SO

C.
SC MODULE 6

(Weeks 152-1814)

LIBACA
O
COLLEG
INTRODUCTION

For the learner:

Welcome to the SOC. SCI. 312 – Fundamentals of Cooperative Module 65 on

Settlement of Disputes, Winding Up and Dissolution of Cooperative Societies, and Execution of
Decrees and Awards. This module was designed to help you get familiar with the lesson and
how beneficial these topics can be. Different activities are presented for you to enjoy while
learning as you are also expected to improve and widen up your knowledge about these topics.

Kindly consider the following in using this module:

1. Use it with care. Do not put unnecessary mark/s on any part of this module.
2. Read the instruction carefully before answering or doing the task.
3. Observe honesty and integrity in doing the exercises and activities.
4. Return this module to your instructor once you are through on or before the deadline.

If you have any clarification on the given tasks in this module, kindly contact your
instructor. We learn as one.

We hope that through this module, you will be able to identify and understand what
Cooperation is all about.
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CONTENT

Appeal, Revision and Review

Important Power of Registrar and Government

Registrar of Cooperative societies enjoys the following powers in area of Registration, Working
and Management of Society:

(1) To register or refuse any proposed co-operative society if it is likely to be economically

unsound or the registration of which may have an adverse effect on the co-operative
movement.
(2) To register or to refuse to register any proposed society if any conditions of registration are
not fulfilled.
(3) To decide the question whether a person is agriculturist or not, or whether any person
resides in the area of operation or not.
(4) To classify the society and also to change its classification. He may alter classification;
allow any society to undertake activities belonging to another class of societies.
(5) To register or to refuse to register an amendment to the byelaws of a society.
(6) To register/ approve the subsidiary byelaws formulated by the Committee relating to
business rules, service rules of a employees etc.
(7) To register or to refuse the proposal of amalgamation, division, conversion, or transfer of
assets& liabilities of societies.
(8) To hear appeals against the decision of the managing committee relating to admission of
person as member and to issue orders according to the merits of the case.
(9) To approve or reject of the proposals of the general meeting regarding expulsion of any
member.
(10) To supersede the managing committee of a society or to remove any member thereof and
to appoint a new committee or an administrator in its place for a limited time.
(11) To enforce performance of certain obligations upon any society or its officers, falling which
the Registrar is empowered to impose fine.
(12) To seize records or take control of records, cash and other assets of a society in certain
conditions.
In area of Audit, Inquiry and Inspection.

(1) To prepare the panel of auditors from which the general body of a society can appoint its
auditor.
(2) To order re-audit of the society under special circumstance.
(3) To direct these society to rectify the defects pointed out in the audit-memo.
(4) To institute an Inquiry into the affairs of a society of his own motion or otherwise and to
apportion its costs and to arrange to recover such costs from the persons responsible.
(5) To institute an inspection of the books of a society and to apportion its cost and to arrange
to recover it.
(6) To assess damages against the delinquent promoters, office bearers, etc. In certain
conditions by himself or, through a person authorized by him.
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Miscellaneous

(1)To permit any co-operative bank to function as agricultural Rural Development Bank.
(2) To grant permission to take cognizance of an offence under the Cooperative Societies Act.
(3) To hear and disposes of certain appeals where appeals lies to him.
(4)To call for and examine any order or decision of his sub-ordinate (except those in the
preerview of the Tribunal) and modify, annul, or revise such order or decision, if necessary.
These powers are known as Revisionary Powers.
(5) To recover certain sums and arrears by himself or through his own agency.
(6)To supervise, guide and control the persons appointed by the Govt. to assist him.
(7)To prescribe books and returns to be maintained or furnished by a society.
(8)To grant permission to exceed the borrowing capacity of a society.
(9)To restrict transactions of a society with a particular non-member.
(10)To permit societies in regard to utilization of their Reserve Fund in their business under
special circumstances.
(11)To direct the committee to convene the special general meeting of a society within one
month. On failure of a Committee to follow the directions, the Registrar himself convene such
special general meeting of a society.
(12) To grant extension of time for holding the annual general meeting up to three months.
(13) To exercise any other powers conferred upon him under the Act, Rules and byelaws of a
society.
Important Power of State Government

(1) To appoint a person to be the Registrar and such other persons to assist him. Similarly to
appoint a person to be the Director of Cooperative audit and to appoint such other persons to
assist him.
(2) To exempt any society from any condition with regard to registration of a society in special
cases.
(3) To issue directions to the Registrar with regard to pending registration proposal or
proposals.
(4) To relax conditions as regards holding of shares by a individual member.
(5) To exempt societies from payment of certain taxes, duties, fees, etc.
(6) To prohibit, restrict or regulate the lending of money by any society on the security of any
property.
(7) To permit societies or to direct societies regarding utilization of Reserve Fund.
(8) To prescribe rules regarding qualifications for the posts of manager, secretary, etc. of a
society.
(9) To constitute or recognize federal authorities (societies) and direct any society to make
yearly contribution to such federal societies.
(10) To guarantee the debentures of Agricultural and Rural Development Banks.
(11) To grant sanction for prosecution against an employer for non-deduction or non-
remittance of moneys so deducted from salaries of the employees.
(12) To constitute “Co-operative Tribunal” and approve its rules.
(13) To appoint members of the Tribunal.
((14) To hear appeal against the orders or decisions of the Registrar in certain cases.
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(15) To exempt any society or class of societies from any of the provisions of the Act or modify
any provision of the Act and apply it to any society or class of societies in public interest.
(16) To make rules on matters provided in Act and place the rules on the table of the
Legislature for a total period of 14 days, either in one session or in successive sessions.
The Government shall constitute a single member Tribunal to exercise the powers and
discharge the functions conferred on the Tribunal under the Act. The Tribunal shall be headed
by a District Judge and the term, salary and allowance and other conditions of service shall be
such as may be decided by Government from time to time. The Government shall make rules
for regulating the procedure for the disposal of the business of the Tribunal.

Appeals to Tribunal

(1) Any person aggrieved by the order or award of the Cooperative Arbitration Court or the
Registrar or the Empowered Officer or the Arbitrator in respect of settlement of disputes under
the Act, may, within sixty days from the date of such decision or award, as the case may be,
appeal to the Tribunal and the Tribunal, may pass such order on the appeal as it may deem fit.
The Tribunal shall decide the appeal within 6 months and arrange to communicate its order to
the parties within 15 days from the date of its order.
(2) The order made by the Tribunal shall be final
Revision by Tribunal

The Tribunal may call for and examine the record of any proceedings in which an appeal
lies to it for the purpose of satisfying itself as to the legality or propriety of any decision or order
passed and if in any case it shall appear to the Tribunal that any such decision or order should
be modified, annulled or revised, the Tribunal may pass such order thereon as it may deem fit;

Provided that the Tribunal shall not take any action if;

(a) The time for appeal against the decision or order has not expired; or
(b) The decision or order has been made the subject matter of an appeal; Provided further that
no order shall be made unless notice has been given to all interested parties and they have
been given a reasonable opportunity of being heard.

