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MULTI-STATE CO-OPERATIVE SOCIETIES ACT 2002

ACT NO. 39 OF 2002

[3rd July, 2002.]

Short title, extent and commencement.

1. Short title, extent and commencement.-(1) This Act may be called the Multi-State Co-operative Societies Act, 2002.

(2) It extends to the whole of India.

(3) It shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint and different dates may be appointed for different provisions of this Act and any reference in any such provision to the commencemen of this Act shall be construed as a reference to the coming into force of that provision.

Application. 2. Application.-This Act shall apply to- (a) all co-operative societies, with objects not confined to one State which were incorporated before the commencement of this Act,- (i) under the Co-operative Societies Act, 1912 (2 of 1912), or (ii) under any other law relating to co-operative societies in force in any State or in pursuance of the Multi-unit Co-operative Societies Act, 1942 (6 of 1942) or the Multi-State Co-operative Societies Act, 1984 (51 of 1984), and the registration of which has not been cancelled before such commencement; and (b) all multi-State co-operative societies.

Definitions. 3. Definitions.-In this Act, unless the context otherwise requires,- (a) "area of operation" means the area from which the persons are admitted as members; (b) "board" means the board of directors or the governing body of a multi-State co-operative society, by whatever name called, to which the direction and control of the management of the affairs of the society is entrusted; (c) "bye-laws" means the bye-laws for the time being in force which have been duly registered or deemed to have been registered under this Act and includes amendments thereto which have been duly registered or deemed to have been registered under this Ac ; (d) "Central Registrar" means the Central Registrar of Co-operative

Societies appointed under sub-section (1) of section 4 and includes any officer empowered to exercise the powers of the Central Registrar

under sub-section (2) of that section; (e) "Chief Executive" means a Chief Executive of a multi-State co-operative society appointed under section 51; (f) "co-operative bank" means a multi-State co-operative society which undertakes banking business; (g) "co-operative principles" means the co-operative principles specified in the First Schedule; (h) "co-operative society" means a society registered or deemed to be registered under any law relating to co-operative societies for the time being in force in any State; (i) "co-operative year", in relation to any multi-State co-operative society or class of such societies, means the year ending on the 31st day of March of the year and where the accounts of such society or class of such societies are, with the previous s nction of the Central Registrar, balanced on any other day, the year ending on such day; (j) "Deposit Insurance Corporation" means the Deposit Insurance and Credit Guarantee Corporation established under section 3 of the Deposit Insurance Corporation Act, 1961 (47 of 1961); (k) "federal co-operative" means a federation of co-operative societies registered under this Act and whose membership is available only to a co-operative society or a multi-State co-operative society; (l) "general body", in relation to a multi-State co-operative society, means all the members of that society and in relation to a national co-operative society or a federal co-operative means all the delegates of member co-operative societies or delegate of multi-State co-operative societies and includes a body constituted under the first

proviso to sub-section (1) of section 38; (m) "general meeting" means a meeting of the general body of a multi-State co-operative society and includes special general meeting; (n) "member" means a person joining in the application for the registration of a multi-State co-operative society and includes a person admitted to membership after such registration in accordance with the provisions of this Act, the rules and the bye-la s; (o) "member co-operative" means a co-operative society or a multi-State co-operative society which is member of a federal co-operative; (p) "multi-State co-operative society" means a society registered or deemed to be registered under this Act and includes a national co-operative society and a federal co-operative; (q) "multi-State co-operative society with limited liability" means a society having the liability of its members limited by its bye-laws to the amount, if any, unpaid on the shares, respectively, held by them or to such amount as they may, respectively, thereby undertake to contribute to the assets of the society, in the event of its being wound up; (r) "national co-operative society" means a multi-State co-operative society specified in the Second Schedule; (s) "notification" means a notification published in the Official Gazette; (t) "officer" means a president, vice-president, chairperson, vice-chairperson, managing director, secretary, manager, member of a board, treasurer, liquidator, an administrator appointed under section 123 and includes any other person empowered under th s Act or the rules or the bye-laws to give directions in regard to the business of a multi-State co-operative society; (u) "prescribed" means prescribed by rules; (v) "Reserve Bank" means the Reserve Bank of India constituted under the Reserve Bank of India Act, 1934 (2 of 1934); (w) "rules" means the rules made under this Act. CHAP CENTRAL REGISTRAR AND REGISTRATION OF MULTI-STATE CO-OPERATIVE SOCIETIES CHAPTER II CENTRAL REGISTRAR AND REGISTRATION OF MULTI-STATE CO-OPERATIVE SOCIETIES

Central Registrar.

4. Central Registrar.-(1) The Central Government may appoint a person to be the Central Registrar of Co-operative Societies and may appoint such other persons as it may think fit to assist the Central Registrar.

(2) The Central Government may, by notification, direct that any power exercisable by the Central Registrar under this Act (other than the power of registration of a multi-State co-operative society) shall, in relation to such society, and such matters a may be specified in the notification, be exercisable also by any other officer of the Central Government or of a State Government as may be authorised by the Central Government subject to such conditions as may be specified therein: Provided that no officer of a State Government shall be empowered to exercise such power in relation to a national co-operative society.

Multi-State co-operative societies which may be registered..

5. Multi-State co-operative societies which may be registered.-(1) No multi-State co-operative society shall be registered under this Act, unless,- (a) its main objects are to serve the interests of members in more than one State; and (b) its bye-laws provide for social and economic betterment of its members through self-help and mutual aid in accordance with the co-operative principles.

(2) The word "limited" or its equivalent in any Indian language shall be suffixed to the name of every multi-State co-operative society registered under this Act with limited liability.

Application for registration.

6. Application for registration.-(1) For the purposes of registration of a multi-State co-operative society under this Act, an application shall be made to the Central Registrar in such form and with such particulars as may be prescribed.

(2) The application shall be signed,- (a) in the case of a multi-State co-operative society of which all the members are individuals, by at least fifty persons from each of the State concerned; (b) in the case of a multi-State co-operative society of which the members are co-operative societies, by duly authorised representatives on behalf of at least five such societies as are not registered in the same State; and (c) in the case of a multi-State co-operative society of which another multi-State co-operative society and other co-operative societies are members, by duly authorised representatives of each of such societies: Provided that not less than two of the co-operative societies referred to in this clause, shall be such as are not registered in the same State; (d) in the case of a multi-State co-operative society of which the members are co-operative societies or multi-State co-operative societies and individuals, by at least- (i) fifty persons, being individuals, from each of the two States or more; and (ii) one co-operative society each from two States or more or one multi-State co-operative society.

(3) The application shall be accompanied by four copies of the proposed bye-laws of the multi-State co-operative society and the persons by whom or on whose behalf such application is made shall furnish such information in regard to the society as the Ce tral Registrar may require.

Registration.

7. Registration.-(1) If the Central Registrar is satisfied- (a) that the application complies with the provisions of this Act and the rules; (b) that the proposed multi-State co-operative society satisfies the basic criterion that its objects are to serve the interests of members in more than one State; (c) that its bye-laws provide for social and economic betterment of its members through self-help and mutual aid in accordance with the co-operative principles; (d) that the proposed bye-laws are not contrary to the provisions of this Act and the rules, he may register the multi-State co-operative society and its bye-laws.

(2) The application for registration shall be disposed of by the Central Registrar within a period of four months from the date of receipt thereof by him.

(3) Where the Central Registrar refuses to register a multi-State co-operative society, he shall communicate, within a period of four months from the date of receipt of the application for registration, the order of refusal together with the reasons ther for to the applicant or applicants, as the case may be: Provided that no order of refusal shall be made unless the applicants have been given a reasonable opportunity of being heard: Provided further that if the application for registration is not disposed of within a period of four months specified in sub-section

(2) or the Central Registrar fails to communicate the order of refusal within that period, the application shall be deeme to have been accepted for registration and the Central Registrar shall issue the registration certificate in accordance with the provisions of this Act and the rules made thereunder.

Registration certificate. 8. Registration certificate.-Where a multi-State co-operative society is registered under this Act, the Central Registrar shall issue a certificate of registration signed by him, which shall be conclusive evidence that the society therein mentioned is du y registered under this Act, unless it is proved that the registration of the society has been cancelled.

Multi-State co-operative society to be body corporate..

9. Multi-State co-operative society to be body corporate.-(1) The registration of a multi-State co-operative society shall render it a body corporate by the name under which it is registered having perpetual succession and a common seal, and with power t acquire, hold and dispose of property, both movable and immovable, enter into contract, institute and defend suits and other legal proceedings and to do all things necessary for the purpose for which it is constituted, and shall, by the said name, sue o be sued.

(2) All transactions entered into in good faith prior to the registration of a multi-State co-operative society shall be deemed to be its transactions after registration for furtherance of the objects of its registration.

Bye-laws of multi-State co-operative societies.

10. Bye-laws of multi-State co-operative societies.-(1) Every multi-State co-operative society may make its bye-laws consistent with the provisions of this Act and the rules made thereunder.

(2) In particular, and without prejudice to the generality of the foregoing power, such bye-laws may provide for all or any of the following matters, namely:- (a) the name, address and area of operation of the society; (b) the objects of the society; (c) the services to be provided to its members; (d) the eligibility for obtaining membership; (e) the procedure for obtaining membership; (f) the conditions for continuing as member; (g) the procedure for withdrawal of membership; (h) the transfer of membership; (i) the procedure for expulsion from membership; (j) the rights and duties of the members; (k) the nature and amount of capital of the society; (l) the manner in which the maximum capital to which a single member can subscribe; (m) the sources from which the funds may be raised by the multi-State co-operative society; (n) the purpose for which the funds may be applied; (o) the manner of allocation or disbursement of net profits of the multi-State co-operative society; (p) the constitution of various reserves; (q) the manner of convening general meetings and quorum thereof other than those provided under this Act; (r) the procedure for notice and manner of voting, in general and other meetings; (s) the procedure for amending the bye-laws; (t) the number of members of the board not exceeding twenty-one; (u) the tenure, of directors, chairperson and other office-bearers of the society, not exceeding five years; (v) the procedure for removal of members of the board and for filling up of vacancies; (w) the manner of convening board meetings, its quorum, number of such meetings in a year and venue of such meetings; (x) the frequency of board meetings; (y) the powers and functions of the Chief Executive in addition to those provided under section 52; (z) the manner of imposing the penalty; (za) the appointment, rights and duties of auditors and procedure for conduct of audit; (zb) the authorisation of officers to sign documents and to institute and defend suits and other legal proceedings on behalf of the society; (zc) the terms on which a multi-State co-operative society may deal with persons other than members; (zd) the terms on which a multi-State co-operative society may associate with other co-operatives societies; (ze) the terms on which a multi-State co-operative society may deal with organisations other than co-operative societies; (zf) the rights, if any, which the multi-State co-operative society may confer on any other multi-State co-operative society or federal co-operative and the circumstances under which such rights may be exercised by the federal co-operative; (zg) the procedure and manner for transfer of shares and interest in the name of a nominee in case of death of a member; (zh) the educational and training programmes to be conducted by the multi-State co-operative society; (zi) the principal place and other places of business of multi-State co-operative society; (zj) the minimum level of services to be used by its members; (zk) any other matter which may be prescribed.

Amendment of bye-laws of a multi-State co-operative society.

11. Amendment of bye-laws of a multi-State co-operative society.-(1) No amendment of any bye-law of a multi-State co-operative society shall be valid, unless such amendment has been registered under this Act.

(2) The amendment to the bye-laws of a multi-State co-operative society shall be made by a resolution passed by a two-third majority of the members present and voting at general meeting of the society.

(3) No such resolution shall be valid unless fifteen clear days' notice of the proposed amendment has been given to the members.

(4) In every case in which a multi-State co-operative society proposes to amend its bye-laws, an application to register such amendments shall be made to the Central Registrar together with-

(a) a copy of the resolution referred to in sub-section (2); (b) a statement containing the particulars indicating- (i) the date of the general meeting at which the amendments to the bye-laws were made; (ii) the number of days' notice given to convene the general meeting; (iii) the total number of members of the multi-State co-operative society; (iv) the quorum required for such meeting; (v) the number of members present at the meeting; (vi) the number of members who voted in such meeting; (vii) the number of members who voted in favour of such amendments to bye-laws; (c) a copy of the relevant bye-laws in force with the amendment proposed to be made together with reasons justifying such amendments; (d) four copies of the text of the bye-laws incorporating therein the proposed amendments signed by the officer duly authorised in this behalf by the general body; (e) a copy of the notice given to the members and the proposal to amend the bye-laws; (f) a certificate signed by the person who presided at the general

meeting certifying that the procedure specified in sub-sections (2)

and (3) and the bye-laws had been followed; (g) any other particular which may be required by the Central Registrar in this behalf.

