Chapter 6 ACCOUNTABILITY

1. (1) Every Co-operative shall keep at its registered office, at least the following accounts, records and documents, namely:-
   • (a) an upto-date copy of this Act;
   • (b) objectives of the Co-Operative;
   • (c) an up-to-date copy of its articles of association;
   • (d) the minutes books;
   • (e) account of all sums of money received and expended by the Co-operative and their respective purposes;
   • (f) account of all purchases and sales of goods by the Co-operative;
   • (g) account of the assets and liabilities of the Co-operative;
   • (h) a list of members, their fulfilment of responsibilities over the previous financial year, their eligibility to exercise their rights for the current financial year, updated within forty-five days of closure of the Co-operative's financial year; and
     • (i) all such other accounts, records and documents as may be required by this Act or other laws and regulations.
2. (2) Where a Co-operative has branch offices, summarised statements of accounts relating to such branch offices, shall be available at the registered office for each quarter, within fifteen days of the end of that quarter.
3. (3) Every Co-operative shall keep the books of account and other records for inspection by any director during business hours.
4. (4) Every Co-operative shall make available during its business hours to any member who so requests, copies of this act, articles of association, minute book of the general body, voters' list and such accounts and records of transactions that relate to that member, on payment of such fees, as may be decided by the board.

1. (1) A co-operative shall get its accounts audited by-
   • (a) a chartered accountant within the meaning of the Chartered Accountants Act, 1949; or
   • (b) by any other auditor, in state auditor’s cadre of Co-operative Societies, on payment of fees to be decided by the Auditor General of Co-operative Societies; or
   • (c) by a retired co-operative auditor/retired government auditor with minimum three years of experience.
2. (2) The co-operative, in its annual general body meeting shall resolve to appoint an auditor. This appointment shall be valid only until the conclusion of the next succeeding annual general body meeting.
3. (3) The remuneration of an auditor may be fixed by the general body or, if not so fixed, by the board.
4. (4) An auditor ceases to hold office when the auditor-
   • (a) resigns; or
   • (b) is removed from office under sub-section (6); or
   • (c) completes his/her term of office.
5. (5) The resignation of an auditor becomes effective when a written resignation is received by the Co-operative, or at the time specified in the resignation whichever is later, subject to acceptance by the board.
6. (6) The general body may, by a special resolution, remove an auditor from office.
7. (7) An auditor, who-
   • (a) resigns; or
   • (b) receives a notice of a general body meeting called for the purpose of removing him/her from office,- is entitled to submit to the general body a written statement giving the reasons for his/her resignation or the comments on the proposed removal, as the case may be.
8. (8) A vacancy created by the resignation, death or the removal shall be filled up by the general body. An auditor appointed to fill a vacancy shall hold office for the unexpired term of his/her predecessor.
9. (9) The auditor shall be sent notice of every general body meeting and, at the expense of the Co-operative, will be entitled to attend and be heard on matters relating to his/her duties as auditor and their exercise.
10. (10) It shall be the duty of the board to ensure that annual financial statements are prepared and presented for audit within forty-five days of closure of the Co-operative's financial year.
11. (11) Upon the reasonable demand of the auditor of a Co-operative, the present or former directors, members, managers or employees of the Co-operative shall-
    • (a) provide such access to records, documents, books, accounts and vouchers of the Co-operative; and
    • (b) furnish such information and explanations as are, in the opinion of the auditor, necessary to enable him/her to make the examination and report.
12. (12) It shall be the duty of the auditor to ensure that audited annual financial statements and his/her accompanying report are furnished to the Co-operative, within forty-five days of the submission of annual financial statements by the board.
13. (13) The auditor's report to the Co-operative shall-
    • (a) state whether the auditor has obtained all the information and explanations, which, to the best of his/her knowledge and belief, were necessary for the purpose of his/her audit;
    • (b) state whether the Co-operative's balance sheet and profit and expenditure account dealt with by the report are in agreement with the books of accounts;
    • (c) indicate the basis on which each asset and liability was valued, and make specific mention of any change in the manner in which such valuation was done in the year under audit;
    • (d) indicate the deficit/surplus, if any;
    • (e) indicate any deviation in actual expenses and income from the estimated expenses and income in the approved budget;
    • (f) indicate whether any director of the Co-operative during the Co-operative business year under audit, become ineligible under this Act to continue in office as a director; and
    • (g) state whether the decisions on disposal of surplus or assessment of deficit, of the general body, at its previous annual general body meeting were implemented correctly and completely or not.

