Transfer of assets and liabilities, division, amalgamation and conversion of society.

(1) A society may, by a resolution decide to- (a) transfer its assets and liabilities in whole or in part to any other society which agrees to such transfer by a resolution; or (b) divide itself into two or more societies; or (c) convert itself into a society of a class different from the one to which it belongs. (2) Any two or more societies may, by a resolution, decide to amalgamate themselves and form a new society: Provided that where a society under sub-section (1) is a member or two or more societies under sub-section (2) are members of a federal society or in receipt of assistance from a financing bank, such society or societies shall obtain prior consent of the federal society or financing bank for any resolution under sub-section (1) or sub-section (2) as the case may be. (3) Every resolution of a society under sub-section (1) or sub-section (2) shall be passed at the general meeting by a majority of not less than two-thirds of members present and voting, and such resolution shall contain all particulars of the transfer, division, amalgamation or conversion as the case may be. (12) No suit or other legal proceeding shall be instituted or maintained or continued in any civil court, tribunal or other authority in respect of any order made under this section.

(13) It shall be competent for the Government to make rules and to give such directions as they deem fit to the Registrar to carry out the provisions of this section.

Explanation:- For the purpose of this section,-

(a) "sick co-operative society" means a co-operative society which has,-

(i) the accumulated losses in any financial year equal to fifty per cent or more of its average net worth during four years immediately preceding such financial year; or

(ii) fail to repay its debts within any three consecutive quarters on demand made in writing for its repayment by a creditor or creditors of such society;

(b) "net worth" means the sum total of the paid up capital and free reserves after deducting the provisions or expenses as may be prescribed;

(c) "free reserves" means all reserves created out of the profits and share premium account but does not include reserves created out of revaluation of assets, write back of depreciation provisions and amalgamation;

(d) "debt" means any liability (inclusive of interest), which is due and payable by a society, in cash or otherwise, whether secured or unsecured, or whether payable under a decree or order of any Civil Court or otherwise and legally recoverable from such society;

(e) the expression "cannot undertake its operations in a viable manner" shall mean the level of operations of the society in any financial year during four financial years immediately preceding the financial year in which the issue is being considered, is such that the income generated therefrom is not adequate to meet even the operating and establishment costs, current liabilities and to service the loans and working capital borrowings availed by it;

(f) "person" includes an individual, partnership, trust, company, corporation, co-operative society, an association of persons or a body of individuals, whether incorporated or not, and every artificial juridical persons, not falling within any of the preceding categories;

(g) "Implementation Secretariat" means the implementation Secretariat established in the Department of Public Enterprises by the State Government in G.O.Ms.No.150, General Administration (PE-II) Department, dated 30th April, 1998;

(h) "best offer" means the highest offer received that complies with the requirements specified in the call for tenders or offers.