(5) Every such application shall be made within sixty days from the date of the general meeting at which such amendment to the bye-laws was passed.

(6) The procedure given in sub-sections (2) to (5) of this section shall apply to the amendment of the bye-laws of a co-operative society desiring to convert itself into a multi-State co-operative society as per the provisions of section 22.

(7) If, on receipt of application under sub-section (5), the Central Registrar is satisfied that the proposed amendment- (a) is not contrary to the provisions of this Act or of the rules; (b) does not conflict with co-operative principles; and (c) will promote the economic interests of the members of the multi-State co-operative society, he may register the amendment within a period of three months from the date of receipt thereof by him.

(8) The Central Registrar shall forward to the multi-State co-operative society a copy of the registered amendment together with a certificate signed by him within a period of one month from the date of registration thereof and such certificate shall be conclusive evidence that the amendment has been duly registered.

(9) Where the Central Registrar refuses to register an amendment of the bye-laws of a multi-State co-operative society, he shall communicate the order of refusal together with the reasons therefor to the Chief Executive of the society in the manner pres ribed within fifteen days from the date of such refusal: Provided that if the application for registration is not disposed of

within a period of three months specified in sub-section (7) or the Central Registrar fails to communicate the order of refusal within that period, the application shall be deemed to ha e been accepted for registration and the Central Registrar shall issue registration certificate in accordance with the provisions of this Act.

When amendment of bye-laws comes into force. 12. When amendment of bye-laws comes into force.-An amendment of the bye-laws of a multi-State co-operative society shall, unless it is expressed to come into operation on a particular day, come into force on the day on which it is registered.

Change of name.

13. Change of name.-(1) A multi-State co-operative society may, by an amendment of its bye-laws, change its name but such change shall not affect any right or obligation of the multi-State co-operative society or of any of its members or past members, an any legal proceedings which might have been continued or commenced by or against the multi-State co-operative society by its former name, may be continued or commenced by or against its new name.

(2) Where a multi-State co-operative society changes its name, the Central Registrar shall enter the new name on the register of multi-State co-operative society in place of the former name and shall amend the certificate of registration accordingly.

Change of address. 14. Change of address.-Every multi-State co-operative society shall have a principal place of business and an address registered in the manner prescribed to which all notices and communications may be sent.

Publication of name by multi-State co-operative society. 15. Publication of name by multi-State co-operative society.-Every multi-State co-operative society- (a) shall paint or affix its name and the address of its registered office and keep the same painted or affixed, on the outside of every office or place in which its business is carried on, in conspicuous position, in letters easily legible; and if the haracters employed therefor are not those of the language, or of one of the languages in general use in that locality, also in the characters of that language or of one of those languages; (b) shall have its name engraven in legible characters on its seal; and (c) shall have its name and the address of its registered office mentioned in legible characters in all its business letters, in all its bill heads and letter paper, and in all its notices and other official publications; and also have its name so mentio ed in all bills of exchange, hundies, promissory notes, endorsements, cheques and orders for money or goods purporting to be signed by or on behalf of the multi-State co-operative society, and in all bills of parcels, invoices, receipts and letters of c edit of the multi-State co-operative society.

Liabiliry.

16. 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 functio 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 th 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.

Amalgamation or transfer of assets and liabilities, or division of multi-State co-operative societies. 17. Amalgamation or transfer of assets and liabilities, or division

of multi-State co-operative societies.-(1) A multi-State co-operative society may, by a resolution passed by a majority of not less than two-thirds of the members, present and voting at general meeting of the society held for the purpose,- (a) transfer its assets and liabilities in whole or in part to any other multi-State co-operative society or co-operative society; (b) divide itself into two or more multi-State co-operative societies; (c) divide itself into two or more co-operative societies.

(2) Any two or more multi-State co-operative societies may, by a resolution passed by a majority of not less than two-thirds of the members present and voting at a general meeting of each such society, amalgamate themselves and form a new multi-State co- perative society.

(3) The resolution of a multi-State co-operative society under

sub-section (1) or sub-section (2) shall contain all particulars of the transfer or division or amalgamation, as the case may be.

(4) When a multi-State co-operative society has passed a resolution

under sub-section (1) or sub-section (2), it shall give notice thereof in writing to all the 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 of the date of service of the notice upon him, have the option of withdrawing his shares, deposits or loans, as the case may be.

(5) Any member or creditor who does not exercise his option within the

period specified in sub-section (4) shall be deemed to have assented to the proposals contained in the resolution.

(6) (a) A resolution passed by a multi-State co-operative society under this section shall not take effect until the assent thereto of all the members and creditors has been obtained. (b) The multi-State co-operative society shall make arrangements for meeting in full or otherwise satisfying all claims of the members and creditors who exercise the option within the period specified in

sub-section (4).

(7) On receipt of an application for the registration of new societies formed by division in accordance with the resolution passed under

sub-section (1) or of a new society formed by amalgamation in

accordance with the resolution passed under sub-section (2), the Central Registrar, on being satisfied that the resolution has become

effective under sub-section (6) shall, unless for reasons to be recorded in writing he thinks fit to refuse so to do, register the new society or societies, as the case may be, and the bye-laws thereof.

(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 suffic ent conveyance to vest the assets and liabilities in the transferee without any further assurance.

Central Registrar to prepare scheme of amalgamation or reorganisation of a co-operative bank in certain cases. 18. Central Registrar to prepare scheme of amalgamation or reorganization of a co-operative bank in certain cases.-When an order of moratorium has been made by the Central Government under

sub-section (2) of section 45 of the Banking Regulation Act, 1949 (10 of 1949) in respect of a co-operative bank, the Central Registrar, with the previous approval of the Reserve Bank in writing, may, during the period of moratorium, prepare a scheme- (a) for the amalgamation of the co-operative bank with any other co-operative bank; or (b) for the reorganisation of the co-operative bank.

Promotion of subsidiary institution.

19. Promotion of subsidiary institution.-(1) Any multi-State co-operative society may, by a resolution passed at general meeting by a majority of members present and voting, promote one or more subsidiary institutions, which may be registered under any l w for the time being in force, for the furtherance of its stated objects.

(2) Any subsidiary institution promoted under sub-section (1) shall exist only as long as general body of the multi-State co-operative society deems its existence necessary: Provided that a multi-State co-operative society, while promoting such a subsidiary institution, shall not transfer or assign its substantive part of business or activities undertaken in furtherance of its stated objects. Explanation.-For the purposes of this section,- (a) an institution shall be deemed to be a subsidiary institution if the multi-State co-operative society- (i) controls the management or board of directors or members of governing body of such institution; or (ii) holds more than half in nominal value of equity shares of such institutions; or (iii) if one or more members of such multi-State co-operative society, hold whether by themselves or together with subsidiary institution or their relatives, as the case may be, the majority of equity shares in that institution; (b) a subsidiary institution shall not include a partnership firm.

(3) The annual reports and accounts of any such subsidiary institution shall be placed each year before general meeting of the promoting multi-State co-operative society.

Liability of a co-operative bank to Deposit Insurance and Credit Guarantee Corporation. 20. Liability of a co-operative bank to Deposit Insurance and Credit Guarantee Corporation.-Notwithstanding anything contained in section 17 or any other provision of this Act, where a co-operative bank, being an insured bank within the meaning of the De osit Insurance and Credit Guarantee Corporation Act, 1961 (47 of 1961), is amalgamated or reorganised and the Deposit Insurance Corporation has become liable to

pay to the depositors of the insured bank under sub-section (2) of section 16 of that Act, th bank with which such insured bank is amalgamated or the new co-operative bank formed after such amalgamation, or, as the case may be, the insured bank or transferee bank shall be under an obligation to repay to the Deposit Insurance Corporation in the c rcumstances, to the extent and in the manner referred to in section 21 of the Deposit Insurance and Credit Guarantee Corporation Act, 1961.

Cancellation of registration certificate of multi-State co-operative societies in certain cases. 21. Cancellation of registration certificate of multi-State

co-operative societies in certain cases.-(1) Where the whole of the assets and liabilities of a multi-State co-operative society are transferred to another multi-State co-operative society or to a co-operative society in accordance with the provisions of section 17, the registration of the first-mentioned multi-State co-operative society shall stand cancelled and the society shall be deemed to have been dissolved and shall cease to exist as a co porate body.

(2) Where two or more multi-State co-operative societies are amalgamated into a new multi-State co-operative society in accordance with the provisions of section 17, the registration of each of the amalgamating societies shall stand cancelled on the regi tration of the new society, and each of the amalgamating societies shall be deemed to have been dissolved and shall cease to exist as a corporate body.

(3) Where a multi-State co-operative society divides itself into two or more multi-State co-operative societies or two or more co-operative societies in accordance with the provisions of section 17, the registration of that society shall stand cancelled n the registration of the new societies, and that society shall be deemed to have been dissolved and shall cease to exist as a corporate body.

(4) The amalgamation or division of multi-State co-operative societies shall not in any manner whatsoever affect any right or obligation of the resulting multi-State co-operative society or societies or render defective any legal proceedings by or agains the multi-State co-operative society or societies, and any legal proceedings that might have been continued or commenced by or against the multi-State co-operative society or societies, as the case may be, before the amalgamation or division, may be con inued or commenced by or against the resulting multi-State co-operative society or societies.

Conversion of a co-operative society into a multi-State co-operative society. 22. Conversion of a co-operative society into a multi-State

co-operative society.-(1) A co-operative society may, by an amendment of its bye-laws, extend its jurisdiction and convert itself into a multi-State co-operative society: Provided that no such amendment of bye-laws of a co-operative society shall be valid unless it has been registered by the Central Registrar.

(2) (a) Every proposal for such amendment of bye-laws shall be forwarded to the Central Registrar in accordance with the provisions

contained in sub-section (4) of section 11. (b) If the Central Registrar, after consulting the Registrars of Co-operative Societies of the States concerned, has satisfied himself that such amendment- (i) fulfils the requirements of the members being from more than one State;

(ii) is in accordance with the provisions contained in sub-section (4) of section11, he may register the amendment within a period of six months from the date of receipt thereof by him: Provided that no co-operative society shall be deemed to have been converted into a multi-State co-operative society on any ground whatsoever unless such society is registered as a multi-State co-operative society.

(3) The Central Registrar shall forward to the co-operative society a copy of the registered amendment together with a certificate signed by him and such certificate shall be conclusive evidence that the amendment has been registered.

(4) Where the Central Registrar refuses to register an amendment of the bye-laws of a co-operative society, he shall communicate the order of refusal together with the reasons therefor to the society in the manner prescribed within seven days from the da e of refusal.

(5) (a) Once the amendment of bye-laws has been registered by the Central Registrar, the co-operative society shall, as from the date of registration of amendment, become a multi-State co-operative society. (b) The Central Registrar shall forward to the co-operative society a certificate signed by him to the effect that such society has been registered as a multi-State co-operative society under this Act and also forward a copy of the same to the Registrar f Co-operative Societies of the State concerned. (c) The Registrar of Co-operative Societies referred to in clause (b) shall thereupon make an order directing that the society had, as from the date of registration by the Central Registrar, ceased to be a society under the law relating to co-operative s cieties in force in that State. CHAP REGISTRATION AND FUNCTIONS OF FEDERAL CO-OPERATIVES CHAPTER III REGISTRATION AND FUNCTIONS OF FEDERAL CO-OPERATIVES

Registration of federal co-operative..

23. Registration of federal co-operative.-(1) Every federal co-operative shall obtain registration certificate in accordance with the provisions of this Act.

(2) Every federal co-operative shall in its general meeting be represented by its member co-operative.

(3) The classification of federal co-operative and other terms and conditions applicable to it shall be such as may be prescribed.

(4) All provisions of this Act, applicable to a multi-State co-operative society shall, as far as may be, apply to a federal co-operative.

Functions of federal co-operative..

24. Functions of federal co-operative.-(1) Subject to the provisions of this Act and any other law for the time being in force, a federal co-operative may discharge the functions to facilitate the voluntary formation and democratic functioning of co-oper tive societies as federal co-operative or multi-State co-operatives based on self-help and mutual aid.