Review of Order by Tribunal

(1) The Tribunal may, either on the application of the Registrar or on the application of any
party, review its own order in any case and pass in reference thereto such order as it thinks fit;
Provided that no such application shall be entertained unless the tribunal is satisfied that
there has been a discovery of new and important matter or evidence which after the exercise of
due diligence was not within the knowledge of the applicant or could not be produced by him at
the time when its order was made or that there has been some mistake or error apparent on
the face of the record or that there is any other sufficient reason for reviewing its order;
Provided further that no such order shall be made unless notice has been given to all
interested parties and they have been given a reasonable opportunity of being heard.
(2) An application for review at (1) by any party shall be made within ninety days from the date
of communication of the order of the Tribunal.
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(a) on a certificate signed by the Registrar or any person authorized by him in this behalf, be
deemed to be a decree of a civil court and shall be executed in the same manner as a decree
of such court; or
(b) where the order is for the recovery of money, be executed according to the law and under
the rules for the time being in force for the recovery of arrears of public revenue due on land.
For this purpose application for such recovery shall be made to the Collector and shall be
accompanied by a certificate signed by the Registrar or by any person authorised by him in this
behalf;
(c) be executed by the Registrar or any other person subordinate to him empowered by the
Registrar in this behalf, by the attachment and sale or sale without attachment of any property
of the person or a society against whom the order, decision or award has been obtained or
passed.
Thus, the law provide for three alternative modes of execution- by the civil court, or by
the revenue authorities, or by the Registrar through his Sale Officers. However, the law
explicitly makes it very clear that the decree holder once he makes the choice of the agency he
wants to proceed with, cannot alter his decision later in favour of an alternative agency.
Registrar or person empowered by him to be civil court for certain purpose

The Registrar or any person empowered by him in this behalf shall be deemed, , to be a
civil court for the purposes of Article 136 of the Schedule to the Limitation Act, 1963(Central
Act 36 of 1963) when exercising any power under this Act when passing any orders on any
application made to him for such recovery

Attachment of property before award or order

If the Registrar is satisfied on an application, report, inquiry, or otherwise, that any

person with intent to delay or obstruct the enforcement of any order, decision or award that
may be made against him under the provisions of this Act:-

(a) is about to dispose of the whole or any part of his property, or

(b) is about to remove the whole or any part of his property from the jurisdiction of the
Registrar, the arbitrator, or the liquidator, as the case may be,
he may direct the attachment of the said property by order in writing. Any such attachment
shall have the same effect as if made by a competent civil court.
If the final order of the Registrar goes against the person, whose property is attached
before the final judgment, there is no need for reattaching the said property afresh. On the
other hand, if the final judgment is in favour of the person whose property is attached, then the
Registrar is required to order the release of the property from attachment.

Recovery of sum due to Government

(1) (1) All sums due from a society or from an officer or member or past member or
deceased member of a society as such to the government, including any costs awarded
to the Government under any provision of this Act may, on a certificate issued by the
Registrar in this behalf, be recovered in the same manner as arrears of public revenue
due on land.
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(2) Sums due from a society to the Government and recoverable under (1) above, may be
recovered first, from the property of the society and secondly, in the case of a society the
liability of the members of which is limited, from the members, past members or the estates of
deceased members subject to the limit of their liability, and in case of other societies from the
members, past members or the estates of the deceased members.
Provided that the liability of past members and the estates of deceased members shall
in all cases be limited by time to two years from the date on which the member ceases to be a
member or on the date on which he dies, as the case may be.
Procedure for Execution of Decision, Award or Order

The detailed procedure followed by the Registrar or the person authorized by him in this
regard in executing an order or award under a typical law is discussed in the following
paragraphs. The topics covered below include the manner of filing the execution petition, the
procedure followed in seizure and sale of movable assets of the defaulter, the procedure
involved in attachment and sale or sale without attachment of the immovable property of the
defaulter, procedure for setting aside the sale by the Registrar and the confirmation of sale and
issuing of the sale certificate by the Registrar.

Manner of Filling Execution Petition by the Decree Holder

(1) If any decision, award or order has to be executed as provided under the co-operative law,
the holder of such order, decision or award (hereinafter referred to as the “decree holder”) shall
apply to the Registrar.
(2) Every such application, shall be made in the form specified by the Registrar and shall be
signed by the decree-holder and shall be accompanied by the original of the order, decision or
award and the receipted chalan obtained from the Treasury for payment of fees, specified by
the Registrar. The decree holder may indicate whether he wished to proceed against the
immovable property or to secure the attachment of any movable property.
(3) On receipt of such application, the Registrar shall verify the correctness and genuineness of
the particulars set forth in the application, with the records, if any available in his office and
forward it to the Sale Officer. The Sale Officer will prepare a demand notice, in writing in
duplicate, in the form prescribed by the Registrar setting forth the name of defaulter and the
amount due from him and serve it on the defaulter concerned.
Where a defaulter dies before the decree has been fully satisfied, an application under sub-rule
(1) may be made against the legal representative of the deceased and thereupon all the
provisions of this Rule shall apply, as if such legal representative were the defaulter.

Order in Which Proceeding shall be taken

Unless the decree holder has expressed a desire that proceedings shall be taken in a
particular order as laid down in sub-rule (2) of the rules mentioned in the just preceding
paragraph, execution shall ordinarily be taken in the following manner:
 Movable property of the defaulter shall be first proceeded against but this shall not
preclude the immovable property being proceeded against simultaneously in case of necessity;

If there is no movable property or if sale proceeds of the movable property or properties

available for attachment and sale are considered to be insufficient to meet in full the demand of
the decree-holder, the immovable property mortgaged to the decree-holder, or other
immovable property belonging to the defaulter may be proceeded against.

Procedure for Seizure and Sale of Movable Property

In the seizure and sale of movable properties the following rules shall be observed

(i) The sale officer shall, after giving previous notice to the decree-holder proceed to the village
where the defaulter resides or the property to be distrained is situated and serve the demand
notice upon the defaulter, if he is present. If the amount due together with the expenses not
paid at once, the sale officer shall make the distress and shall immediately deliver to the
defaulter a list or inventory of the property distrained and an intimation of the place, day or hour
at which the distrained property will be brought to sale. In cases where the defaulter is not
present, the Sale Officer shall serve the demand notice on some adult member of his family, or
on his authorised agent or when such service cannot be effected shall affix a copy of the
demand notice on some conspicuous part of his residence. He shall then proceed to make the
distress and shall affix the list of the property attached on the usual place of residence of the
defaulter endorsing thereon the place where the property may be lodged or kept and an
intimation of the place, day and hour of sale, if the amounts due are not previously discharged.
(ii) After the distress is made, the Sale Officer may arrange for the custody of the property
attached with the decree-holder or otherwise. If the Sale Officer requires the decree-holder to
undertake the custody of the property distrained, he shall be bound to do so and any loss
incurred, owing to his negligence shall be made good by the decree-holder. If the attached
property is livestock, the decree-holder shall be responsible for providing the fodder, thereof. In
such cases the decree-holder shall be entitled to realise from the defaulter, the expenses
incurred by him for maintaining the livestock or keeping intact the property distrained. The Sale
Officer or the decree- holder shall not work the livestock or make use of the goods or effects
distrained.
(iii) The Sale Officer may, at the instance of the defaulter or of any person claiming an interest
in such property, leave it in the village or place where it was attached in the charge of such
defaulter or person if he enters into a contract in the form specified by the Registrar with one or
more sufficient sureties for the production of the property at the place of sale when called for.
(iv) The distress shall be made after sun rise and before sun set and not at any other time.
(v) The distress made shall not be excessive, that is to say, the property distrained, shall as
nearly as possible, be proportionate to the sum due by the defaulter together with interest and
all expenses incidental to the distraint, detention and sale, and it shall not include, (a) the
ordinary wearing apparel of the defaulter and his family; and (b) his implements of husbandry
and ploughing cattle, provided that the implements of husbandry over which the decree- holder
has a first charge may be distrained.
(vi) If crops or ungathered products of the land belonging to the defaulter are attached, the sale
officer may cause them to be sole when fit for reaping or gathering or at his option may cause
them to be reaped or gathered in due season and stored in proper place until sole.
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In the latter case the expenses of reaping or gathering and storing such crops or products
shall be defrayed by the owner upon his redeeming the property or from the proceeds of the
sale in the event of its being sold.
(vii) It shall be lawful for the Sale Officer to force open and enter any cow house, granary,
godown, out-house or other building and he may also enter any dwelling house, the outer door
of which may be open and may break open the door of any room in such dwelling house, for
the purpose of attaching property belonging to a defaulter and lodged therein
Provided that it shall not be lawful for a Sale Officer to break open or enter any
apartments in such dwelling house appropriated for the occupation of women except as
provided under clause.

Where the sale officer may have reason to suppose that the property of defaulter is
lodged within a dwelling house the outer door of which may be shut, or within any apartments
appropriated to women, which by the usage of the country, are considered private, the sale
officer shall represent the fact to the officer-in-charge of the nearest police station. On such
representation, the officer- in-charge of the police station shall send a Police Officer to the spot
in the presence of whom the Sale Officer may force open the outer door of such dwelling
house and in like manner as he may break open the door of any room within the house. The
Sale Officer may also, in the presence of the Police Officer and after giving due notice for the
removal of women within the apartment enter the said apartment for the purpose of distraining
the defaulter’s property, if any, deposited therein, but such property, if found shall immediately
remove from such apartment, so as to enable the women to occupy it.

