Chapter XI WINDING UP AND DISSOLUTION OF CO-OPERATIVE SOCIETIES

1. (1) Where, on the basis of an audit conducted under section 54 or an enquiry held under section 55 or on receipt of an application made with a special resolution passed at a special general meeting called for the purpose, 67[or otherwise ] it comes to the knowledge of the Registrar that-
   • (a) the number of members or the amount of the paid up share capital in the society has reduced below the minimum level which is essential for registration of such class of society; or
   • (b) the society has not commenced to work even after two years of its registration, or has fulfilled the core objects for which it was constituted or has ceased to work in accordance with its core objectives 68[or has repeatedly been violating the provisions of the Act or the rules or its bye-laws ], he may, after giving the society an opportunity of making its representation, issue an order directing the winding up of such society.
2. (2) The Registrar may cancel an order for the winding up of a co-operative society, stating the reasons therefor, at any time, in any case where, in his opinion, the society should continue to exist. 69[(3) Notwithstanding anything contained in sub-section (1), an order for winding up of the apex Co-operative Bank or a Central Cooperative Bank shall be issued within one month of the recommendation of the Reserve Bank of India to that effect in public interest.]

Notwithstanding anything contained in this Act, in the case of an Insured Co-operative Bank -

1. (i) an order for the winding up, or an order sanctioning a scheme of compromise or arrangement or of amalgamation or reconstruction (including division or reorganisation) of the Bank may be made only with the previous sanction in writing of the Reserve Bank of India.
2. (ii) an order for the winding up of the Bank shall be made by the Registrar 70[within a month] if so required by the Reserve Bank of India in the circumstances referred to in section 13D of the Deposit Insurance and Credit Guarantee Corporation Act, 1961 (Central Act 47 of 1961);
3. (iii) if so required by the Reserve Bank of India in the public interest or for preventing the affairs of the Bank being conducted in a manner detrimental to the interests of the depositors or for securing the proper management of the Bank, an order shall be made 70[ by the Registrar within one month of such requisition ] for the removal of the committee or other managing body (by whatever name called) of the Bank and the appointment of an administrator therefor for such period or periods, not exceeding 71[one year ] in the aggregate, as may from time to time be specified by the Reserve Bank of India, and the administrator so appointed shall, after the expiry of his term of office, continue in office until the day immediately preceding the date of the first meeting of the new committee;
4. (iv) no appeal, revision or review shall lie or be permissible against an order such as is referred to in clauses (i), (ii) or (iii) made with the previous sanction in writing or on the requisition of the Reserve Bank of India and such order or sanction shall not be liable to be called in question in any manner;
5. (v) the Liquidator or the Insured Co-operative Bank or transferee Bank, as the case may be, shall be under an obligation to repay the deposit to the Deposit Insurance Corporation established under the Deposit Insurance and Credit Guarantee Corporation Act, 1961 (Central Act 47 of 1961) in the circumstances, to the extent and in the manner referred to in section 21 of that Act. Explanation -
6. (i) For the purpose of this section a Co-operative Bank means a Bank as has been defined in the Deposit Insurance and Credit Guarantee Corporation Act, 1961 (Central Act 47 of 1961).
7. (ii) Insured Co-operative Bank means a Co-operative Bank, which is an Insured Bank under the provisions of the Deposit Insurance and Credit Guarantee Corporation Act, 1961 (Central Act 47 of 1961).
8. (iii) Transferee Bank, in relation to an Insured Co-operative Bank, means a Co-operative Bank -

1. (a) with which such Insured Co-operative Bank is amalgamated; or
2. (b) to which the assets and liabilities of such Insured Cooperative Bank are transferred; or
3. (c) into which such Insured Co-operative Bank is divided or reorganised under the provisions of section 12 of 13 of this Act.