(2) Without prejudice to the generality of the provisions contained in

sub-section (1), the federal co-operative may- (a) ensure compliance of the co-operative principles; (b) make model bye-laws and policies for consideration of its member co-operative; (c) provide specialised training, education and data-base information; (d) undertake research, evaluation and assist in preparation of perspective development plans for its member co-operative; (e) promote harmonious relations amongst member co-operative; (f) help member co-operative to settle disputes among themselves; (g) undertake business services on behalf of its member co-operative, if specifically required by or under the resolution of the general body or the board, or bye-laws of a member co-operative; (h) provide management development services to a member co-operative; (i) evolve code of conduct for observance by a member co-operative; (j) evolve viability norms for a member co-operative; (k) provide legal aid and advice to a member co-operative; (l) assist member co-operative in organising self-help; (m) develop market information system, logo brand promotion, quality control and technology upgradation. CHAP MEMBERS OF MULTI-STATE CO-OPERATIVE SOCIETIES AND THEIR DUTIES, RIGHTS AND LIABILITIES CHAPTER IV MEMBERS OF MULTI-STATE CO-OPERATIVE SOCIETIES AND THEIR DUTIES, RIGHTS AND LIABILITIES

Persons who may become members.

25. Persons who may become members.-(1) No person shall be admitted as a member of a multi-State co-operative society except the following, namely:- (a) an individual, competent to contract under section 11 of the Indian Contract Act, 1872 (9 of 1872); (b) any multi-State co-operative society or any co-operative society; (c) the Central Government; (d) a State Government; (e) the National Co-operative Development Corporation established under the National Co-operative Development Corporation Act, 1962 (26 of 1962); (f) any other corporation owned or controlled by the Government; (g) any Government company as defined in section 617 of the Companies Act, 1956 (1 of 1956); (h) such class or classes of persons or association of persons as may be permitted by the Central Registrar having regard to the nature and activities of a multi-State co-operative society.

(2) No individual person shall be eligible for admission as a member of a national co-operative society or a federal co-operative.

(3) Any person eligible for membership of a multi-State co-operative society may, on his application, be admitted as a member by such society.

(4) Every application for admission as a member of a multi-State co-operative society shall be disposed of by such society within a period of four months from the date of receipt of the application, and the decision of such society on the application sha l be communicated to the applicant within fifteen days from the date of such decision: Provided that if the application is not disposed of within the period aforesaid, or the decision is not communicated within a period of fifteen days of the expiry of the aforesaid period of four months, the multi-State co-operative society shall be deeme to have made a decision, on the date of expiry of such period, refusing admission to the applicant.

(5) It shall be the duty of every member of a multi-State co-operative society to promote and protect the interests and objects of such society.

Nominal or associate member of society. 26. Nominal or associate member of society.-A multi-State co-operative society may, if provided in its bye-laws, admit a person as nominal or associate member: Provided that no such nominal or associate member shall be entitled to subscribe the shares of such society or have any interest in the management thereof including right to vote, elect as a director of the board or participate in the general body meetin s.

Educational course for members.

27. Educational course for members.-(1) Every multi-State co-operative society shall organise co-operative education programmes for its members, directors and employees.

(2) Every multi-State co-operative society may provide funds for such co-operative education programmes.

Members not to exercise rights till due payment made. 28. Members not to exercise rights till due payment made.-No member of a multi-State co-operative society shall exercise the rights of a member, unless he has made the payment to the society in respect of membership, or has acquired such interest in the ociety, as may be specified in the bye-laws.

Disqualification for member of a multi-State co-operative society. 29. Disqualification for member of a multi-State co-operative society.-No person shall be eligible for being a member of a multi-State co-operative society if- (a) his business is in conflict or competitive with the business of such multi-State co-operative society; or (b) he used for two consecutive years the services below the minimum level specified in the bye-laws; or (c) he has not attended three consecutive general meetings of the multi-State co-operative society and such absence has not been condoned by the members in the general meeting; or (d) he has made any default in payment of any amount to be paid to the multi-State co-operative society under the bye-laws of such society.

Expulsion of members.

30. Expulsion of members.-(1) A multi-State co-operative society may, by resolution passed by a majority of not less than two-thirds of the members present and voting at a general meeting of members held for the purpose, expel a member for acts which are detrimental to the proper working of the society: Provided that the member concerned shall not be expelled unless he has been given a reasonable opportunity of making representation in the matter.

(2) No member of the multi-State co-operative society who has been

expelled under sub-section (1), shall be eligible for re-admission as a member of that society, for a period of one year from the date of such expulsion.

Vote of members. 31. Vote of members.-Every member of a multi-State co-operative society, including a member who is an employee of such society, shall have one vote in the affairs of the society: Provided that- (a) a member who is an employee of such society shall not be entitled to vote- (i) at the election of a member of the board of such society; (ii) in any general meeting convened for framing the bye-laws of such society or any amendments thereto; (b) in the case of an equality of votes, the chairperson shall have a casting vote; (c) where any of the authorities, multi-State co-operative society or a co-operative society referred to in clauses (b) to (g) of

sub-section (1) of section 25 is a member of a multi-State co-operative society, each person nominated by such authority or society, on the board in accordance with the provisions contained in this Act and the rules, shall, have one vote; (d) a multi-State co-operative society, the membership of which include co-operative societies or other multi-State co-operative societies, may provide in its bye-laws for an equitable system of voting having regard to the membership of, and the extent o business carried on, by such co-operative societies or multi-State co-operative societies.

Manner of exercising vote. 32. Manner of exercising vote.-Every member of a multi-State co-operative society shall exercise his vote in person and no member shall be permitted to vote by proxy: Provided that a multi-State co-operative society or a co-operative society or any other institution which is a member of any other multi-State co-operative society may, subject to the provisions of

sub-section (3) of section 38 and the rules, appoint its representative to vote on its behalf in the affairs of such multi-State co-operative society.

Restriction on holding of shares. 33. Restriction on holding of shares.-No member, other than the

authorities referred to in clauses (c) to (g) of sub-section (1) of section 25 or a multi-State co-operative society or a co-operative society, shall hold more than such portion of the total share capital of the society (in no case exceeding one-fifth thereof) as may be prescribed in the rules or bye-laws of such mutli-State co-operative society.

Restriction on transfer of shares or interest. 34. Restriction on transfer of shares or interest.-The transfer of share or interest of a member in the capital of a multi-State co-operative society shall be subject to such conditions as to maximum holding as specified in section 33.

Redemption of shares.

35. Redemption of shares.-(1) Shares held in a multi-State co-operative society by any of the authorities referred to in clauses

(c) to (g) of sub-section (1) of section 25 shall be redeemable in accordance with the bye-laws of such multi-State co-operat ve society and in a case where the bye-laws do not contain any provision in this regard, in such manner as may be agreed upon between the multi-State co-operative society and such authority.

(2) The redemption of shares referred to in sub-section (1) shall be on the face value of the shares.

Transfer of interest on death of members.

36. Transfer of interest on death of members.-(1) On the death of a member, a multi-State co-operative society may transfer the share or interest of the deceased member to the person nominated in accordance with the bye-laws made in this behalf or, if th re is no person nominated, to such person as may appear to the board to be the heir or legal representative of the deceased member, or pay to such nominee, heir or legal representative, as the case may be, a sum representing the value of such member's sh re or interest as ascertained in accordance with the rules: Provided that no such transfer or payment shall be made except with the consent of the nominee, heir or legal representative, as the case may be.

(2) A multi-State co-operative society shall, unless within six months of the death of the member prevented by an order of a competent court, pay to such nominee, heir or legal representative, as the case may be, all other moneys due to the deceased mem er from the society.

(3) All transfers and payments made by a multi-State co-operative society in accordance with the provisions of this section shall be valid and effectual against any demand made upon the society by any other person.

Liabilities of past member and estate of deceased member.

37. Liabilities of past member and estate of deceased member.-(1)

Subject to the provisions of sub-section (2), the liability of a past member or of the estate of a deceased member of a multi-State co-operative society for the debts of the society as the existed,- (a) in the case of a past member, on the date on which he ceased to be a member; (b) in the case of a deceased member, on the date of his death, shall continue for a period of two years from such date.

(2) Notwithstanding anything contained in sub-section (1), where a multi-State co-operative society is ordered to be wound up under section 86, the liability of a past member who ceased to be a member or of the estate of a deceased member who died within two years immediately preceding the date of the order of winding up, shall continue until the entire liquidation proceedings are completed, but such liability shall extend only to the debts of the society as they existed on the date of cessation of membe ship or death, as the case may be. CHAP DIRECTION AND MANAGEMENT OF MULTI-STATE CO-OPERATIVE SOCIETIES CHAPTER V DIRECTION AND MANAGEMENT OF MULTI-STATE CO-OPERATIVE SOCIETIES

Constitution, powers and functions of general body.

38. Constitution, powers and functions of general body.-(1) The general body of a multi-State co-operative society shall consist of all the members of such society: Provided that where the bye-laws of a multi-State co-operative society provide for the constitution of a smaller body consisting of delegates of members of the society elected or selected in accordance with such bye-laws, that smaller body shall exercise such powers of the general body as may be prescribed or as may be specified in the bye-laws of the society.

(2) Subject to the provisions of this Act, the rules and the bye-laws, the ultimate authority of a multi-State co-operative society shall vest in the general body of its members: Provided that nothing contained in this sub-section shall affect the exercise by the board or any officer of a multi-State co-operative society of any power conferred on such board or such officer by this Act or the rules or the bye-laws.

(3) Where in any meeting of the general body or the board of a multi-State co-operative society, a co-operative society or another multi-State co-operative society is to be represented, such co-operative society or other multi-State co-operative society hall be represented in such meeting only through the Chairperson or the president or the Chief Executive or a member of the board of such co-operative society or other multi-State co-operative society, as the case may be, if such member is so authorised y the board and where there is no board of such co-operative society or other multi-State co-operative society, for whatever reasons, through the administrator, by whatever name called, of such co-operative society or other multi-State co-operative socie y: Provided that where the bye-laws of a multi-State co-operative society provide for representation of other institutions in any meeting of general body or the board of such multi-State co-operative society, such institutions shall be represented through i s nominee.

Annual general meeting of general body.

39. Annual general meeting of general body.-(1) The board of every multi-State co-operative society shall, within such period as may be prescribed, and not later than six months after the close of the corresponding year, call the annual general meeting i the manner prescribed for the purpose of- (a) consideration of the audited statement of accounts; (b) consideration of the audit report and annual report; (c) consideration of audit compliance report; (d) disposal of net profits; (e) review of operational deficit, if any; (f) creation of specific reserves and other funds; (g) approval of the annual budget; (h) review of actual utilisation of reserve and other funds; (i) approval of the long-term perspective plan and the annual operational plan; (j) review of annual report and accounts of subsidiary institution, if any; (k) expulsion of members; (l) list of employees who are relatives of members of the board or of the Chief Executive; (m) amendment of bye-laws, if any; (n) formulation of code of conduct for the members of the board and officers; (o) election of members of the board, if any.

(2) Where the board of a multi-State co-operative society fails to convene the annual general meeting within the period specified in

sub-section (1), the Central Registrar or the person authorised by him in this behalf shall be competent to convene such nnual general meeting within a period of ninety days from the date of expiry of the period mentioned in that sub-section and the expenditure incurred on such meeting shall be borne by the society.

(3) At every annual general meeting of a multi-State co-operative society, the board shall lay before the society a statement showing the details of the loans or goods on credit, if any, given to any of the members of the board or to the spouse or a son or daughter of a member of the board during the preceding year or outstanding against him or against such spouse or son or daughter of the member of the board.

Special general meeting of general body.

40. Special general meeting of general body.-(1) The Chief Executive may, at any time, on the direction of the board, call a special general meeting of the society and shall call such meeting within one month after the receipt of a requisition in writing from the Central Registrar or from such member or members or a proportion of the total number of members, as may be provided in the bye-laws.

(2) If a special general meeting of a multi-State co-operative society is not called in accordance with the requisition referred to in

sub-section (1), the Central Registrar or any person authorised by him in this behalf shall have the power to call such meeting and that meeting shall be deemed to be a meeting called by the Chief Executive in accordance with the provisions of that sub-section and the Central Registrar may order that the expenditure incurred in calling such meeting shall be paid out of th funds of the society or by such person or persons who, in the opinion of the Central Registrar, was or were responsible for the refusal or failure to convene the special general meeting.

Board of directors.

41. Board of directors.-(1) Subject to the provisions of this Act and rules, there shall be a board of directors for every multi-State co-operative society consisting of such number of members as specified

in sub-section (3).