Officer shall on the day previous to and on the day of sale cause a proclamation of the
time and place of the intended sale to be made by beat of drum, if such mode of publicity is
found unavoidable, in the village in which the defaulter resides and in such other place or
places as the Registrar may consider necessary to give due publicity to the sale. No sale shall
take place until after the expiration of a period of fifteen days from the date on which the sale
notice has been served or affixed in the manner prescribed in clause (i)

Provided that where the property seized is subject to speedy and natural decay, or
where the expenses of keeping it in custody is likely to exceed its value, the sale officer may
sell it at any time, before the expiry of the said period of fifteen days, unless the amount due is
sooner paid.

(x) At the appointed time, the property shall be sold in public auction in terms of one or more
lots as may be decided by the sale officer and shall be disposed of to the highest bidder:

Provided that it shall be open to the sale officer to decline to accept the highest bid
where the price offered appears to be unduly low or for other reasons.
 Provided further that the Registrar or the Sale officer may in his discretion adjourn the
sale to a specified day and hour, recording his reasons for such adjournment. Where a sale is
so adjourned for a longer period than seven days a fresh proclamation under clause (ix) shall
be made unless the defaulter consents to waive it.

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(xi) Where the property is sold for more than the amount due, the excess amount, after
reducing the interest and expenses of process and other charges shall be paid to the defaulter.
(xii) The property shall be paid for in cash at the time of sale or as soon thereafter as the sale
officer shall appoint and the purchaser shall not be permitted to carry away any part of the
property until he has paid for it in full. Where the purchaser fails in the payment of purchase
money, the property shall be resold.
(xiii) Where it is proved to the satisfaction of any Civil Court of competent jurisdiction that any
property which has been distrained under these rules has been forcibly or clandestinely
removed by any person, the court may order forthwith such property to be restored to the Sale
Officer.
where prior to the day fixed for sale, the defaulter or any person acting in his behalf or any
person claiming an interest in the property attached pays the full amount due including interest,
batta and other costs incurred in attaching the property, the sale officer shall cancel the order
of attachment and release the property forthwith.
Procedure in attachment and sale of immovable property

In the attachment and sale or sale without attachment of immovable property, the
following rules shall be observed:-
(a) The application filing the execution petition by the decree holder shall contain a description
of the immovable property to be proceeded against with details sufficient for the identification,
specifying the boundaries, survey number etc. and the defaulter’s share or interest in such
property, to the best of the belief and knowledge of the decree holder and so far as he has
been able to ascertain it.
(b) The demand notice issued by the Sale Officer shall contain the name of the defaulter, the
amount due, including the expensed, if any, and the batta to be paid, to the person, who shall
serve the demand notice, the time allowed for payment and in case of non-payment the
particulars of the properties to be attached and sold or sold without attachment as the case
may be. This demand notice shall be served on the defaulter in the manner provided in these
rules;
Provided that where the Registrar is satisfied that a defaulter with intent to defeat or delay the
execution proceedings against him, is about to dispose of the whole or any part of his property,
the demand notice issued shall not allow any time to the defaulter for payment of the amount
due by him and the property of the defaulter shall be attached forthwith.
(c) If the defaulter fails to pay the amount specified in the demand notice within the time
stipulated therein, the sale officer shall proceed to attach and sell or sell without attachment as
the case may be the immovable property noted in the application for execution in the following
manner.
(d) Where attachment is required before sale, the officer shall cause a notice of attachment to
be served on the defaulter. A copy of the attachment notice shall also be affixed in some
conspicuous part of the defaulter’s last known place of abode. The notice shall specify the
amount due with interest, cost etc. and shall set forth that unless the whole amount inclusive of
interest, Cost, etc. be paid with the date therein mentioned the immovable property concerned
will be brought to sale. A copy of the notice shall be sent to the decree-holder.
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The notice of attachment shall be published on the concerned village and Society offices and
also by beat of horse carriage
(e) Proclamation of sale shall be published by affixing a notice in the offices of the Registrar,
the Thahsildar and of the Society concerned, at least thirty days before the date fixed for the
sale and also by the beat of Tom-tom in the village on two consecutive days previous to the
date of sale and on the date of sale prior to the commencement of the sale. Such proclamation
shall, where attachment is required before sale, be made after the attachment has been
effected. Notice shall also be given to the decree-holder and the defaulter. It shall specify the
date, time and place of sale and specify as fairly and accurately as possible ( I) the property to
be sole (ii) any encumbrance to which the property is liable (iii) the amount for the recovery of
which sale is ordered ; and (iv) every other matter which the sale officer considers material for
a purchaser to know in order to judge the nature and value of the property.
(f) When any immovable property is sold under these rules, the sale shall be subject to the
prior encumbrances on the property, if any. The decree-holder shall when the amount for the
realisation of which the sale is held exceed Rs. 100, furnish to the sale officer within such time
as may be fixed by him or the Registrar an encumbrance certificate from the Registration
Department for a period of not less than twelve years prior to the date of attachment of the
property sought to be sold. The time for production of encumbrance certificate may be
extended at the discretion of sale officer or Registrar. The sale shall be by public auction to the
highest bidder, provided that it shall be open to the sale officer to decline to accept the highest
bid where the price offered appears to be unduly low or for other reasons and provided also
that the Registrar or sale officer may in his discretion adjourn the sale to a specified day and
hour, recording his reasons for such adjournment. Where a sale is so adjourned for a longer
period than 7 days, a fresh proclamation under clause (e) shall be made, unless the defaulter
expresses his consent in writing to waive it. The sale shall be held after expiry of not less than
30 days calculated from the date on which notice of the proclamation was affixed in the office
of the Registrar, Taluk Office and the Society office whichever is later. The time and place of
sale shall be fixed by the Registrar and place of sale shall be the village where the property to
be sold is situated or such adjoining prominent place of public resort as may be fixed by the
Registrar.
Provided that in case where an encumbrance certificate is not obtainable owing to the
destruction of the connected records, an affidavit from the village officer in regard to the
encumbrances known to him supported by a certificate from the Registration Department that
the encumbrance certificate cannot be granted owing to the destruction of the connected
records, shall be accepted in the place of an encumbrance certificate.
(g) A sum of money equal to 15% of the price of the immovable property shall be deposited by
the purchaser with the sale officer at the time of purchase and in default of such deposit; the
property shall forthwith be resold: Provided that where the decree-holder is the purchaser and
is entitled to set off the purchase money under clause (k) the sale officer shall dispense with
the requirements of this clause.
(h) The remainder of the purchase money and the amount required for the general stamp for
the certificate under sub-rule (5) of R.83 shall be paid within 15 days from the date of sale:
Provided that the time for payment of the cost of the stamp may, for good and sufficient reason
be extended at the discretion of the Registrar up to thirty days from the date of sale:
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Provided further that in calculating the amount to be paid under this rule, the purchaser
shall have the advantage of any set off to which he may be entitled under clause (k).
(i) In default of payment within the period mentioned in clause (h) the deposit may, if the
Registrar thinks fair, after defraying the expenses of the sale be forfeited to the Government
and the defaulting purchaser shall forfeit all claims to the property or to any part of the sum of
which it may subsequently be sold.
(j) Every resale of immovable property in default of payments of the amounts mentioned in
clause (h) within the period allowed for such payments shall be made after the issue of fresh
proclamation in the manner and for the period hereinbefore specified for the sale.
(k) Where decree holder purchases the property, the purchase money and the amount due on
the decree shall be set off against one another and the sale officer shall enter up satisfaction of
the decree in whole or in part accordingly.
(l) Where prior to the date fixed for a sale, the defaulter or any person acting on his behalf or
any person claiming an interest in the property sought to be sole tenders, payments of the full
amount due together with interest, batta and other expense incurred in bringing the property to
sale, including the expenses of attachment, if any, the sale officer shall forthwith release the
property after canceling orders of attachment, if any, in force,
Application to Set Aside Sale on Deposit

1) Where immovable property has been sold by the sale officer, any person either owning such
property or holding an interest therein by virtue of a title acquired before such sale may apply
to have the sale set aside on his depositing with the Registrar;
(a) for payment to the purchaser, a sum equal to 5% of the purchase money, and
(b) for payment to the decree-holder, the amount of arrears specified in the proclamation of
sale for the recovery of which the sale ordered together with interest thereon and the expenses
of attachment, if any, and sale and other costs due in respect of such amount less any amount
which may since the date of such proclamation have been received by such decree-holder.
(2) If such deposit and application are made within thirty days from the date of sale, the
Registrar shall pass an order setting aside the sale and shall repay to the purchaser the
purchase money so far as it has been deposited together with the 5 per cent deposited by the
applicant:
Provided that if more persons than one have made deposit and application under this
rule, the application of the first depositor to the officer authorized to set aside the sale shall be
accepted.