1. (1) Where the Registrar has made an order under section 61 for the winding up of a co-operative society he may appoint a Government servant, not below the rank of Inspector, co-operative to be a Liquidator for the purpose and fix his remuneration.
2. (2) 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, or damage to, such property, effects and claims.
3. (3) Where an appeal is preferred under section 104, an order of winding up of a co-operative society made under section 61 shall not operate thereafter until the order is confirmed in appeal: Provided that the Liquidator shall continue to have custody or control of the property, effects and actionable claims mentioned in subsection (2) and have authority to take the steps referred to in that subsection.
4. (4) Where an order of winding up of co-operative society is setaside in appeal, the property, effects and actionable claims of the society shall re-vest in the society

1. (1) Subject to any rules made in this behalf, the whole of the assets of a co-operative society in respect of which an order for winding up has been made shall vest in the liquidator appointed under section 63 from the date on which the order takes effect and the liquidator shall have power to realise such assets by sale or otherwise.
2. (2) Such liquidator shall also have power, subject to the control of the Registrar, -
   • (a) to institute and defend suits and other legal proceedings on behalf of the co-operative 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 past members or by the estates or nominees, heirs or legal representatives of deceased members or by any officers of former officers, to the assets of the society;
   • (c) to investigate all claims against the co-operative society and subject to the provisions of this Act, to decide questions of priority arising between claimants in accordance with the rules;
   • (d) to pay claims against the co-operative 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 determine by what persons and in what proportions the costs of the liquidation are to be borne;
   • (f) to determine whether any person is a member, past member or nominee of a 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 the affairs of the society;
   • (h) to carry on the 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 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 co-operative 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 to take any security for the discharge of any such call, liability, debt or claim and give a complete discharge in respect thereof;
   • (k) to fix the time or times within which creditors shall prove their debts and claims to be included for the benefit of any distribution made before those debts or claims are proved; 72[(l) to write off, subject to the approval of the Registrar, such claims of the society, whereafter all possible efforts, the claims are found irredeemable;
   • (m) to declare a claim against the society as 'not payable' in whole or in part, where the society does not have enough redeemable resources to pay such claims;
   • (n) to surrender and transfer an immovable property to the Government, where, in the opinion of the Registrar, it is in wider public interest to do so in the manner as may be prescribed;
   • (o) to entrust, with the special permission of the Government to that effect, an immovable property such as a community centre, which is being used by the local residents of the area for their general welfare and community activities, to a society of such residents exclusively formed to maintain such common facility without having any other objectives in its bye-laws, in the common interest of such residents: Provided that in case, it is found that the property entrusted to the society of the residents for community activities, is being used for an activity other than the community activities for which it was entrusted to the society, the property shall revert back to the Government :] 73[Provided Further that ] no liquidator shall determine the contribution, debt or dues to be recovered from a member, past member, or a nominee, heir or representative of a deceased member unless opportunity has been given to such member, past member or nominee, heir or representative of the deceased member of being heard.
3. (3) When the affairs of a co-operative 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. (1) The winding up proceedings of a society shall be completed within three years from the date of the order of the winding up, unless the period is extended by the Registrar: Provided that the Registrar shall not grant any extension for a period exceeding one year at a time and two years in the aggregate.
2. (2) If the winding up proceedings are not completed within such time, as may be extended by the Registrar under sub-section (1), the Registrar shall refer the matter to the Government with the reasons therefor and shall thereafter act as per the directions issued by the Government in each individual case.

After all the liabilities including the paid up share capital of the 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 body of the society and approved by the Registrar or where the general body has determined no such objectives, they shall be assigned by the Registrar in whole or in part to any or all of the following, namely :-

1. (a) an object to public utility;
2. (b) a charitable purpose, as defined in section 2 of the Charitable Endowments Act, 1890 (Central Act 6 of 1890);
3. (c) for development of Co-operative movement in the State and for official development of infrastructure to render better services to the co-operative societies; or may be placed in deposit with the financing bank until such time as a new society with similar objectives is registered when, with the consent of the Registrar, such surplus may be credited to the reserve fund of such new society. Explanation:- For the purpose of this section Registrar shall not include officers whom powers of the Registrar have been conferred under sub-section (2) of section 4.