(2) The members of a multi-State co-operative society, by a resolution in a general meeting, shall elect directors who shall be members of board.

(3) The board shall consist of such number of directors as may be specified in the bye-laws: Provided that the maximum number of directors in no case shall exceed twenty-one: Provided further that the board may co-opt two directors in addition to twenty-one directors specified in the first proviso: Provided also that the functional directors in the national co-operative societies shall also be the members of the board and such members shall be excluded for the purpose of counting the total number of directors specified in the first proviso.

Association of employees in management decision making process. 42. Association of employees in management decision making process.-Every multi-State co-operative society shall devise such procedure, as may be specified in the bye-laws or in the administrative instructions of such society, for the association of the epresentatives of employees of such multi-State co-operative societies at such level or bodies as may be specified in the bye-laws or the instructions issued in this regard, in the management decision making process.

Disqualifications for being a member of board.

43. Disqualifications for being a member of board.-(1) No member of any multi-State co-operative society or nominee of a member, society or a national co-operative society shall be eligible for being chosen as, or for being, a member of the board of such multi-State co-operative society or a national co-operative society, or of any other co-operative society to which the multi-State co-operative society is affiliated, if such member- (a) has been adjudged by a competent court to be insolvent or of unsound mind; (b) is concerned or participates in the profits of any contract with the society; (c) has been convicted for an offence involving moral turpitude; (d) holds any office or place of profit under the society: Provided that the Chief Executive or such full-time employee of the society as may be notified by the Central Government from time to time or a person elected by the employees of such society to represent them on the board of such society shall be eligi le for being chosen as, or for being, a member of such board; (e) has been a member of the society for less than twelve months immediately preceding the date of such election or appointment; (f) has interest in any business of the kind carried on by the society of which he is a member; (g) has taken loan or goods on credit from the society of which he is a member, or is otherwise indebted to such society and after the receipt of a notice of default issued to him by such society, has defaulted- (i) in repayment of such loan or debt or in payment of the price of the goods taken on credit, as the case may be, within the date fixed for such repayment or payment or where such date is extended, which in no case shall exceed six months, within the da e so extended, or (ii) when such loan or debt or the price of goods taken on credit is to be paid in instalments, in payment of any instalment, and the amount in default or any part thereof has remained unpaid on the expiry of six months from the date of such default: Provided that a member of the board who has ceased to hold office as such under this clause shall not be eligible, for a period of one year, from the date on which he ceased to hold office, for re-election as a member of the board of the multi-State co-o erative society of which he was a member or for the election to the board of any other multi-State co-operative society; (h) is a person against whom any amount due under a decree, decision or order is pending recovery under this Act; (i) is retained or employed as a legal practitioner on behalf of or against the multi-State co-operative society, or on behalf of or against any other multi-State co-operative society which is a member of the former society. Explanation.-For the purposes of this clause, ''legal practitioner''

has the same meaning as in clause (i) of sub-section (1) of section 2 of the Advocates Act, 1961 (25 of 1961); (j) has been convicted for any offence under this Act; (k) is disqualified for being a member under section 29; (l) has been expelled as a member under section 30; (m) absents himself from three consecutive board meetings and such absence has not been condoned to by the board; (n) absents himself from three consecutive general body meetings and such absence has not been condoned by the members in the general body.

(2) A person shall not be eligible for being elected as member of board of a multi-State co-operative society for a period of five years if the board of such multi-State co-operative society fails- (a) to conduct elections of the board under section 45; or (b) to call the annual general meeting under section 39; or (c) to prepare the financial statement and present the same in the annual general meeting.

Prohibition to hold office of chairperson or president or vice-chairperson or vice-president in certain cases. 44. Prohibition to hold office of chairperson or president or

vice-chairperson or vice-president in certain cases.-(1) No member of a board shall be eligible to be elected as the chairperson or president or vice-chairperson or vice-president of a multi-S ate co-operative society if such member is a Minister in the Central Government or a State Government.

(2) No member of a board shall be eligible to be elected as the chairperson or president of a multi-State co-operative society, after he has held the office, as such during two consecutive terms, whether full or part: Provided that a member who has ceased to hold the office of the chairperson or president continuously for one full term shall again be eligible for election to the office as such. Explanation.-Where any member holding the office of the chairperson or president at the commencement of this Act is again elected to that office after such commencement, he shall for the purpose of this section, be deemed to have held office for one term before such election.

Elections of members of board.

45. Elections of members of board.-(1) The conduct of elections to the board of a multi-State co-operative society shall be the responsibility of the existing board.

(2) The election of members of board shall be held by secret ballot in the manner as may be prescribed.

(3) The election of the members of the board shall be held in the general meeting of the members of the multi-State co-operative society.

(4) The elected members of the board shall, if the bye-laws of such society permit, be eligible for re-election.

(5) The term of office of the elected members of the board shall be such, not exceeding five years from the date of elections, as may be specified in the bye-laws of a multi-State co-operative society: Provided that elected members shall continue to hold office till their successors are elected or nominated under the provisions of this Act or the rules or bye-laws and assume charge of their office.

(6) Where the board fails to conduct election of the members of board, the Central Registrar shall hold the election within a period of ninety days from the date when such election became due.

(7) No person shall be eligible to be elected as a member of the board of a multi-State co-operative society unless he is a member of the general body of that society.

(8) The expenses for holding election by the Central Registrar shall be borne by the multi-State co-operative society.

(9) The Central Government may make rules generally to provide for or to regulate matters in respect of election of members of the board.

Holding of office in co-operative society. 46. Holding of office in co-operative society.-Notwithstanding anything contained in this Act, no person shall be eligible to hold, at the same time, office of a president or chairperson or vice-president or vice-chairperson on the board of more than two multi-State co-operative societies.

Removal of elected members by general body. 47. Removal of elected members by general body.-An elected member of a board, who has acted adversely to the interests of multi-State co-operative society, may on the basis of a report of the Central Registrar or otherwise be removed from the board upon resolution of the general body passed at its meeting by a majority of not less than two-third of the members present and voting at the meeting: Provided that the member concerned shall not be removed unless he has been given a reasonable opportunity of making a representation in the matter.

Nominee of Central Government or State Government on board.

48. Nominee of Central Government or State Government on board.-(1) Where the Central Government or a State Government has subscribed to the share capital of a multi-State co-operative society, the Central authorised by the Central Government or the State Government shall have right to nominate on the board such number of persons as its members on the following basis, namely:- Government or the State Government, as the case ay be, or any person (a) where the total amount of issued equity share capital held by the Central Government or the State Government is less than twenty-six per cent. of the total issued equity share capital, one member of the board; (b) where the total amount of issued equity share capital held by the Central Government or the State Government is twenty-six per cent or more but less than fifty-one per cent. of the total issued equity share capital, two members of the board; (c) where the total amount of issued equity share capital held by the Central Government or the State Government is fifty-one per cent. or more of the total issued share capital, three members of the board: Provided that the number of such nominated persons shall not exceed one-third of the total number of members of the board: Provided further that where the Central Government or a State Government has guaranteed the repayment of principal and payment of interest on debentures issued by a multi-State co-operative society or has guaranteed the repayment of principal and payment of interest on loans and advances to a multi-State co-operative society or has given any assistance by way of grants or otherwise to a multi-State co-operative society, the Central Government or the State Government in this behalf, as the case may be, or any person authorised by the Central Government, shall have the right to nominate person on the board of such a society in the manner as may be prescribed.

(2) A person nominated under this section shall hold office during the pleasure of the Government by which he has been so nominated.

Powers and functions of board.

49. Powers and functions of board.-(1) The board may exercise all such powers as may be necessary or expedient for the purpose of carrying out its functions under this Act.

(2) Without prejudice to the generality of the foregoing powers, such powers shall include the power- (a) to admit members; (b) to interpret the organisational objectives and set-up specific goals to be achieved towards these objectives; (c) to make periodic appraisal of operations; (d) to appoint and remove a Chief Executive and such other employees of the society as are not required to be appointed by the Chief Executive; (e) to make provisions for regulating the appointment of employees of the multi-State co-operative society and the scales of pay, allowances and other conditions of service of, including disciplinary action against such employees; (f) to place the annual report, annual financial statements, annual plan and budget for the approval of the general body; (g) to consider audit and compliance report and place the same before the general body; (h) to acquire or dispose of immovable property; (i) to review membership in other co-operatives; (j) to approve annual and supplementary budget; (k) to raise funds; (l) to sanction loans to the members; and (m) to take such other measures or to do such other acts as may be prescribed or required under this Act or the bye-laws or as may be delegated by the general body.

Meeting of board.

50. Meeting of board.-(1) The Chief Executive shall convene the meetings of the board at the instance of the chairperson or president of the multi-State co-operative society.

(2) The total number of meetings of the board in a year and the venue of meetings as may be specified in the bye-laws: Provided that the board shall meet at least once in every quarter: Provided further that not more than two persons may be invited by the board in its meetings.

(3) The Chairperson, or if for any reason, he is unable to attend a meeting of the board, any other member of the board chosen by the members of the board present from amongst themselves at the meeting, shall preside at the meeting.

Chief Executive.

51. Chief Executive.-(1) There shall be a Chief Executive, by whatever designation called, of every multi-State co-operative society to be appointed by the board and he shall be a full-time employee of such multi-State co-operative society.

(2) The Chief Executive shall be a member of the board and of the Executive Committee and such other committees or sub-committees as may

be constituted under sub-section (1) of section 53.

(3) Where the Central Government or the State Government holds fifty-one per cent. or more of the equity share capital or of total shares of the multi-State co-operative society, the salary and allowances payable to and other terms and conditions of serv ce including pension, gratuity and other retirement benefits of the Chief Executive shall be such as may be prescribed.

Powers and functions of Chief Executive. 52. Powers and functions of Chief Executive.-The Chief Executive shall under the general superintendence, direction and control of the board, exercise the powers and discharge the functions specified below, namely:- (a) day-to-day management of the business of the multi-State-co-operative society; (b) operating the accounts of the multi-State co-operative society and be responsible for making arrangements for safe custody of cash; (c) signing on the documents for and on behalf of the multi-State co-operative society; (d) making arrangements for the proper maintenance of various books and records of the multi-State co-operative society and for the correct preparation, timely submission of periodical statements and returns in accordance with the provisions of this Act, the rules and the bye-laws; (e) convening meetings of the general body of the multi-State co-operative society, the board and the Executive Committee and other

committees or sub-committees constituted under sub-section (1) of section 53 and maintaining proper records for such meeti gs; (f) making appointments to the posts in the multi-State co-operative society in accordance with the bye-laws; (g) assisting the board in the formulation of policies, objectives and planning; (h) furnishing to the board periodical information necessary for appraising the operations and functions of the multi-State co-operative society; (i) appoint the person to sue or be sued on behalf of the multi-State co-operative society; (j) present the draft annual report and financial statements for the approval of the board within thirty days of closure of the financial year; (k) performing such other duties, and exercising such other powers, as may be specified in the bye-laws of the multi-State co-operative society.

Committees of board.

53. Committees of board.-(1) The board may, subject to such conditions as may be prescribed, constitute an Executive Committee and other committees or sub-committees as may be considered necessary: Provided that other committees or sub-committees, other than the Executive Committee shall not exceed three.

(2) The Executive Committee or other committee or sub-committee

referred to in sub-section (1) shall perform such functions as are assigned to it in accordance with the bye-laws of the multi-State co-operative society.

Securing possession of records, etc.

54. Securing possession of records, etc.-(1) If- (a) the records, including registers and books of account of a multi-State co-operative society are likely to be tampered with or destroyed or the funds or other property of such society are likely to be mis-appropriated; or (b) the board of a multi-State co-operative society is reconstituted at a general meeting of the society; or (c) a multi-State co-operative society is ordered to be wound up under section 86 and the outgoing members of the board refuse to handover charge of the records and property of the society to those having or entitled to receive such charge, the Chief Executive may apply to the magistrate within whose jurisdiction the multi-State co-operative society functions for securing the records and property of the society.

(2) On receipt of an application under sub-section (1), the magistrate may, by a warrant, authorise any police officer not below the rank of a sub-inspector to enter and search any place where such records and property are kept or are believed to be kept and to seize such records and property; and the records and property so seized shall be handed over to the new board or the liquidator, as the case may be.