(3) If a person applies to set aside the sale of immovable property, he shall not be entitled to
make an application under this rule.

Application to Set Aside on Ground of Irregularity or Fraud

(1) (1) At any time, within thirty days from the date of sale of immovable property, the
decree-holder or any person entitled to share in ratable distribution of the assets or
whose interests are affected by the sale, may apply to the Registrar to set aside the sale
on the ground of a material irregularity or mistake or fraud in publishing or conducting
it:

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Provided that no sale shall be set aside on the ground aforesaid unless the Registrar is
satisfied that the applicant has sustained substantial injury by reason of such irregularity,
mistake and fraud.
(2) If the application be allowed, the Registrar shall set aside the sale and may direct a fresh
one.
(3) On the expiration of thirty days from the date of sale, if no application to have the sale set
aside is made or if such application has been made and rejected, the Registrar shall make an
order confirming the sale:
Provided that, if he shall have reason to think that the sale ought to be set aside
notwithstanding that no such application which has been made or on ground other than those
alleged in any application which has been made and rejected, he may, after recording his
reason in writing set aside the sale.
(4) Whenever the sale of any immovable property is not so confirmed or is set aside, the
deposit or purchase money, as the case may be, shall be returned to the purchaser.
(5) After the confirmation of any such sale, the Registrar shall grant a certificate of sale bearing
his seal and signature to the purchaser. Such certificate shall state the property sold and the
name of the purchaser and it shall be conclusive evidence of the fact to the purchase in all
court and Tribunals, where it may be necessary to prove it and no proof of the seal or signature
of the Registrar shall be necessary unless the authority before whom it is produced shall have
reason to doubt its genuineness. But such certificate shall be registered under the Registration
Act for the time being in force, at the cost of the parties to whom they are issued.
(6) An order made under this rule shall subject only to appeal to Government, be final and shall
be liable to be questioned in any suit or other legal proceedings.
Delivery of Possession

Where any lawful purchaser of immovable property is resisted and prevented by any
person other than a person,(not being the defaulter)claiming in good faith to be in possession
of the property on his own account, from obtaining possession of the immovable property
purchased, any court of competent jurisdiction, on application and production of the certificate
of sale above, shall cause the proper process to be issued for the purpose of putting such
purchaser in the same manner as in the immovable property purchased had been decreed to
the purchaser by a decision of the court.

Sale of Immovable Property to be Proportionate to the Amount Due

It shall be lawful for the sale officer to sell the whole or any portion of the immovable
property of defaulter in discharge of money due:
 Provided that so far as may be practicable, no larger section of immovable property
shall be sole than may be sufficient to discharge the amount due with interest and expenses of
attachment, if any, on sale.

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Properties and Funds of Cooperative Societies

Co-operatives do recognize capital as a factor of production but is given only secondary
importance. The very philosophy of co-operation is centered on man as a human being and
therefore focuses on maximizing returns on his labour, either directly(as is the case in workers’
societies), or indirectly on the products/services produced/consumed by him. Capital is
compensated, but the returns on it by principle shall be limited. Further, the co-operative model
envisages steady and sustained development, avoiding steep cyclical fluctuations
characterized by capitalist development. Hence, investment of a co-operative’s funds shall
invariably be non speculative. The surplus arising from co-operative business shall be
distributed strictly in consonance with co-operative principles i.e. equity in distribution and ear
marking a portion of surplus for promoting co-operative education, training etc. The legal
system governing co-operatives should necessarily reflect the above values and give effect to
them. Examination of the legal provisions relating to the properties and funds of co-operatives
will amplify the points made above. .

Funds Not to be Divided

No part of the funds other than the net profits of a society shall be paid by way of bonus
or dividend or otherwise distributed amongst its members provided that a member may be paid
such remuneration, allowances or honoraria on such scale as may be laid down by the bye-
laws for any services rendered by him to the society.

Disposal of Net Profit

A cooperative Society out of its net profit in any year can;

(a) transfer an amount not to be less than fifteen per cent of the net profits to the reserve fund,
(b) credit such portion of the net profits, not exceeding five per cent , as may be prescribed, to
the Co-operative Education Fund, and
(c) transfer 10% towards Member Relief Fund.
The balance of net profits may be utilised for all or any of the following purpose,
namely:

(a) payment of dividends to members on their paid up share capital at such rate (not exceeding
twenty five per cent) as may be prescribed,
(b) payment of bonus to members on the amount or volume of business done by them with the
society , to the extent and in the manner specified in the bye-laws,
(c) Constitution of or, or contributions to , such special funds as may be specified in the bye-
laws,
(d) 7% of the net profit to Agricultural Credit Stabilization Fund,
(e) 5% of net profit to the Professional Education Fund maintained by the Registrar,
(f) donations of amounts not exceeding ten per cent of the net profits for any charitable
purpose as defined in S.2 of the Charitable Endowments Act, 1890 (Central Act 6 of 1890),and
(g) balance of net profit may be utilized for any or all of the purposes specified in the bye-laws
except for Payment of bonus to employees.

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Composition of Cooperative Education Fund

Every society having a net profit of Rs, 1,000/- and above shall set apart a sum
calculated at five per cent of the net profit for contribution to the Co-operative Education Fund
subject to maximum of 60,000 rupees. The sum so allocated shall be remitted to the Credit of
Co-operative Education Fund within two months of the date of receipt of the audit certificate.
The Co-operative Education Fund shall be maintained and administered by the State Co-
operative Union. it shall be utilized for the furtherance of Co-operative Education, including
propaganda as contemplated in the Act and Rules and Regulations framed by the union and
approved by Government. No part of the Co-operative Education Fund shall be spent by the
Union except in accordance with the regulations of the union and the General directions that
may be issued by the Registrar or Government from time to time. The Union shall maintain
separate account for this fund in accordance with the regulations to be framed by the union,
with the approval of Government. The regulations shall, among other things provide for
contributions to the All India Co-operative Union and assistance to Circle Co-operative Unions.

The Rules in Kerala also provide for contribution to Co-operative Education Fund by
certain large sized societies, both at the primary and federal levels, every year at fixed rates,
even if they are working under loss. The legality of such a rule however is questionable, as the
Act provide such contribution only out of net profit.

Membership of Cooperative Society

A co-operative society is an autonomous association of persons united voluntarily for

meeting their socio, economic and cultural needs and aspirations through a jointly owned and
democratically managed enterprise. Thus, persons become members of a society voluntarily,
remain as members voluntarily and even exit from the membership voluntarily. As such, a co-
operative as an association shall have the freedom to decide whether or not to admit a person
as a member. A co-operative can be selective in admitting a new person as a member; it
cannot resort to restrictive practices in admitting new members, as it is bound by the principle
of open membership. A co-operative society can not deny membership on artificial
considerations of caste, religion, race language etc. A cooperative society can extend its
services to a new member without causing any diminution of its services to existing members
etc.

Eligibility of Membership

The following persons may be admitted as members of a society.