1. (1) Within thirty days of the holding the annual general body meeting, every Co-operative shall file the following returns with the Registrar, namely:-
   • (a) annual report of activities;
   • (b) annual audited financial statements of accounts with auditor's report;
   • (c) statistical statement indicating name of the Co-operative, core services offered by the Co-operative to its members, total number of members as on the last day of the Co-operative business year, total number of employees, total liabilities expressed as-
     • (i) funds from members, and surpluses, and
     • (ii) funds from other external sources as on the last day of the financial year, quantum in rupees of services provided-
   • (a) to members, and
   • (b) to potential members; and surplus/deficit at the end of Co-operative business year; and
   • (d) annual disposal of surplus or management of deficit.
2. (2) Alongwith the returns specified under sub-section (1), every Co-operative shall furnish the following information to the Registrar, namely:-
   • (a) the date of the annual general body meeting at which the returns to be filed with the Registrar were considered and approved;
   • (b) the total number of members on the roll of the Co-operative who were eligible to vote on the date of such annual general body meeting;
   • (c) the total number of members present at such annual general body meeting;
   • (d) list of names of directors, their addresses and their terms of office;
   • (e) name and address of the auditor appointed for auditing the current year's accounts; and
   • (f) such other information as required by the Registrar which will enable him/her to decide whether the Co-operative has conducted its affairs in accordance with the co-operative principles and the provisions of this Act.
3. (3) If the returns and information referred to in sub-sections
4. (1) and (2), are not filed with the Registrar within the time specified under sub-section (1), it shall be treated as an offence under this Act and the Co-operative shall be penalised in accordance with the provisions of this Act.
5. (4) The Registrar shall submit an annual report to the Government by the first day of each calendar year, containing statistical information on the Co-operatives in the State compiled from the returns received, during the previous calendar year, under sub-section (1), with regard to the total number of Co-operatives in the State, their membership, employees, funds, services and surplus/deficit and the report shall also contain information on fees raised under this Act by the Registrar.
6. (5) A Co-operative may ask in writing to the Registrar seeking a copy of the Registrar's annual report, which shall be made available by the Registrar on reasonable fee, to be decided by the Registrar.

1. (1) The Registrar after giving a notice to the Co-operative concerned shall, on the application of a Secondary Co-operative to which the Co-operative concerned is affiliated, or of a creditor to whom the Co-operative is indebted, or of not less than one-third of the directors, or of not less than one-tenth of the members, hold an inquiry or cause an inquiry to be made into any specific subject or subjects relating to any gross violation of any of the provisions of this Act by the Co-operative.
2. (2) The Registrar shall order an inquiry under sub-section (1), only after receipt of such fee, from the applicant or the applicants, as deemed sufficient to meet the costs of the inquiry.
3. (3) The inquiry shall be completed within a period of one hundred and twenty days from the date of ordering the inquiry.
4. (4) If the inquiry is not completed within the time specified in sub-section (3), it shall lapse at the end of the said period, and the Registrar shall refund to the applicants the fee collected from them.
5. (5) The Registrar shall, within a period of thirty days from the date of the completion of the inquiry, as specified in sub-section
6. (3) or of the lapse of the inquiry as specified in sub-section (4), communicate the report of the inquiry or the reasons for the non-completion of the inquiry, as the case may be,-
   • (a) to the Co-operative concerned;
   • (b) to the applicants; and
   • (c) to any person, on payment of fee specified by the Registrar.

1. (1) A person who makes or assists in making a report, return, notice or other document required in this Act to be sent to the Registrar or to any other person which—
   • (a) contains an untrue statement;
   • (b) omits to state a material fact required in the report or necessary to make a statement; or
   • (c) contains misleading information, shall be guilty of an offence.
2. (2) The offender, on conviction through summary trial shall, in case of an individual, be liable to be punished with fine which may extend to five thousand rupees and if the offender be a person other than an individual, he shall be liable to a fine which may extend to ten thousand rupees.
3. (3) Where the person guilty of an offence under subsection
4. (1) is a body corporate and whether or not the body corporate has been promoted or convicted, any director or officer of the body corporate who knowingly aids or abets the offence shall be held guilty of an offence and liable for conviction through summary trial to be punished with fine which may extend to ten thousand rupees.
5. (4) No person shall be deemed to be guilty of an offence in pursuance of subsection
6. (1) or
7. (3) where the untrue statement or omission—
   • (a) was not known to him/her; or
   • (b) in the exercise of reasonable diligence, could not have been known to him/her.
8. (5) Every person who—
   • (a) without reasonable cause, contravenes a provision of this Act for which no penalty is otherwise provided; or
   • (b) fails to give any notice, send any return or document that is required, for the purposes of this Act, shall be deemed to be guilty of an offence and liable, on conviction through summary trial, to be punished with fine which may extend to one thousand rupees.
9. (6) Where a person is convicted of an offence in pursuance of this Act, the court may, in addition to any punishment imposed, order the person to comply with the provisions of this Act or the provision of the articles of association for the contravention of which he/she has been convicted.
10. (7) No prosecution for an offence under this Act shall commence after six calendar years from the date on which the subject matter of the complaint is detected.
11. (8) No civil remedy for an act or omission under this Act is suspended or affected by reason that the act or omission is an offence under this Act.
12. (9) No court inferior to that of a Magistrate of the first class shall try any offence under this Act.
13. (10) Any transaction or payment, contrary to the provisions of this Act or the articles of association, deficiency to the assets of the Co-operative, by breach of trust, wilful negligence, or otherwise, misappropriation, fraudulently or unauthorised retention of money or other property belonging to the Co-operative, caused by any present or past employee, member or the director of the Co-operative, shall be treated as an offence under this Act and in addition to the punishment as deemed proper, under the general law of the land, the court may pass order for recovery of such dues or property of the Co-operative.
14. (11) Any member of the Co-operative or Secondary Co-operative shall be the person competent to institute prosecution for any offence under this Act.

1. (1) The Registrar or any officer authorised in this behalf may, either before or after the institution of proceedings for an offence under this Act, permit any person charged with the offence, to compound the offence on payment of such sum, not exceeding ten thousand rupees.
2. (2) On payment of such sum as may be determined under sub-section (1), no further proceedings shall be taken against the person in respect of the same offence.
3. (3) Any order passed or proceeding recorded under sub-section
4. (1) shall be final and no appeal or application for revision shall lie thereon.

No suit, prosecution or other legal proceedings shall lie against the Registrar or any other officer empowered to exercise powers under this Act for anything which is in good faith done or intended to be done under this Act.