(3) Every such search and seizure shall be made in accordance with the provisions of the Code of Criminal Procedure, 1973 (2 of 1974). CHAP PRIVILEGES OF MULTI-STATE CO-OPERATIVE SOCIETIES CHAPTER VI PRIVILEGES OF MULTI-STATE CO-OPERATIVE SOCIETIES

Charge and set-off in respect of share or contribution or interest of members. 55. Charge and set-off in respect of share or contribution or interest of members.-A multi-State co-operative society shall have a charge on the share or contribution or interest in the capital and on the deposits of a member or past or deceased member a d on any dividend, bonus or profits payable to a member or past member or the estate of a deceased member in respect of any debt due from such member or past member or the estate of such deceased member to the society and may set-off any sum credited or ayable to a member or past member or the estate of deceased member in or towards payment of any such debt.

Share or contribution or interest not liable to attachment.

56. Share or contribution or interest not liable to attachment.-(1) Subject to the provisions of section 55, the share or contribution or interest of a member or past or deceased member in the capital of a multi-State co-operative society shall not be li ble to attachment or sale under any decree or order of any court in respect of any debt or liability incurred by such member, and an official assignee or a receiver under any law relating to insolvency shall not be entitled to, or have any claim on, suc share or contribution or interest.

(2) The reserve fund, or the bad debt reserves, or the provident fund of the employees, of a multi-State co-operative society invested by such society in accordance with the provisions of this Act and the bye-laws shall not be liable to attachment under ny decree or order of a court in respect of any debt or liability incurred by the society.

Register of members. 57. Register of members.-Any register or list of members or shares kept by any multi-State co-operative society shall be prima facie evidence of any of the following particulars entered therein, namely:- (a) the date on which any person entered in such register or list became a member; and (b) the date on which any such person ceased to be a member.

Admissibility of copy of entry as evidence.

58. Admissibility of copy of entry as evidence.-(1) A copy of any entry in a book of a multi-State co-operative society regularly kept in the course of its business shall, if certified in such manner as may be prescribed, be received in any suit or legal proceedings as prima facie evidence of the existence of such entry and shall be admitted as evidence of the matters, transactions and accounts therein recorded in every case where, and to the same extent, as the original entry itself is admissible.

(2) No officer of a multi-State co-operative society and no officer in whose office the books of a multi-State co-operative society are deposited after liquidation shall, in any legal proceedings to which the society or the liquidator is not a party, be ompelled to produce any of the society's books or documents the contents of which can be proved under this section, or to appear as a witness to prove the matters, transactions and accounts therein recorded, except under an order of a court or an arbitra or made for a special cause.

Exemption from compulsory registration of instruments. 59. Exemption from compulsory registration of instruments.-Nothing in

clauses (b) and (c) of sub-section (1) of section 17 of the Registration Act, 1908 (16 of 1908) shall apply to- (a) any instrument relating to shares in a multi-State co-operative society notwithstanding that the assets of the society consist in whole or in part of immovable property; or (b) any debenture issued by any such society and not creating, declaring, assigning, limiting or extinguishing any right, title or interest to or in immovable property, except in so far as it entitles the holder thereof to the security afforded by a regi tered instrument whereby the society has mortgaged, conveyed or otherwise transferred the whole or part of its immovable property or any interest therein to trustees upon trust for the benefit of the holders of such debentures; or (c) an endorsement upon transfer of any debenture issued by any such society.

Deduction from salary to meet multi-State co-operative society's claim in certain cases. 60. Deduction from salary to meet multi-State co-operative society's

claim in certain cases.-(1) Notwithstanding anything contained in any law for the time being in force, a member of a multi-State co-operative society may execute an agreement in favour f that society providing that his employer disbursing his salary or wages shall be competent to deduct every month from the salary or wages payable to him, such amount as may be specified in the agreement and to pay the amount so deducted to the society n satisfaction of any debt or other demand the member owes to the society.

(2) On the execution of such agreement, the employer disbursing the salary or wages of the members shall, if so required by the multi-State co-operative society, by a requisition in writing and so long as the society does not intimate that the whole of s ch debt or other demand has been paid, make the deduction in accordance with the agreement and pay the amount so deducted to the society within a period of fourteen days of the date on which deduction has been made, as if it were a part of the salary or ages payable on the day as required under the Payment of Wages Act, 1936 (4 of 1936), and such payment shall be valid discharge of the employer for his liability to pay the amount deducted.

(3) If after the receipt of a requisition made under sub-section (2), the employer disbursing the salary or wages of the member at any time fails to deduct the amount specified in the requisition from the salary or wages payable to the member concerned o makes default in remitting the amount deducted to the multi-State co-operative society, the society shall be entitled to recover any such amount from such employer as arrears of land revenue and the amount so due from such employer shall rank in priorit in respect of the liability of such employer equal to that of the salary or wages in arrears.

Government aid to multi-State co-operative societies. 61. Government aid to multi-State co-operative societies.-Notwithstanding anything contained in any law for the time being in force, the Central Government or a State Government, on receipt of request from a multi-State co-operative society and with a vi w to promoting co-operative movement, may,- (a) subscribe to the share capital of a multi-State co-operative society; (b) give loans or make advances to a multi-State co-operative society; (c) guarantee the repayment of principal and payment of interest on debentures issued by a multi-State co-operative society; (d) guarantee the repayment of share capital of a multi-State co-operative society and dividends thereon at such rates as may be specified by the Central Government or the State Government; (e) guarantee the repayment of principal and payment of interest on loans and advances to a multi-State co-operative society; (f) give financial assistance in any other form, including subsidies, to any multi-State co-operative society; and (g) provide aid to any other multi-State co-operative society on such terms and conditions as may be prescribed. CHAP PROPERTIES AND FUNDS OF MULTI-STATE CO-OPERATIVE SOCIETIES CHAPTER VII PROPERTIES AND FUNDS OF MULTI-STATE CO-OPERATIVE SOCIETIES

Funds not to be divided by way of profits.

62. Funds not to be divided by way of profits.-(1) No part of the funds, other than net profits, of a multi-State co-operative society shall be divided by way of bonus or dividend or otherwise distributed among its members.

(2) The net profits of a multi-State co-operative society referred to

in sub-section (1) in respect of a society earning profits shall be calculated by deducting from the gross profit for the year, all interest accrued and accruing in relation to amounts which are overdue, establishment charges, interest payable on loans and deposits, audit fees, working expenses including repairs, rent, taxes and depreciation, bonus payable to employees under the law relating to payment of bonus for the time being in fo ce, and equalisation fund for such bonus, provision for payment of income-tax and making approved donations under the Income-tax Act, 1961 (43 of 1961), development rebate, provision for development fund, bad debt fund, price fluctuation fund, dividend e ualisation fund, share capital redemption fund, investment fluctuation fund, provision for retirement benefits to employees, and after providing for or writing off bad debts and losses not adjusted against any fund created out of profit: Provided that such society may add to the net profits for the year interest accrued in the preceding years, but actually recovered during the year: Provided further that in the case of such multi-State co-operative societies as do not have share capital, the surplus of income over expenditure shall not be treated as net profits and such surplus shall be dealt with in accordance with the bye-laws.

Disposal of net profits.

63. Disposal of net profits.-(1) A multi-State co-operative society shall, out of its net profits in any year,- (a) transfer an amount not less than twenty-five per cent. to the reserve fund; (b) credit one per cent. to co-operative education fund maintained, by the National Co-operative Union of India Limited, New Delhi, in the manner as may be prescribed; (c) transfer an amount not less than ten per cent. to a reserve fund for meeting unforeseen losses.

(2) Subject to such conditions as may be prescribed, the balance of the net profits may be utilised for all or any of the following purposes, namely:- (a) payment of dividend to the members on their paid-up share capital at a rate not exceeding the prescribed limit; (b) constitution of, or contribution to, such special funds including education funds, as may be specified in the bye-laws; (c) donation of amounts not exceeding five per cent. of the net profits for any purpose connected with the development of co-operative movement or charitable purpose as defined in section 2 of the Charitable Endowments Act, 1890 (6 of 1890); (d) payment of ex gratia amount to employees of the multi-State co-operative society to the extent and in the manner specified in the bye-laws.

Investment of funds. 64. Investment of funds.-A multi-State co-operative society may invest or deposit its funds- (a) in a co-operative bank, State co-operative bank, co-operative land development bank or Central co-operative bank; or (b) in any of the securities specified in section 20 of the Indian Trusts Act, 1882 (2 of 1882); or (c) in the shares or securities of any other multi-State co-operative society or any co-operative society; or (d) in the shares, securities or assets of a subsidiary institution or any other institution; or (e) with any other bank; or (f) in such other mode as may be provided in the bye-laws. Explanation.-For the purposes of clause (e), ''bank'' means any banking company as defined in clause (c) of section 5 of the Banking Regulation Act, 1949 (10 of 1949), and includes- (i) the State Bank of India constituted under the State Bank of India Act, 1955 (23 of 1955); (ii) a subsidiary bank as defined in clause (k) of section 2 of the State Bank of India (Subsidiary Banks) Act, 1959 (38 of 1959); (iii) a corresponding new bank constituted under section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (5 of 1970) or a corresponding new bank constituted under section 3 of the Banking Companies (Acquisition and Transfe of Undertakings) Act, 1980 (40 of 1980).

Restriction on contribution. 65. Restriction on contribution.-No multi-State co-operative society shall make a contribution, either in money or in kind, whether directly or indirectly, to an institution which has an object of furtherance of the interest of a political party.

Restriction on loans.

66. Restriction on loans.-(1) A multi-State co-operative society, other than a co-operative bank, shall not make a loan to a member on the security of his share or on the security of a non-member.

(2) Notwithstanding anything contained in sub-section (1), a multi-State co-operative society may make a loan to a depositor on the security of his deposit.

Restriction on borrowing.

67. Restriction on borrowing.-(1) A multi-State co-operative society may receive deposits, raise loans and receive grants from external sources to such extent and under such conditions as may be specified in the bye-laws: Provided that the total amount of deposits and loans received during any financial year shall not exceed ten times of the sum of subscribed share capital and accumulated reserves: Provided further that while calculating the total sum of subscribed share capital and accumulated reserves, the accumulated losses shall be deducted.

(2) Subject to the provisions of sub-section (1), a multi-State co-operative society may accept funds or borrow funds for the fulfilment of its objects on such terms and conditions as are mutually contracted upon.

(3) A multi-State co-operative society may issue non-convertible debentures or other instruments subject to the provisions of any law for the time being in force to raise resources for the fulfilment of its objects to the extent of twenty-five per cent. f its paid-up share capital.

Restriction on other transactions with non-members. 68. Restriction on other transactions with non-members.-Save as provided in sections 66 and 67, the transaction of a multi-State co-operative society with any person other than a member, shall be subject to such prohibitions and restrictions, if any, as ay be specified in the bye-laws.

Contributory provident fund.

69. Contributory provident fund.-(1) Subject to the provisions of the Employees' Provident Fund and Miscellaneous Provisions Act, 1952 (19 of 1952), a multi-State co-operative society having such number or class of employees as may be prescribed, may est blish a contributory provident fund for the benefit of its employees to which shall be credited all contributions made by the employees and the society in accordance with the bye-laws of the society.

(2) Monies standing to the credit of any contributory provident fund established by a multi-State co-operative society under sub-section

(1) shall not- (a) be used in the business of the society; (b) form part of the assets of the society; (c) be liable to attachment or be subject to any other process of any court or other authority. CHAP AUDIT, INQUIRY, INSPECTION AND SURCHARGE CHAPTER VIII AUDIT, INQUIRY, INSPECTION AND SURCHARGE

Appointment and remuneration of auditors.

70. Appointment and remuneration of auditors.-(1) Every multi-State co-operative society shall cause to be audited by an auditor referred

to in sub-section (2), its accounts at least once in each year.

(2) Every multi-State co-operative society shall, at each annual general meeting, appoint an auditor or auditors to hold office from the conclusion of that meeting until the conclusion of the next annual general meeting and shall, within seven days of th appointment, give intimation thereof to every auditor so appointed: Provided that such auditor or auditors may be appointed from a panel of auditors approved by the Central Registrar or from a panel of auditors, if any, prepared by the multi-State co-operative society.

(3) Every auditor appointed under sub-section (1) shall, within thirty days of the receipt from the multi-State co-operative society of the intimation of his appointment, inform the Central Registrar in writing that he has accepted, or refused to accept, the appointment.