(a) an individual who has attained the age of eighteen years, is of sound mind and is resident
within the area of operation of the society or is in possession of landed property in the area of
operation of the society. Exemption from age limit is provided to membership in school or
college societies.
(b) any other society :(b) any other society
(c) local self Government
(d) the Government

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(e) anybody of persons, whether incorporated or not and whether or not established by or
under any law, if such body is approved by the Government in this behalf by general or special
order.
As pointed out earlier, admission to membership is not automatic and the law puts up
several conditions:

(a) in a society formed for the promotion of the economic interest of its members through a
specified activity, no person other than who is likely to be benefited directly by such activity
may be admitted as a member,
(b) in a society formed exclusively for the benefit of persons engaged in any particular industry,
no person who is not an actual worker in the industry shall be admitted in excess of such
percentage of the total membership of the society as may be prescribed;
(c) the Coffee Board, the Rubber Board and any other statutory or non-statutory Board,
committee or Corporation constituted for the purpose of the development of an industry, may
be admitted as a member of a society engaged in marketing and processing of the products of
the industry concerned and formed for the workers and growers of such industry, so however
that no such Board, Committee or Corporation shall be admitted as a member of a co-
operative credit society.
The Principle of Open Membership is upheld by the law as membership in any society
other than a society formed for the benefit of the Scheduled Caste or the Scheduled Tribes
shall not be refused merely on the ground that a person belongs or does not belong to a
particular religion, race, community, caste, sect or denomination. A decision on an application
for membership shall be taken by the Management Committee within two months from the date
of receipt of the application. In case the Management Committee fails to decide within two
months, the law confers the legal right to the applicant to appeal to the Registrar, who will have
to decide on such appeal within one month.

Where a person is refused admission as a member in a society, the decision of the

Management Committee refusing admission together with the reasons thereof shall be
communicated by the society to that person within a period of fifteen days from the date of the
decision. Appeal lies to the Registrar against such order of refusal and the appeal shall be filed
by the person whose membership application is refused within one month from the date of
receiving the order of refusal.

No person shall be admitted as members of a society unless

(a) he has applied in writing in the form if any laid down by the society,
(b) his application is approved by the committee of the society,
(c) he has fulfilled all other conditions laid down in the Act, Rules and Bye-laws,
(d) he has fulfilled all other conditions laid down in the Act, Rules and Bye-laws,

Non-eligibility Criteria for Membership of Cooperative Soiety

A member can be denied permission for membership in following cases:

(a) (a) has not attained the age of 18 years, exception being societies formed for the
benefit of students of schools and colleges; or
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(b) is not a resident of or does not own or possess land within the area of operation of the
society; or
(c) has applied to be adjudicated as an insolvent or is an undischarged insolvent; or
(d) has been sentenced for any offence, other than an offence of a political character or an
offence not involving moral turpitude and a period of five years has not elapsed from the date
of expiry of the sentence; or
(e) is a paid employee of the Society or of its financing Bank or of any society for which it is the
financing Bank, exceptions being Co-operative Motor Transport Societies, Co-operative
Workshop, Societies for the employees of Financing Banks and societies formed for the benefit
of actual workers; or
(f) has been surcharged and a period of 3 years has not elapsed since the payment of money
or restoration of property as directed in the said order of surcharge; or
(g) he is subject to any disqualification provided under the bye-laws of the society.
(h) Where a person already admitted to membership is seen to have been ineligible for
membership at the time he was so admitted as a member or if he subsequently becomes
ineligible for membership the committee of the society may remove the person from
membership after giving him an opportunity for making his representation if any, and the
person concerned shall thereupon cease to be a member of the society
(g) Where a member of a society becomes ineligible to continue as such, the Registrar may of
his own motion or on a representation made to him by any member of the society or by the
financing Bank, by an order in writing declare that he has ceased to be a member of the
society form the date of his order. The Registrar shall give such persons an opportunity to state
his objection, if any, to the proposed action and if the person wishes to be heard, he shall be
given an opportunity to be heard before passing an order as aforesaid.
Condition Relating to Democratic and Economic Participation by Members

Following the 97th Constitutional Amendment Act 2011, state laws have incorporated
provisions requiring minimum level of participation by members in the democratic and
economic process of their co-operative society, failing which a member incurs disqualification.
A typical example is S.16A of the Kerala Co-operative Societies Act 1969, whose contents are
summarized below.

No member shall be eligible to continue to be a member of a co-operative society if he—

(a) is not using the services of the society for two consecutive years or using the services
below the minimum level as may be prescribed in the rules or the bye-laws And (b) has not
attended three consecutive general meetings of the society and such absence has not been
condoned by the members in the general meeting. The Committee is empowered to remove a
member incurring the above disqualifications after giving such member a reasonable
opportunity to defend himself. A member so removed shall not be eligible for re-admission for a
period of one year.

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Expulsion of Members

1) Any member of a society, who has acted, adversely to the interest of the society, or has
failed to comply with the provisions of the bye-laws may be expelled upon a resolution of the
general body passed at a special meeting convened for the purpose by the votes of not less
than two-thirds of the total number of members present and voting at the meeting.
2) No member shall be expelled without being given an opportunity of making his
representation; or
3) A copy of the resolution expelling a member shall be communicated to the member within a
period of fifteen days from the date of passing of the resolution.
A member expelled is ineligible for re-admission for a period of one year. Further, the
society can forfeit the shares held by such expelled member.

Nominal or Associate Members

1) A society may admit any individual as a nominal or associate member.

2) A nominal or associate member shall not be entitled to any share, in any form whatsoever,
in the assets or profits of the society or to be elected to the committee of a society.

3) Save as provided above, a nominal or associate member shall have such privileges and
rights of a member and be subject to such liabilities of a member, as may be specified in the
bye-laws of the society.

Members not to Exercise Rights Till Due Payment is Made

No member of a society shall exercise the rights of a member unless he has made such
payments to the society in respect of membership or has acquired such interest in the society,
as may be prescribed by the rules or the bye-laws.

The law provide for denial of voting rights to members, who fail to comply with the
conditions relating to minimum participation in the democratic and economic process of the
society. Consequently, the names of such members will not be included in the voters list and
shall not be eligible to participate in the general body meetings.

The Right to Information of members is now recognized by state laws. Accordingly,

every society is now required to keep open to inspection for its members, free of charge, at all
reasonable times, at the registered address of the society—an up-to-date copy of the Act and
the Rules, an up-to-date copy of its bye-laws, a register of members, the latest audited balance
sheet of the society and the accounts of the society in so far as they relate to his transaction
only. A Member shall make following payments to acquire rights of membership: A member
can make following payments to acquire rights of member:

(i) Admission fee

(ii) Subscription to share capital
(iii) Any other payments required to be made under the bye-laws.

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Vote of Members

Every member of a society shall have one vote in the affairs of the society: Provided
that-

a. A nominal or associate member shall not have the right to vote:

b. Where the Government is a member of the society , each person nominated by the
Government on the committee of the society shall have one vote including the right to vote in
the election of office bearers of the society :
c. An ex-officio member on the committee of a society shall have one vote:
d. A member admitted within sixty days from the date fixed for the general body meeting shall
not have the right of vote in such general body meeting:
e. In the case of an equality of votes, the chairman shall have and exercise a second or casting
vote.

Restriction on the Right of Vote at Election

No member of a society shall be eligible to vote at the meeting fixed for any election to
the committee of that society, unless 60 days prior to the date of such meeting he has acquired
the number of shares for membership as may be provided in the bye-laws of the society of
which he is a member.

Manner of Exercising Vote

1) Every member of a society shall exercise his vote in person.

2) Notwithstanding anything contained at (1) above, a society or corporation or a statutory or a
non-statutory Board, Committee or other body of persons which is a member of another society
may, subject to any rules made under this Act, appoint one of its members to vote on its behalf
in the affairs of the other society.
A member shall be deemed to have exercised his right to one vote at an election of the
Committee of the society, if he express the choice in favour of such number of persons as are
to be elected.

