the shares in respect of any loss arising from such purchase; but the State Government shall be entitled to any moneys received by the Apex society in liquidation proceedings or on dissolution, as the case may be.
2. (2) If a society in which shares are purchased from the Subsidiary State Partnership Fund is, wound up or dissolved, neither the State Government nor the Apex society shall have any claim against the Central society which purchased the shares in respect of any loss arising from such purchase; but the Apex society shall be entitled to any moneys received by the

Disposal of share capital and dividend, etc.-

1. (1) All moneys received by an Apex society in respect of shares of other societies, purchased from the moneys in the Principal State Partnership Fund on redemption of such shares, or by way of dividends or otherwise, shall be credited to that Fund.
2. (2) All moneys received by a Central society, in respect of shares of Primary societies purchased from the moneys in the Subsidiary State Partnership Fund on redemption of such shares, or by way of dividends or otherwise, shall in the first instance be credited to that Fund, and then transferred to the Apex society, which shall credit them to the Principal State Partnership fund.
3. (3) All moneys and dividends referred to in sub-sections (1) and (2) shall, notwithstanding that the shares stand in the name of the Apex society or the Central society, as the case may be, paid to the State Government.
4. (4) Save as provided in sub-section (3), the State Government shall not be entitled to any other return on the moneys provided by it to an Apex society under Section 51.

Central society.—

1. (1) If an Apex society which has established a Principal State Partnership Fund is wound up or dissolved, all money, to the credit of, or payable to that Fund, shall be paid to the State Government.
2. (2) If a Central society which has established a Subsidiary State Partnership Fund is wound up or is dissolved, all moneys to the credit of, or payable to that Fund shall be paid and credited to the Principal State Partnership Fund from which it received moneys under clause (b) of sub- section (2) of section 52.

Any amount to the credit of a Principal State Partnership Fund or a Subsidiary State Partnership Fund shall not form part of the assets of the Apex society or the Central Society, as the case may be.

Subject to the foregoing provisions of this Chapter

1. (a) the State Government may enter into an agreement with an Apex society setting out the terms and conditions on which it shall provide moneys to the Apex society for the purpose specified in section 51;
2. (b) an Apex society may, with the previous approval of the State Government, enter into an agreement with a Central society, setting out the terms and conditions on which it shall provide moneys to that society from the Principal State Partnership Fund for the purpose specified in clause (b) of sub-section (2) of section 52

Notwithstanding anything contained in any law for the time being in force, but subject to such conditions as the State Government by general or special order may specify in this behalf, the State Government may,-

1. (a) give loans to a society;
2. (b) guarantee the payment of the principal of debentures issued by a society, or of interest thereon, or both or the repayment of the share capital of a society to its members, or the payment of dividends thereon at such rates as may be specified by the State Government;
3. (c) guarantee the repayment of loans given by a Co-operative Bank to a society;
4. (d) guarantee the repayment of the principal of, and payment of interest on, loans and advances given by the Reserve Bank of India, or the Industrial Finance Corporation of India or any other authority constituted under any law for the time being in force; or
5. (e) Provide financial assistance, in any other form (including subsidies), to a society.

The provisions of sections 51 to 61 (both inclusive) in this Chapter shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force.