(4) A retiring auditor shall be re-appointed unless- (a) he is not qualified for re-appointment; (b) he has given the multi-State co-operative society a notice in writing of his unwillingness to be re-appointed; (c) a resolution has been passed at the general meeting of members appointing some body instead of him or providing expressly that he shall not be re-appointed; or (d) where notice has been given of an intended resolution to appoint some person or persons in the place of a retiring auditor, and by reason of the death, incapacity or disqualification of that person or all those persons, as the case may be, the resolu ion cannot be proceeded with.

(5) Where at an annual general meeting no auditors are appointed or re-appointed, the Central Registrar may appoint a person to fill the vacancy.

(6) First auditor or auditors of a multi-State co-operative society shall be appointed by the board within one month of the date of registration of such society and the auditor or auditors so appointed shall hold office until the conclusion of the first nnual general meeting: Provided that- (a) the multi-State co-operative society may, at a general meeting, remove any such auditor or all or any of such auditors and appoint in his or their places any other person or persons who have been nominated for appointment by any member of the multi-S ate co-operative society and of whose nomination notice has been given to the members of the multi-State co-operative society not less than fourteen days before the date of the meeting; and (b) if the board fails to exercise its powers under this sub-section, the multi-State co-operative society in the general meeting may appoint the first auditor or auditors.

(7) (a) The multi-State co-operative society may fill any casual vacancy in the office of an auditor; but while any such vacancy continues, the remaining auditor or auditors, if any, may act: Provided that where such vacancy is caused by the resignation of an auditor, the vacancy shall only be filled by the multi-State co-operative society in general meeting. (b) Any auditor appointed in a casual vacancy shall hold office until the conclusion of the next annual general meeting.

(8) Any auditor appointed under this section may be removed from office before the expiry of his term by the multi-State co-operative society in general meeting.

(9) The remuneration of the auditors of a multi-State co-operative society- (a) in the case of an auditor appointed by the board or the Central Registrar may be fixed by the board or the Central Registrar, as the case may be; and (b) subject to clause (a), shall be fixed by the multi-State co-operative society in general meeting or in such manner as the multi-State co-operative society in general meeting may determine. Explanation.-For the purposes of this sub-section, any sums paid by the multi-State co-operative society in respect of the auditors' expenses shall be deemed to be included in the expression "remuneration".

Provision as to resolutions for appointing or removing auditors. 71. Provision as to resolutions for appointing or removing

auditors.-(1) A special notice shall be required for a resolution at an annual general meeting appointing as auditor a person other than a not be re-appointed. retiring auditor, or providing expressly that a retiring auditor shall

(2) On receipt of notice of such a resolution, the multi-State co-operative society shall forthwith send a copy thereof to the retiring auditor.

(3) Where notice is given of such a resolution and the retiring auditor makes with respect thereto representations in writing to the multi-State co-operative society (not exceeding a reasonable length) and requests their notification to members of the mu ti-State co-operative society, the multi-State co-operative society shall, unless the representations are received by it too late for it to do so,- (a) in any notice of the resolution given to members of the multi-State co-operative society, state the fact of the representations having been made; and (b) send a copy of the representation to every member of the multi-State co-operative society to whom notice of the meeting is sent, whether before or after the receipt of the representations by the multi-State co-operative society, and if a copy of the representations is not sent as aforesaid because they were received too late or because of the multi-State co-operative society's default, the auditor may (without prejudice to his right to be heard orally) require that the represent tions shall be read out at the meeting.

Qualifications and disqualifications of auditors.

72. Qualifications and disqualifications of auditors.-(1) A person shall not be qualified for appointment as an auditor of a multi-State co-operative society unless he is a chartered accountant within the meaning of the Chartered Accountants Act, 1949 (3 of 1949).

(2) None of the following persons shall be qualified for appointment as auditor of a multi-State co-operative society- (a) a body corporate; (b) an officer or employee of the multi-State co-operative society; (c) a person who is a member, or who is in the employment, of an officer or employee of the multi-State co-operative society; (d) a person who is indebted to the multi-State co-operative society or who has given any guarantee or provided any security in connection with the indebtedness of any third person to the multi-State co-operative society for an amount exceeding one thous nd rupees.

(3) A person shall also not be qualified for appointment as an auditor of a multi-State co-operative society if he is, by virtue of

sub-section (2), disqualified for appointment as an auditor of any other body corporate or multi-State co-operative societ or co-operative society.

(4) If an auditor becomes subject, after his appointment, to any of

the disqualifications specified in sub-sections (2) and (3), he shall be deemed to have vacated his office as such.

Powers and duties of auditors.

73. Powers and duties of auditors.-(1) Every auditor of a multi-State co-operative society shall have a right of access at all times to the books, accounts and vouchers of the multi-State co-operative society, whether kept at the head office of the multi State co-operative society or elsewhere, and shall be entitled to require from the officers or other employees of the multi-State co-operative society such information and explanations as the auditor may think necessary for the performance of his duties s an auditor.

(2) Without prejudice to provisions of sub-section (1), the auditor shall inquire,- (a) whether loans and advances made by the multi-State co-operative society on the basis of security have been properly secured and whether the terms on which they have been made are not prejudicial to the interests of the multi-State co-operative societ or its members; (b) whether transactions of the multi-State co-operative society which are represented merely by book entries are not prejudicial to the interests of the multi-State co-operative society; (c) whether personal expenses have been charged to revenue account; and (d) where it is stated in the books and papers of the multi-State co-operative society that any shares have been allotted for cash, whether cash has actually been received in respect of such allotment, and if no cash has actually been so received, whethe the position as stated in the account books and the balance-sheet is correct, regular and not misleading.

(3) The auditor shall make a report to the members of the multi-State co-operative society on the accounts examined by him and on every balance-sheet and profit and loss account and on every other document required to be part of or annexed to the balance sheet or profit and loss account, which are laid before the multi-State co-operative society in general meeting during his tenure of office, and the report shall state whether, in his opinion and to the best of his information and according to the explan tions given to him, the said accounts give the information required by this Act in the manner so required and give a true and fair view,- (a) in the case of the balance-sheet, of the state of the multi-State co-operative society's affairs as at the end of its financial year; and (b) in the case of the profit and loss account, of the profit or loss for its financial year.

(4) The auditors' report shall also state- (a) whether he has obtained all the information and explanations which to the best of his knowledge and belief were necessary for the purposes of his audit; (b) whether, in his opinion, proper books of account have been kept by the multi-State co-operative society so far as appears from his examination of those books, and proper returns adequate for the purposes of his audit have been received from branches r offices of the multi-State co-operative society not visited by him; (c) whether the report on the accounts of any branch office audited by a person other than the multi-State co-operative society's auditor has been forwarded to him and how he has dealt with the same in preparing the auditor's report; (d) whether the multi-State co-operative society's balance-sheet and profit and loss account dealt with by the report are in agreement with the books of account and returns.

(5) Where any of the matters referred to in clauses (a) and (b) of

sub-section (3) or in clauses (a), (b), (c) and (d) of sub-section (4) is answered in the negative or with a qualification, the auditor's report shall state the reason for the answer.

Signature of audit report, etc. 74. Signature of audit report, etc.-Only the person appointed as an auditor of the multi-State co-operative society shall sign the auditor's report, or sign or authenticate any other document of the multi-State co-operative society required by law to be igned or authenticated by the auditor.

Reading and inspection of auditor's report. 75. Reading and inspection of auditor's report.-The auditor's report shall be read before the multi-State co-operative society in the general meeting and shall be open to inspection by any member of the multi-State co-operative society.

Right of auditor to attend general meeting. 76. Right of auditor to attend general meeting.-All notices of, and other communications relating to, any general meeting of a multi-State co-operative society, which any member of the multi-State co-operative society is entitled to have sent to him, sha l also be forwarded to the auditor of the multi-State co-operative society; and the auditor shall be entitled to attend any general meeting and to be heard at any general meeting which he attends on any part of the business which concerns him as auditor.

Power of Central Government to direct special audit in certain cases. 77. Power of Central Government to direct special audit in certain

cases.-(1) Where the Central Government is of the opinion- (a) that the affairs of any multi-State co-operative society are not being managed in accordance with self-help and mutual aid and co-operative principles or prudent commercial practices; or with sound business principles; or (b) that any multi-State co-operative society is being managed in a manner likely to cause serious injury or damage to the interests of the trade, industry or business to which it pertains; or (c) that the financial position of any multi-State co-operative society is such as to endanger its solvency, the Central Government may at any time by order direct that a special audit of the multi-State co-operative society's accounts for such period or periods as may be specified in the order, shall be conducted and may by the same or a different order appoin either a chartered

accountant as defined in clause (b) of sub-section (1) of section 2 of the Chartered Accountants Act, 1949 (38 of 1949) or the multi-State co-operative society's auditor himself to conduct with special audit: Provided that the Central Government shall not order for special audit of a multi-State co-operative society's accounts if that Government or the State Government either by itself or both hold less than fifty-one per cent. of the paid-up share capital or of the shares in such multi-State co-operative society.

(2) The chartered accountant or the multi-State co-operative society's

auditor appointed under sub-section (1) to conduct a special audit as aforesaid is hereafter in this section referred to as the special auditor.

(3) The special auditor shall have the same powers and duties in relation to the special audit as an auditor of a multi-State co-operative society has under section 73: Provided that the special auditor shall, instead of making his report to the members of the multi-State co-operative society, make the same to the Central Government.

(4) The report of the special auditor shall, as far as may be, include all the matters required to be included in the auditors' report under section 73 and, if the Central Government so directs, shall also include a statement on any other matter which ma be referred to him by that Government.

(5) The Central Government may by order direct any person specified in the order to furnish to the special auditor within such time as may be specified therein such information or additional information as may be required by the special auditor in connec ion with the special audit.

(6) On receipt of the report of the special auditor, the Central Government may take such action on the report as it considers necessary in accordance with the provisions of this Act or any other law for the time being in force: Provided that if the Central Government does not take any action on the report within four months from the date of its receipt, that Government shall send to the multi-State co-operative society either a copy of, or relevant extract from, the report with its comments thereon and require the multi-State co-operative society either to circulate that copy or those extracts to the members or to have such copy or extracts read before the multi-State co-operative society at its next general meeting.

(7) The expenses of, and incidental to, any special audit under this section (including the remuneration of the special auditor) shall be determined by the Central Government which determination shall be final and paid by the multi-State co-operative soc ety and in default of such payment, shall be recoverable from the multi-State co-operative society as an arrear of land revenue.

Inquiry by Central Registrar.

78. Inquiry by Central Registrar.-(1) The Central Registrar may, on a request from a federal co-operative to which a multi-State co-operative society is affiliated or a creditor or not less than one-third of the members of the board or not less than one- ifth of the total number of members of a multi-State co-operative society hold an inquiry or direct some person authorised by him by order in writing in this behalf to hold an inquiry into the constitution, working and financial condition of a multi-Stat co-operative society: Provided that no inquiry under this sub-section shall be held unless a notice of not less than fifteen days has been given to the multi-State co-operative society.

(2) The Central Registrar or the person authorised by him under

sub-section (1) shall have the following powers, namely:- (a) he shall at all reasonable times have free access to the books, accounts, documents, securities, cash and other properties belonging to or in the custody of the multi-State co-operative society and may summon any person in possession or responsible f r the custody of any such books, accounts, documents, securities, cash or other properties to produce the same, at any place specified by him; (b) he may, notwithstanding any bye-law specifying the period of notice for a general meeting of the multi-State co-operative society, require the officers of the society to call a general meeting of the society by giving notice of not less than seven da s at such time and place at the headquarters of the society to consider such matters, as may be directed by him; and where the officers of the society refuse or fail to call such a meeting, he shall have power to call it himself; (c) he may summon any person who is reasonably believed by him to have any knowledge of the affairs of the multi-State co-operative society to appear before him at any place at the headquarters of the society or any branch thereof and may examine such pe son on oath.

(3) Any meeting called under clause (b) of sub-section (2) shall have all the powers of a general meeting of the society called under the bye-laws of the society and its proceedings shall be regulated by such bye-laws.

(4) The Central Registrar shall, within a period of three months of the date of receipt of the report, communicate the report of inquiry to the multi-State co-operative society, the financial institutions, if any, to which the society is affiliated, and o the person or authority, if any, at whose instance the inquiry is made.

Inspection of multi-State co-operative societies.