Restriction on Holding Shares

In any society no member other than the Government, any statutory or non-statutory
Board, committee or corporation approved by the Government in this behalf or any other
society shall hold more than such portion of the total share capital of the society not exceeding
one fifth thereof, as may be prescribed.
Provided that the Government may, by notification in the Gazette, specify in respect of
any class of societies a higher maximum than one fifth of the share capital, as the case may
be.
The above restriction on individuals is essential to uphold the Principle of Open
Membership in a co-operative society or otherwise there is every chance of a society
degenerating into an association of self seeking individuals, as the entire shares of the society
could be closely held by a clique
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Restriction on Transfer of Share or Interest

1) The transfer of a share or interest of a member in the capital of a society shall be subject to
such conditions and restrictions as to the maximum holdings as are specified in the
immediately above paragraph.
2) No transfer by a member of his share or interest in a society shall be valid unless the
member has held such share or interest for not less than three years and the transfer is
approved by the committee of the society.
Restriction on Withdrawal of Share

No withdrawal by a member of his share in a society shall be valid unless-

(a) the member has held such share for not less than three years, and
(b) Such withdrawal is in accordance with the bye-laws of the society.
Generally speaking, the finances of a society is fragile as members contribute only small
amounts towards the capital. Ensuring a minimum lock-in period on withdrawal of shares by
members will ensure some stability to the capital of a society.

Transfer of Interest on Death of Member

On the death of a member of a society, the society shall transfer the share or interest of
the deceased member to the person or persons who has been so nominated by the deceased
member, if the nominee/s agrees to be the member of the society. Even otherwise, such
nominee/s shall be paid the amount receivable by him/them, if such nominee/s is/are not
qualified for being admitted as a member.

In case the deceased member has not named his nominee, the Committee shall pay to
such person as may appear to the committee to be the heir or legal representative of the
deceased member. Before making the payment, such heir or legal representative shall be
admitted as a member, provided the person possess the qualification for being admitted as a
member and he voluntarily agrees to be the member of the society.

A society may pay all other moneys due to the deceased member from the society to
such nominee, heir or legal representative, as the case may be. All transfers and payments
made by a society in accordance with the above provisions shall be valid and effectual against
any demand made upon the society by any other person.
Procedure for Making Nomination

(1) A member of a society may nominate a person to whom, in the event of his death, his share
or interest in the capital of the society shall be transferred or the value thereof or any other
moneys due to him from the society shall be paid. The member shall also have the right to vary
or revoke the nomination made by him at any time.

2) The nomination made for the purpose shall be in writing signed by the member making it,
and attested by at least two witnesses. And registered in the books of the society kept for the
purpose

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Valuation of Shares of a Deceased Members

If a member dies the sum representing the value of his share or interest in the capital of
the society payable to his nominee, heirs or legal representative, as the case may be, shall be
ascertained in the following manner:

(i) In the case of a society with unlimited liability it shall be the actual amount received by the
society in respect of such share or interest,

(ii) In the case of the society with limited liability, it shall be the amount arrived at by a valuation
based on the financial position of the society as shown in the last audited Balance sheet,
provided that the amount so ascertained shall not exceed the actual amount received by the
society in respect of such shares or interest.

Shares Not to Be Hypothecated to Society

The shares of a society shall not be hypothecated to that society or any other society by
the members as a security for a loan.

Members Right to Inspect Accounts of Society

(i) Any member of a registered society may, at any time during office hours and on payment of
such fee as may be prescribed, by himself or by an agent who is a member specially
authorised by him in writing, inspect the accounts of the society in so far as they relate to his
transactions with it.

(ii) The member shall pay to the society a fee for inspection at the rates specified in the bye-
laws. Such rates shall however not in any case exceed Rs.25 for any one Year to which the
accounts to be inspected relate, Rs.15 for every additional year and Rs.100 for any on e
member at any one such inspection irrespective of the number of years.

General Body Meeting

A Cooperative Society is a democratic organization. It is also an autonomous
organization. Further, the cooperative organization has to follow the principles of cooperation.
Based on these factors, the Cooperative Act provides for vivid aspects touching the business
or management of a society.

General Body : Supreme Body

In every State Co-operative societies Act and in the Central Act i.e. the Multi-State Co-
operative Societies Act 2002, it is provided that the final authority of every society shall vest in
the general body of members in the general meeting. In other words, the general body is the
supreme authority. General body is superior and higher to the Managing Committee / Board of
Directors. However, final authority vested in the general body shall be subject to the provisions
of the Act and the Rules. Further, the law stipulates that the general body cannot prevent the
exercise of powers by the office-bearers or officers, if such powers are vested on them by the
Act or Rules or the Bye-laws.

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Policies, programmes and schemes related to the functioning of the Cooperative society
are generally worked out by the general body. Similarly, the guidelines are framed by the
general body while the day to day administration, implementation and execution are vested
with the Managing Committee, with the help of salaried staff. In societies having large
membership or having a large area of operation, the law provides for constitution of a smaller
body called the ‘representative general body’. The representative general body shall have all
the powers of the general body except the powers to hold elections to the MC and to amend
those provisions of the byelaws relating to its own powers. The term of the representative
general body is generally co- terminus with the term the MC.

Types of General Body Meetings:

1. First General Meeting

 The First General meeting is required to be convened by the chief promoter immediately
after the registration of the society. This meeting is attended by the persons who joined for the
registration of the society. The business transacted is admission of those who joined for
registration as members, allotment of shares, approval of the expenditure incurred by the Chief
Promoter for registration work, approval of budget with reference to the plan of activities for the
ensuing financial year, etc.
2. Annual General Meeting (AGM)

 Required to be convened by the managing committee every year within the time limit
(six months) prescribed after ending the financial year for transacting the specific functions as
per the Act/Rules/Byelaws i.e. after 31st March every year.
3. Special General Meeting
Must be convened by the Managing Committee under following circumstances:
(a)If there is requisition from 1/5th members; or
(b)If there is a demand from the majority of Managing Committee Members; or
(c) If there is a request from the federal society; or
(d) If there are instructions from the Registrar to hold such Special General Meeting;
 Besides the aforesaid provisions, a Special General Meeting may be called by the
Managing Committee of the Society, as and when the Managing Committee considers that
such meeting is necessary. Generally, for considering an urgent matter and for seeking
approval of the general body, such special general meeting is called for. This is voluntary and
optional.
4. Specially Convened General Meeting

 In certain circumstances, general body meeting has to be convened for specific

purposes. For example, amendment of bylaws, amalgamation/division/transfer of assets and
liabilities, expulsion of members who had acted against the interest of the society, conduct of
election, directions of the inquiry officer conducting an inquiry into the affairs of the society, etc.
In such cases a general body meeting is convened specially for that particular purpose.

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5. Final General Meeting

 When a liquidator has been appointed and when he has completed the work of winding
up of the affairs of the society, it is provided in the Act/Rules that the liquidator shall
convene a final meeting of the members of the society and shall place his work report
for consideration/information. If there are any surplus assets, the Liquidator may request
the final general meeting for making suitable recommendations in respect of the
disposal of such surplus assets according to the provisions of the Act, Rules and Bye-
laws.

Notice & Agenda of General Meeting

For every meeting either of the managing committee or the general body, a due notice is
required to be given to members or the concerned managing committee members, as the case
may be, as per the provisions in the Act, Rules or Bye-laws. Such notice should contain:

(a) Date of meeting,

(b) Time,
(c) Place,
(d) Subjects placed for consideration before the meeting which is known as Agenda. The
agenda should be clear, explicit and unambiguous.
The bye-laws of a society prescribe the minimum number of days of which notice should
be given, known as notice period. In certain States, specific provision is made in this regard in
the Act or the Rules.

So far as a general meeting is concerned, a notice of minimum following days is

required.

(a) Ordinary general meeting - 14 days

(b) Special general meeting - 10 days
(c) AGM or Special GM meeting meant for amalgamation/division/transfer of assets and
liabilities or expulsion - 15 days
(d) AGM or Special General Meeting meant for amendment of Bye-laws -14 days
 The notice is to be served to the members of the society by the methods prescribed in
the Bylaws. It may be direct service, sending by post or publishing in vernacular newspapers
having wide circulation in the area of operation of the society. Besides, the notice is published
in the notice board of the Head office and branches or units of the Society and the local office
of the Registrar of Cooperative Societies.

