Liability

(1) No multi-State co-operative society with unlimited liability shall be registered after the commencement of this Act: Provided that where a multi-State co-operative society with unlimited liability was functioning before the commencement of this Act, such a society shall exercise the option within a period of one year from such commencement either to continue to function as such or to convert itself into a multi-State co-operative society with limited liability by following the procedure specified in sub-sections (2) to (4). (2) Subject to the provisions of this Act and the rules, a multi-State co-operative society may, by an amendment of its bye-laws, change the extent of its liability. (3) When a multi-State co-operative society has passed a resolution to change the extent of its liability, it shall give notice thereof in writing to all its members and creditors, and, notwithstanding anything contained in the bye-laws or contract to the contrary, any member or creditor shall, during the period of one month from the date of service of the notice upon him, have the option of withdrawing his shares, deposits or loans, as the case may be. (4) Any member or creditor who does not exercise his option within the period specified in sub-section (3) shall be deemed to have assented to the change. (5) An amendment of a bye-law of a multi-State co-operative society changing the extent of its liability shall not be registered or shall not take effect until either— (a) the assent thereto of all members and creditors has been obtained; or (b) all claims of members and creditors who exercise the option referred to in sub-section (3) within the period specified therein have been met in full or otherwise satisfied. (8) On the issue of an order under sub-section (7), the provisions of section 21 shall, so far as may be, apply to the multi-State co-operative society so divided or the multi-State co-operative societies so amalgamated. (9) Where a resolution passed by a multi-State co-operative society under this section involves the transfer of any assets and liabilities, the resolution shall, notwithstanding anything contained in any other law for the time being in force, be a sufficient conveyance to vest the assets and liabilities in the transferee without any further assurance. (10) Any co-operative society may, by a resolution passed by majority of not less than two-thirds of the members present and voting at a general meeting of such society, decide to merge into an existing multi-State co-operative society: Provided that such resolution shall be subject to the provisions of the respective State Co-operative Societies Act for the time being in force under which such co-operative society is registered.