79. Inspection of multi-State co-operative societies.-(1) The Central Registrar may, on a request from a federal co-operative to which a multi-State co-operative society is affiliated or a creditor or not less than one-third of the members of the board o not less than one-fifth of the total number of members of a multi-State co-operative society by general or special order in writing in this behalf, inspect or direct any person authorised by him by order in writing in this behalf to make an inspection i to the constitution, working and financial condition of a multi-State co-operative society: Provided that no inspection under this sub-section shall be made unless a notice of not less than fifteen days has been given to the multi-State co-operative society.

(2) (a) For the purpose of inspection under sub-section (1), the Central Registrar or the person authorised by him under that sub-section shall at all times have access to all books, accounts, papers, vouchers, securities, stock and other property of tha society and may, in the event of serious irregularities discovered during inspection, take them into custody and shall have power to verify the cash balance of the society and subject to the general or special order of the Central Registrar to call a me ting of the board and also a general meeting of the society where such general meeting is, in his opinion, necessary. (b) Every officer or member of a multi-State co-operative society shall furnish such information with regard to the working of the society as the Central Registrar or the person making such inspection may require.

(3) A copy of the report of inspection under this section shall be communicated to the multi-State co-operative society within a period of three months from the date of completion of such inspection.

Inspection of books of indebted multi-State co-operative societies. 80. Inspection of books of indebted multi-State co-operative

societies.-(1) The Central Registrar shall, on the application of a creditor of a multi-State co-operative society, inspect, or direct some person authorised by him by order in writing in this ehalf to inspect, the books of the society: Provided that no such inspection shall be made unless the applicant- (a) satisfies the Central Registrar that the debt is a sum then due, and that he has demanded payment thereof and has not received satisfaction within a reasonable time; (b) deposits with the Central Registrar such sum as security for the costs of the proposed inspection as the Central Registrar may require.

(2) The Central Registrar shall communicate the result of any such inspection to the creditor.

Costs of inquiry and inspection. 81. Costs of inquiry and inspection.-Where an inquiry is held under section 78 or an inspection is made under section 79, the Central Registrar may apportion the costs, or such part of the costs, as he may think fit, between the multi-State co-operative ociety, the members or creditors demanding an inquiry or inspection, and the officers or former officers and the members or past members of that society: Provided that- (a) no order of apportionment of the costs shall be made under this section unless the society or the person liable to pay the costs thereunder has had a reasonable opportunity of being heard; (b) the Central Registrar shall state in writing under his own hand the grounds on which the costs are apportioned.

Recovery of costs. 82. Recovery of costs.-Any sum awarded by way of costs under section 81 may be recovered, on application to a magistrate having jurisdiction in the place where the person, from whom the money is claimable, actually and voluntarily resides or carries on b siness, and such magistrate shall recover the same as if it were a fine imposed by himself.

Repayment, etc.

83. Repayment, etc.-(1) If in the course of an audit, inquiry, inspection or the winding up of a multi-State co-operative society, it is found that any person, who is or was entrusted with the organisation or management of such society or who is or has a any time been an officer or an employee of the society, has made any payment contrary to this Act, or the bye-laws or has caused any deficiency in the assets of the society by breach of trust or wilful negligence or has misappropriated or fraudulently r tained any money or other property belonging to such society, the Central Registrar may, of his own motion or on the application of the board, liquidator or any creditor inquire himself or direct any person authorised by him, by an order in writing in th s behalf, to inquire into the conduct of such person within a period of two years from the date of the report of the audit, inspection or inquiry or the date of the order of winding up, as the case may be: Provided that where the Central Registrar is satisfied that such inquiry could not be commenced during the period of two years aforesaid on account of fraud or concealment of facts, he may make or direct the inquiry to be made within such period not exce ding six years from the date of the report of the audit, inspection or inquiry or the date of the order of winding up, as he thinks fit.

(2) Where an inquiry is made under sub-section (1), the Central Registrar may, after giving the person concerned a reasonable opportunity of being heard, make an order requiring him to repay or restore the money or property or any part thereof, with inte est at such rate, or to pay contribution and costs or compensation to such extent, as the Central Registrar may consider just and equitable. CHAP SETTLEMENT OF DISPUTES CHAPTER IX SETTLEMENT OF DISPUTES

Reference of disputes.

84. Reference of disputes.-(1) Notwithstanding anything contained in any other law for the time being in force, if any dispute [other than a dispute regarding disciplinary action taken by a multi-State co-operative society against its paid employee or an industrial dispute as defined in clause (k) of section 2 of the Industrial Disputes Act, 1947 (14 of 1947)] touching the constitution, management or business of a multi-State co-operative society arises- (a) among members, past members and persons claiming through members, past members and deceased members, or (b) between a member, past members and persons claiming through a member, past member or deceased member and the multi-State co-operative society, its board or any officer, agent or employee of the multi-State co-operative society or liquidator, past or resent, or (c) between the multi-State co-operative society or its board and any past board, any officer, agent or employee, or any past officer, past agent or past employee, heirs or legal representatives of any deceased officer, deceased agent or deceased employe of the multi-State co-operative society, or (d) between the multi-State co-operative society and any other multi-State co-operative society, between a multi-State co-operative society and liquidator of another multi-State co-operative society or between the liquidator of one multi-State co-operative society and the liquidator of another multi-State co-operative society, such dispute shall be referred to arbitration.

(2) For the purposes of sub-section (1), the following shall be deemed to be disputes touching the constitution, management or business of a multi-State co-operative society, namely:- (a) a claim by the multi-State co-operative society for any debt or demand due to it from a member or the nominee, heirs or legal representatives of a deceased member, whether such debt or demand be admitted or not; (b) a claim by a surety against the principal debtor where the multi-State co-operative society has recovered from the surety any amount in respect of any debt or demand due to it from the principal debtor as a result of the default of the principal debt r, whether such debt or demand is admitted or not; (c) any dispute arising in connection with the election of any officer of a multi-State co-operative society.

(3) If any question arises whether a dispute referred to arbitration under this section is or is not a dispute touching the constitution, management or business of a multi-State co-operative society, the decision thereon of the arbitrator shall be final nd shall not be called in question in any court.

(4) Where a dispute has been referred to arbitration under sub-section

(1), the same shall be settled or decided by the arbitrator to be appointed by the Central Registrar.

(5) Save as otherwise provided under this Act, the provisions of the Arbitration and Conciliation Act, 1996 shall apply to all arbitration under this Act as if the proceedings for arbitration were referred for settlement or decision under the provisions f the Arbitration and Conciliation Act, 1996 (26 of 1996).

Limitation.

85. Limitation.-(1) Notwithstanding anything contained in the Limitation Act, 1963 (36 of 1963), but subject to the specific provisions made in this Act, the period of limitation in the case of a dispute referred to arbitration shall,- (a) when the dispute relates to the recovery of any sum including interest thereon due to a multi-State co-operative society by a member thereof, be computed from the date on which such member dies or ceases to be a member of the society; (b) save as otherwise provided in clause (c), when the dispute relates to any act or omission on the part of any of the parties referred to

in clause (b) or clause (c) or clause (d) of sub-section (1) of section 84, be six years from the date on which t e act or omission, with reference to which the dispute arose, took place; (c) when the dispute is in respect of an election of an officer of a multi-State co-operative society, be one month from the date of the declaration of the result of the election.

(2) The period of limitation in the case of any dispute, except those

mentioned in sub-section (1), which are required to be referred to arbitration shall be regulated by the provisions of the Limitation Act, 1963 (36 of 1963), as if the dispute were a s it and the arbitrator a civil court.

(3) Notwithstanding anything contained in sub-sections (1) and (2), the arbitrator may admit a dispute after the expiry of the period of limitation, if the applicant satisfies the arbitrator that he had sufficient cause for not referring the dispute with n such period. CHAP WINDING UP OF MULTI-STATE CO-OPERATIVE SOCIETY CHAPTER X WINDING UP OF MULTI-STATE CO-OPERATIVE SOCIETY

Winding up of multi-State co-operative societies.

86. Winding up of multi-State co-operative societies.-(1) If the Central Registrar, after audit has been conducted under section 70 or special audit has been conducted under section 77 or an inquiry has been held under section 78 or an inspection has bee made under section 79, is of opinion that the society ought to be wound up, he may, after giving the society a reasonable opportunity of making its representations by order, direct it to be wound up.

(2) The Central Registrar may, of his own motion and after giving the multi-State co-operative society a reasonable opportunity of making its representation, make an order directing the winding up of the multi-State co-operative society,- (a) where it is a condition of the registration of the society that the society shall consist of at least fifty members and the number of members has been reduced to less than fifty; or (b) where the multi-State co-operative society has not commenced working within a period of six months of the date of its registration or such extended period as the Central Registrar may allow in this behalf or has ceased to function in accordance with o-operative principles.

(3) The Central Registrar may cancel an order for the winding up of a multi-State co-operative society, at any time, in any case where, in his opinion, the society should continue to exist.

(4) A copy of such order shall be communicated by registered post to the multi-State co-operative society and to the financial institutions, if any, of which the society is a member.

(5) Notwithstanding anything contained in this section, no co-operative bank shall be wound up except with the previous sanction, in writing of the Reserve Bank.

(6) Notwithstanding anything contained in this section, the Central Registrar shall make an order for the winding up of a multi-State co-operative society, if the society, by a resolution passed by two-third majority of memebrs present and voting in a ge eral meeting decides for winding up of that society.

Winding up of co-operative bank at the direction of Reserve Bank. 87. Winding up of co-operative bank at the direction of Reserve Bank.-Notwithstanding anything to the contrary contained elsewhere in this Act, the Central Registrar shall make an order for the winding up of a co-operative bank, if so required by the Res rve Bank in the circumstances mentioned in section 13D of the Deposit Insurance and Credit Guarantee Corporation Act, 1961 (47 of 1961).

Reimbursement to the Deposit Insurance Corporation by liquidator. 88. Reimbursement to the Deposit Insurance Corporation by liquidator.-Where a co-operative bank, being an insured bank within the meaning of the Deposit Insurance and Credit Guarantee Corporation Act, 1961 (47 of 1961), is wound up and the Deposit Insura ce Corporation has become liable to the depositors of the insured bank

under sub-section (1) of section 16 of that Act, the Deposit Insurance Corporation shall be reimbursed by the liquidator or such other person in the circumstances, to the extent and i the manner provided in section 21 of that Act.

Liquidator.

89. Liquidator.-(1) Where the Central Registrar has made an order under section 86 for the winding up of a multi-State co-operative society, the Central Registrar may appoint a liquidator for the purpose and fix his remuneration.

(2) A liquidator shall, on appointment, take into his custody or under his control all the property, effects and actionable claims to which the multi-State co-operative society is or appears to be entitled and shall take such steps as he may deem necessa y or expedient to prevent loss or deterioration of, or damage to, such property, effects and claims and he may carry on the business of the multi-State co-operative society so far as may be necessary with the previous approval of the Central Registrar.

(3) Where an appeal is preferred under clause (f) of sub-section (1) of section 99, an order for the winding up of a multi-State co-operative society made under section 86 shall not operate thereafter until the order is confirmed in appeal: Provided that the liquidator shall continue to have custody or control of the property,

effects and actionable claims mentioned in sub-section (2) and have authority to take the steps referred to in that sub-section.

(4) Where an order for the winding up of a multi-State co-operative society is set aside in appeal, the property, effects and actionable claims of the society shall re-vest in the society.

Powers of liquidator.

90. Powers of liquidator.-(1) Subject to any rules made in this behalf, the whole of the assets of a multi-State co-operative society in respect of which an order for winding up has been made, shall vest in the liquidator appointed under section 89 from he date on which the order takes effect and the liquidator shall have power to realise such assets by sale or otherwise.