Function of Annual General Meeting

In view of the provisions of the Act, Rules and byelaws, the following subjects are
generally placed every year before the annual general meeting for consideration and decision.
The subjects taken up in the AGM are:

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(a) To read and confirm the minutes of the last general body meeting;
(b) To consider the annual report and annual statements of accounts, including the P&L
Account and the Balance Sheet;
(c) To consider the audit report of the society, and Audit Rectification Report (ARR), prepared
by the Management Committee;
(d) To chalk out policies and programmes and approve the budget estimates for the next year;
(e) To consider and decide any appeal preferred against the decision of the Managing
Committee, or to consider any other special subject;
(f) To consider appointment of Statutory Auditor;
(g) To consider distribution of profit and to consider the declaration of dividend;
(h) To elect or to announce the names of Managing Committee Members, duly elected;
(i) To consider any other subject with permission of the chair.
Management Committee
A cooperative society is a democratically managed, owned and controlled by its
members. The members take policy decisions in the General Body meetings. A small body for
managing the day-to-day working of the society, known as a management committee or Board
of Directors, is elected by all members of the society.

Term of Management Committee

 The term of the Managing Committee is fixed as 5 years from the date of election by the
97th Constitutional Amendment Act 2011 and the same provision is made in the
State /Multi State Cooperative Societies Act.

Election of Management Committee Member

 The maximum number of members of the Management Committee is restricted at 21
with two additional professional Directors under the 97th CAA- 2011. The constitution of
the managing committee is provided in the byelaws category wise and the bye-law
provisions are made inconformity with the provisions of the Act and Rules. The byelaws
also provides the break-up of the composition of the management committee, such as :

(a) No. of elected members belonging to general category, constituency wise

(b) No. of ex-officio members like Managing Director
(c) No. of elected members belonging to reserved categories like women SC/ST, OBCs etc.
(d) No. of nominated members, if any.
Following the 97th CAA- 2011 minimum 2 seats be reserved on management committee
for women members and one seat for members belonging to SC/ST community.

While the management committee of an existing society is constituted by the General

Body through elections, the first management committee of a newly registered society may be
constituted by any one of the following methods.

(a) The promoters may nominate from among themselves the names of members who will form
the committee for a period of 3 months, which period may be extended by the Registrar from
time to time.

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(b) Provisions made in the byelaws empowering the Government or Registrar to nominate the
first Committee including the President say, for a period 12 months.
Any ordinary member can contest the election as a candidate for the Management
Committee and no special qualifications are required for being a member of the management
committee.

Disqualification to Contest Election in Management Committee

General disqualifications to the elected posts as per the Act, the Rules and bye-laws are as
under:
(a) If he is a defaulter of any co-operative Society
(b) If he is a Minister either with the Central Government or the State Government;
(c) If he is an employee of the concerned society
(d) If he is not residing in the area of operation or if he commits a breach of Co-operative
discipline/Principle,
(e) If he is convicted of an offence;
(f) If is a near relative ( as define in the concerned law)of any paid employee of the society;
(g) If he has any interest direct or indirect in any contract or agreement made by the society
and such interest subsists at the time of making the nomination.
(h) If he is surcharged
(i) If he was on a MC that was superseded by the Registrar, he will be disqualified from
contesting elections to MC of any cooperative society for the number of terms as provided in
the Act
(j) If is already a member on the MCs of societies exceeding the number, if any, under the Act.
(k) If he has incurred any disqualification provided under the byelaws of the society.
Power and Function of Management Committee
 The Managing Committee Members under the common law are treated as ‘Trustees’
and ‘Agents’ of the concerned society. They are answerable and accountable for any breach of
duty as trustees or as Agents to the General Body of the Society. Further, they are jointly and
severally liable.

 In order to discharge the assigned duties, in order to carryout day to day business, and
in order to achieve the objects, the Act, the Rules and byelaws confer significant powers on the
management committee. Generally, such powers and functions are mentioned in the bye-laws.
They are, by and large, as follows
(a) to admit members;
(b) to interpret the organizational objectives and set-up specific goals to be achieved towards
these objectives;
(c) to take decisions on business aspects, such as, sanctioning loans, purchases i.e. to look
after day to day working of a society;
(d) to appoint a Chief Executive and such other employees as may be necessary;
(e) to make provisions for regulating the appointment of employees of the society and the
scales of pay, allowances and other conditions of service, including disciplinary action again
such employees.
(f) to approve supplementary budget in anticipation of the General Body;
(g) to acquire or dispose of movable and immovable property;
(h) to raise funds;
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(i) to take such other measures or to do such other acts as may be prescribed or required
under the Act/the Rules/the bye-laws.
Meeting of Management Committee

 The meetings of the Management Committee are convened periodically as provided

under the byelaws. The byelaws prescribe the notice period, manner of service of
notice, manner of writing of the minutes and custody of minute’s book. . Generally
meeting of the Managing Committee is convened once in a month or once in a quarter
in case of large sized national level Cooperatives. Serving of notice with agenda items
to all members is a must. The meeting is legally valid if the required number of members
for quorum is present. The meeting is chaired by the President of the Society and in his
absence; the Vice President chairs the meeting. The decisions on the proposed agenda
items are taken on consensus and if there is any difference of opinion, the issue is
decided by majority votes. In case of equal number of votes, the Chairman shall have a
casting vote to decide the matter. The decisions of the meeting taken in the form of
resolutions are recorded in the minutes book and attested by the President. Minutes of a
meeting is confirmed in the next meeting. Members present in the meeting record their
attendance in the minutes book at the commencement of the meeting

Offences and Penalties

Generally every law, co-operative law included, lists out the specific acts of omission
and commission committed by persons or authorities that constitute offence under that
particular law. Suitable penalty for each of the offences listed is provided. The offences listed
may be cognizable or non-cognizable. Cognizable offences are those where Police Officers
can issue arrest warrant on their own, while non-cognizable offences require orders from a
Court of I Class Magistrate for the police to act on the offence. The offences listed under a
typical law on co-operatives are discussed below and it should be noted that these provisions
shall be without prejudice to any action that may be taken against the offenders under any
other law for the time being in force:
(1) No person other than a society shall trade or carry on business under any name or title of
which the word co-operative or its equivalent is included in any Indian language in part without
the sanction of the Government. Provided that nothing said above shall apply in any area to the
use by any person or his successor in interest of any name or title under which he carried on
business at the date on which the Co-operative Societies Act, 1912, came into operation in that
area. Any contravention of the aforesaid provision shall be punishable with fine which may
extend to one thousand rupees.
(2) Any member or past member or the nominee, heir, or legal representative of a deceased
member of a society who contravenes the provisions relating to bar on disposing of any
property in respect of which the society is entitled to have a first charge or does any other act
to the prejudice of such claim, shall be punishable with fine which may extend to two thousand
rupees.

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(3) The committee of a society or an officer or member thereof willfully making a false return or
furnishing false information or failing to produce cash balance on demand or failing to make the
records available for audit, inquiry or inspection, or any person willfully or without any
reasonable excuse disobeying any summons, requisition or lawful written order issued under
the provisions of the Act or willfully not furnishing any information required from him by an
authorized person, shall be punishable with fine which may extend to five thousand rupees.
(4) any employer or officer who, without sufficient cause either fails to deduct any amount from
the salary of his employee as required by a society under the Act or Fails to pay to a society
the amount deducted by him within a period of seven days from the date on which such
deduction is made, shall be punishable with fine which may extend to five thousand rupees.
(5)If any person collecting the share money for a society in formation does not deposit the
same in the bank notified by the Registrar within fourteen days of its receipt, he shall be
punishable with fine which may extend to five thousand rupees.
(6) If any person collecting the share money for a society in formation, makes use of the funds
so raised for conducting any trade or business in the name of the society to be registered or
otherwise he shall be punishable with fine which may extend to five thousand rupees.
(7) Willful failure by an authorized officer or custodian to hand over the charge to the new
committee or the administrator/administrative committee, or the liquidator or to any authorized
person appointed by the Registrar/Director of Co-operative Audit, the penalty being
imprisonment up to one year or fine up to Rs 5000 or with both,
(8) Commission of any below enumerated electoral malpractice before or during or after
election of committee members or of office bearers or of delegates, the penalty being
imprisonment up to six months or fine up to Rs 1000 or with both:
(8a) Fraudulently defaces or fraudulently destroys any nomination paper, or
(8b) Fraudulently defaces, destroys or removes any list, notice or other document affixed by or
under the authority of a returning officer, or
(8c) Fraudulently defaces or fraudulently destroys any ballot paper or the official mark or any
ballot paper or any declaration of identity, or
(8d) without due authority supplies any ballot paper to any person or receives any ballot paper
from any person or is in possession of any ballot paper, or
(8e) fraudulently puts into any ballot box anything other than the ballot paper which he is
authorized by law to put in, or
(8f) without due authority destroys, takes, opens or otherwise interferes, with any ballot box or
ballot papers then in use for the purposes of the election, or
(8g) fraudulently or without due authority, as the case may be, attempts to do any of the
foregoing acts or willfully aids or abets the doing of any such acts,
(8h) offers any gift or promise to offer any gratification to any person with the object, directly or
indirectly to influence,
(8i) a person to stand or not stand as, or to withdraw or not to withdraw from, being a candidate
at an election, or
(8j) member to vote, or refrain from voting at an election, or as a reward to a person for having
so stood or not stood or for having withdrawn or not having withdrawn his candidature.”

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(9)If any officer, employee, agent, servant of a society or any other person dealing with the
society misappropriates or unauthorisedly or illegally keeps any money belonging to that
society, he shall be punishable with imprisonment for a term which may extend to three years
and with fine which may extend to twice the amount of money involved in the offence.”;
“(10) If any person dishonestly or fraudulently makes or executes or cause to make or execute,
any false or improper document or valuation certificate or project report or register or cause to
register any fictitious company or firm or society in order to support any application for loan and
thereby induces any society to deliver any loan to him or to any other person which causes
loss to the society, he shall be punishable with imprisonment for a term which may extend to
three years and with fine which may extend to twice the amount of money involved in the
offence.
(11) If any officer, employee, member, agent or servant of a society or any other person abets,
connives or conspires the commission of an offence punishable under (10) above, he shall be
punishable with imprisonment for a term which may extend to three years and with fine which
may extend to twice the amount of money involved in the offence.”;
(12) if any person conducting audit or inquiry or inspection or investigation willfully omits to
mention in his report any defects or irregularities which he has noticed or might have noticed
had he exercised due diligence during the course of audit, inquiry, inspection or investigation
as the case may be, or has willfully makes false observation in his report, shall be punishable
with imprisonment for a term which may extend to six months or with fine which may extend to
five thousand rupees or with both.”
“(13) the committee or any office bearer or officer or an employee of a society who fails to give
effect to any decision or award including order if any, passed by the appropriate appellate
authority, such decision or award not being the money decree, shall be punishable with
imprisonment for a term which may extend to six months or with fine which may extend to five
thousand rupees or with both.”)
Cognizance of Offence
 No court inferior to that of a Magistrate of the first class shall try any offence mentioned
at (1) through (6) above and no prosecution of these offences shall be instituted without
the previous sanction of the Registrar.
  Provided that no such sanction shall be required in the case of offences at (9) through
(13). Further, the Court shall take into account the assets dishonestly acquired by the
persons by causing losses to the society in respect of offences at (9) through (11) and
order the amount

Audit of Cooperative Societies

Audit of a cooperative society is necessary to protect the interests of all its stake
holders; members who are the core stake holders, creditors, employees, government etc.
Under the 1904 Cooperative Credit Societies Act, the Registrar was required to conduct annual
audit of societies. Now, the service of audit is provided for a fee. Power of appointing the
Auditor is now vested with the general body of the society.

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Director of Cooperative Audit

 Following the 97th CAA-2011, the general body of the society is empowered to appoint
the auditor. To enable the general body to make the selection, office of Registrar of
Cooperative Societies is required to prepare two separate panels; one, consisting of
departmental auditors and two, a panel consisting of charted accountants. The general
body is required to choose its auditor first from the list mentioned at one above and take
recourse to the other list only if the auditors in the former list are exhausted. The law
provides some exceptions to this general rule.The audit report of apex societies shall be
placed before the State Legislature by Government.

Responsibility of Management Committee for Audit

 A cooperative Society out of its net profit in any year can; Management Committee is
responsible for audit of the society every year within six months from the close of the co-
operative year. Management Committee shall convene the general body meeting well in
advance for appointing the auditor. It shall be responsibility of the Chief Executive to
write up the accounts and prepare the final accounts within one month from the close of
the year and the Management Committee shall authenticate the accounts so prepared
by the Chief Executive and hand over the same to the auditor within two months from
the close of the year. In case Management Committee fails either to convene the
general meeting in time or hand over the authenticated accounts to the auditor in time
Registrar will intervene and appoint an administrator or a administrative committee.

Scope of Audit

 Thus, auditing of accounts of co-operative societies" includes a close examination of

financial transactions, overdue debts, if any, maintenance of books of accounts,
documents and other records of a business and includes an inquiry into the affairs of the
society and subsidiary institutions in order to ascertain the correctness of accounts and
the extent to which its activities were useful in promoting the economic welfare of the
members in accordance with co-operative principles. Thus, auditing of accounts of co-
 operative societies" includes a close examination of financial transactions, overdue
debts, if any, maintenance of books of accounts, documents and other records of a
business and includes an inquiry into the affairs of the society and subsidiary institutions
in order to ascertain the correctness of accounts and the extent to which its activities
were useful in promoting the economic welfare of the members in accordance with co-
operative principles.

Power of Auditor

 The auditor shall have access at all reasonable times to all the books, accounts,
documents, papers, securities, cash or other properties belonging to or in the custody of
the society and may summon any person in possession of or responsible for the custody
of any such books, accounts, documents, papers, securities, cash or other properties to
produce the same at any place at the headquarters of the society or any branch or any
branch thereof.
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 Auditor may call every person who is or has been, at any time, an officer or employee of
the society and every member present or past, who is in possession of any information.
Further he shall also report any serious defect found during audit immediately to the
Registrar.
Audit Certificate

 The auditor shall submit an audit memorandum in the form prescribed on the accounts
examined by him and on the Balance sheet and final accounts as on the date for the
period up to which the accounts have been audited and shall state whether in his
opinion and to the best of his information and according to the explanations giver to him,
the said accounts give all the information required by the Act and give a true and fair
view. The audit memorandum shall state:-

(a) whether the Auditor had obtained all the information and explanation which to the best of
his knowledge and belief were necessary for the purpose of his audit,
(b) whether in his opinion, proper books of accounts, as required by the Act, the rules and the
bye-laws of the society have been kept and regularly maintained by the society so far as it
appear from the examination of these books, and
(c) whether the balance sheet and the final accounts examined by him are in agreement with
the books of accounts and returns of the society.
Where any of the matters referred to above are answered in the negative or with a
qualification, the person who does the audit shall specify the reasons for the answers in the
audit memorandum. The audit memorandum shall also contain schedules with full particulars
of:

(a) all transactions which appear to be contrary to the provisions of the Act,, the rules or the
bye-laws of the society;
(b) all sums which ought to have been, but have not been brought into account, by the society;
(c) any material impropriety or irregularity in the expenditure or in the realisation or moneys due
to the society;
(d) any money or property belonging to the society which appears to the auditor to be bad or
doubtful debt;
(e) v. an audit classification statement prepared in accordance with the instructions issued by
the DCA from time to time; and
(f) whether the balance sheet and the final accounts examined by him are in agreement with
the books of accounts and returns of the society.

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EXERCISES

A. Essay.
1. Those that are above in the Cooperative Society particularly the Government
indeed have the power to do anything but making sure that it is in line with the laws that
they have made. What do you think a newly society to be registered or members should
do in order for them to pass and become functional and be beneficial to people?
2. It is known for the Cooperative Societies that the very focus of it all is to help the
people in ways that they can like not necessarily giving them money but some skills for
the betterment of one’s life. How does money or funds play a role in the Cooperative
Society?
3. Why is it very important to follow the rules even in meetings like this meeting
should take several days before deciding in whatever they will be doing for the benefit of
their stakeholders?
4. How important is the position of an Auditor in the Cooperative Society?
1. Sometimes there are rules that are already good but to change them will take time
because of the steps to follow in order for these revised, changed or new rules to
take effect. What do you think is the reason why rules have to somehow change?
2. How will you act if you saw a suspicious member doing things against the rules?

SELF-ASSESSMENT

1. What have you learned from this module?

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2. What do you like about this lesson?

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3. What area do you need to learn more?

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REFERENCE/S

Cooperative Management App

3014