(2) Such liquidator shall also have power, subject to the control of the Central Registrar- (a) to institute and defend suits and other legal proceedings on behalf of the multi-State co-operative society by the name of his office; (b) to determine from time to time the contribution (including debts due and costs of liquidation) to be made or remaining to be made by the members or past members or by the estates or nominees, heirs or legal representatives of the deceased members or y any officers or former officers, to the assets of the multi-State co-operative society; (c) to investigate all claims against the multi-State co-operative society and subject to the provisions of this Act, to decide questions of priority arising between claimants; (d) to pay claims against the multi-State co-operative society, including interest up to the date of winding up according to their respective priorities, if any, in full or rateably, as the assets of the society may permit; and the surplus, if any, remai ing after payment of the claims being applied in payment of interest from the date of such order of winding up at a rate fixed by him but not exceeding the contract rate in any case; (e) to determine by what persons and in what proportions the costs of the liquidation are to be borne; (f) to determine whether any person is a member, past member or nominee of a deceased member; (g) to give such directions in regard to the collection and distribution of the assets of the multi-State co-operative society as may appear to him to be necessary for winding up the affairs of that society; (h) to carry on the business of the multi-State co-operative society so far as may be necessary for the beneficial winding up of the same; (i) to make any compromise or arrangement with creditors or persons claiming to be creditors or having or alleging to have any claim, present or future, whereby the multi-State co-operative society may be rendered liable; (j) to make any compromise or arrangement with any person between whom and the multi-State co-operative society there exists any dispute and to refer any such dispute for decision; (k) after consulting the members of the multi-State co-operative society, to dispose of the surplus, if any, remaining after paying the claims against the society, in such manner as may be prescribed; (l) to compromise all calls or liabilities to calls and debts and liabilities capable of resulting in debts, and all claims, present or future, certain or contingent, subsisting or alleged to be subsisting between the multi-State co-operative society and a contributory or other debtor or person apprehending liability to the multi-State co-operative society and all questions in any way relating to or affecting the assets or the winding up of the society on such terms as may be agreed and take any security for the discharge of any such call, liability, debt or claim and give a complete discharge in respect thereof.

(3) When the affairs of a multi-State co-operative society have been wound up, the liquidator shall make a report to the Central Registrar and deposit the records of the society in such place as the Central Registrar may direct.

Disposal of surplus assets. 91. Disposal of surplus assets.-The surplus assets, as shown in the report of a liquidator of a multi-State co-operative society which is wound up,- (a) may, if the bye-laws of the multi-State co-operative society specify the purpose for which surplus shall be utilised, be utilised by the Central Registrar for the said purpose, and (b) if the bye-laws aforesaid do not specify the purpose, be divided by the Central Registrar with the previous sanction of the Central Government, amongst the members of such multi-State co-operative society in such manner as may be prescribed.

Priority of contributions assessed by liquidator. 92. Priority of contributions assessed by liquidator.-Notwithstanding anything contained in any law relating to insolvency, the contribution assessed by a liquidator shall rank next to debts due to the Central Government or a State Government or a local uthority in accordance with the order of priority in insolvency proceedings.

Power of Central Registrar to cancel registration of a multi-State co-operative society. 93. Power of Central Registrar to cancel registration of a

multi-State co-operative society.-(1) The Central Registrar may, after considering the report of the liquidator made to him under sub-section

(3) of section 90, order the registration of the mult -State co-operative society to be cancelled and on such cancellation, that society shall stand dissolved.

(2) An order passed under sub-section (1) shall be communicated by registered post to the president or the chairperson, as the case may be, of the multi-State co-operative society and to the financial institutions, if any, of which the society was a memb r. CHAP EXECUTION OF DECREES, ORDERS AND DECISIONS CHAPTER XI EXECUTION OF DECREES, ORDERS AND DECISIONS

Execution of decisions, etc. 94. Execution of decisions, etc.-Every decision or order made under section 39 or section 40 or section 83 or section 99 or section 101 shall, if not carried out,- (a) on a certificate signed by the Central Registrar or any person authorised by him in writing in this behalf, be deemed to be a decree of a civil court and shall be executed in the same manner as if it were a decree of such court and such decree shall e executed by the Central Registrar or any person authorised by him in writing in this behalf, by attachment and sale or sale without attachment of any property of the person or a multi-State co-operative society against whom the decision or order has b en made; or (b) where the decision or order provides for the recovery of money, be executed according to law for the time being in force for the recovery of arrears of land revenue: Provided that any application for the recovery of any sum shall be made in such manner- (i) to the Collector and shall be accompanied by a certificate signed by the Central Registrar or by any person authorised by him in writing in this behalf; (ii) within twelve years from the date fixed in the decision or order and if no such date is fixed, from the date of decision or order, as the case may be; or (c) be executed by the Central Registrar or any person authorised by him in writing in this behalf, by attachment and sale or sale without attachment of any property of the person or a multi-State co-operative society against whom the decision or order h s been made.

Execution of orders of liquidator. 95. Execution of orders of liquidator.-Every order made by the liquidator under section 90 shall be executed according to the law for the time being in force for the recovery of arrears of land revenue.

Attachment before award.

96. Attachment before award.-(1) Where the arbitrator is satisfied that a party to any reference made to him under section 84 with intent to defeat or delay the execution of any decision that may be passed thereon is about to- (a) dispose of the whole or any part of the property; or (b) remove the whole or any part of the property from its existing precincts, the arbitrator may, unless adequate security is furnished, direct conditional attachment of the said property or such part thereof as he deems necessary.

(2) The attachment under sub-section (1) shall be executed by a civil court having jurisdiction in the same way as an attachment order passed by itself and shall have the same effect as such order.

Central Registrar or arbitrator or person authorized to be civil court for certain purposes. 97. Central Registrar or arbitrator or person authorized to be civil court for certain purposes.-The Central Registrar or the arbitrator or any person authorised by him in writing in this behalf shall be deemed, when exercising any powers under this Act or the recovery of any amount by the attachment and sale or by sale without attachment of any property, or when passing any orders on any application made to him for such recovery or for taking a step-in-aid of such recovery, to be a civil court for the urposes of article 136 of the Schedule to the Limitation Act, 1963 (36 of 1963).

Recovery of sums due to Government.

98. Recovery of sums due to Government.-(1) All sums due from a multi-State co-operative society, or from an officer or member or past member of a multi-State co-operative society, to the Central Government or a State Government, including any cost award d to the Central Government or the State Government, as the case may be, under any provision of this Act, may, on a certificate issued by the Central Registrar in this behalf, be recovered in the same manner as arrears of land revenue as first charge on he assets of such society or officer or member, as the case may be.

(2) Sums due from a multi-State co-operative society to the Central

Government or a State Government and recoverable under sub-section (1) may be recovered firstly from the property of the society and secondly from the members, past members or the estate of deceased members, subject to the limit of their liability: Provided that the liability of past members and the estate of deceased members shall in all cases be subject to the provisions of section 37. CHAP APPEALS AND REVIEW CHAPTER XII APPEALS AND REVIEW

Appeals.

99. Appeals.-(1) Subject to the provisions of section 100, an appeal shall lie under this section against-

(a) an order made by the Central Registrar under sub-section (3) of section 7 refusing to register a multi-State co-operative society;

(b) an order made by the Central Registrar under sub-section (9) of section 11 refusing to register an amendment of the bye-laws of a multi-State co-operative society; (c) a decision of a multi-State co-operative society refusing or

deemed to be refusing under sub-section (4) of section 25 to admit any person as a member of the society who is otherwise duly qualified for membership under the bye-laws of the society; (d) an order made by the Central Registrar under section 81 apportioning the costs of an inquiry held under section 78 or an inspection made under section 80;

(e) an order made by the Central Registrar under sub-section (2) of section 83; (f) an order made by the Central Registrar under section 86 directing the winding up of a multi-State co-operative society; (g) an order made by the liquidator of a multi-State co-operative society under section 90.

(2) An appeal against any decision or order under sub-section (1) shall be made within sixty days from the date of such decision or order to the prescribed appellate authority.

(3) The appellate authority may, if satisfied that the appellant was prevented by sufficient cause from preferring the appeal within the period of sixty days, admit the appeal within such further period as that authority may deem fit.

(4) In disposing of an appeal under this section, the appellate authority may, after giving the parties a reasonable opportunity of making their representation, pass such order thereon as that authority may deem fit.

(5) The decision or order of the appellate authority on appeal shall be final.

No appeal in certain cases. 100. No appeal in certain cases.-Notwithstanding anything contained in this Act, where, with the previous sanction in writing of, or on requisition by, the Reserve Bank, a co-operative bank- (a) is being wound up; or (b) in respect of which a scheme of amalgamation or reorganisation is given effect to, no appeal there against shall lie or be permissible, and the sanction or requisition of the Reserve Bank shall not be liable to be called in question.

Review.

101. Review.-(1) The appellate authority referred to in section 99, may, 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 appellate authority is satisfied that there has been a discovery of new and important matter or evidence which after exercise of due diligence was not within the knowledge of the applicant or could not be produced by him at the time when the order was made or that there has been some mistake or error apparent on the face of the record or for any other sufficient reason: Provided further that no such order shall be made under this sub-section unless notice has been given to all interested parties and they have been afforded a reasonable opportunity of being heard.

(2) An application for review under sub-section (1) by any party shall be made within thirty days from the date of communication of the order of the appellate authority sought to be reviewed.

Interlocutory orders. 102. Interlocutory orders.-Where an appeal is made under section 99, the appellate authority may, in order to prevent the ends of justice being defeated, make such interlocutory orders, including an order of stay pending the decision of the appeal as suc authority may deem fit. CHAP SOCIETIES WHICH BECOME MULTI-STATE CO-OPERATIVE SOCIETIES CONSEQUENT ON REORGANISATION OF STATES CHAPTER XIII SOCIETIES WHICH BECOME MULTI-STATE CO-OPERATIVE SOCIETIES CONSEQUENT ON REORGANISATION OF STATES

Co-operative societies functioning immediately before reorganisation of States. 103. Co-operative societies functioning immediately before

reorganization of States.-(1) Where, by virtue of the provisions of Part II of the State Reorganisation Act, 1956 (37 of 1956) or any other enactment relating to reorganisation of States, any co- perative society which immediately before the day on which the reorganisation takes place, had its objects confined to one State becomes, as from that day, a multi-State co-operative society, it shall be deemed to be a multi-State co-operative society re istered under the corresponding provisions of this Act and the bye-laws of such society shall, in so far as they are not inconsistent with the provisions of this Act, continue to be in force until altered or rescinded.

(2) If it appears to the Central Registrar or any officer authorised in this behalf by the Central Government (hereafter in this section referred to as the authorised officer) that it is necessary or expedient to reconstitute or reorganise any society re erred to in

sub-section (1), the Central Registrar or the authorised officer, as the case may be, may, with the previous approval of the Central Government, place before a meeting of the general body of that society, held in such manner as may be prescri ed, a scheme for the reconstitution or reorganisation, including proposals regarding- (a) the formation of new multi-State co-operative societies and the transfer thereto in whole or in part, of the assets and liabilities of that society; or (b) the transfer, in whole or in part, of the assets and liabilities of that society to any other multi-State co-operative society in existence immediately before the date of that meeting of the general body (hereafter in this section referred to as the xisting multi-State co-operative society).

(3) If the scheme is sanctioned by a resolution passed by a majority of the members present at the said meeting, either without modifications or with modifications to which the Central Registrar or the authorised officer agrees, he shall certify the sche e and upon such certification, the scheme shall, notwithstanding anything to the contrary contained in any law, regulation or bye-laws for the time being in force, be binding on all the societies affected by the scheme, as well as the shareholders and cr ditors of all such societies.

(4) If the scheme is not sanctioned under sub-section (3), the Central Registrar or the authorised officer may refer the scheme to such Judge of the appropriate High Court, as may be nominated in this behalf by the Chief Justice thereof, and the decision of that Judge in regard to the scheme shall be final and shall be binding on all the societies affected by the scheme as well as the shareholders and creditors of all such societies. Explanation.-For the purposes of this sub-section, "appropriate High Court" means the High Court within the local limits of whose jurisdiction the principal place of business of the multi-State co-operative society is situated.

(5) Notwithstanding anything contained in this section, where a scheme

under sub-section (2) includes any proposal regarding the transfer of the assets and liabilities of any multi-State co-operative society referred to in clause (b) thereof, the scheme hall not be binding on such multi-State co-operative society or the shareholders and creditors thereof, unless the proposal regarding such transfer is accepted by that multi-State co-operative society by a resolution passed by a majority of the members p esent at a meeting of its general body. CHAP OFFENCES AND PENALTIES CHAPTER XIV OFFENCES AND PENALTIES

Offences and penalties.

104. Offences and penalties.-(1) A multi-State co-operative society or an officer or member thereof wilfully making a false return or furnishing false information, or any person wilfully or without any reasonable excuse disobeying any summons, requisitio or lawful written order issued under the provisions of this Act, or wilfully not furnishing any information required from him by a person authorised in this behalf under the provisions of this Act, shall be punishable with fine which shall not be less t an two thousand rupees and which may extend to ten thousand rupees.

(2) Any employer who, without sufficient cause, fails to pay to a multi-State co-operative society the amount deducted by him under section 60 within a period of fourteen days from the date on which such deduction is made shall, without prejudice to any action that may be taken against him under any other law for the time being in force, be punishable with fine which may extend to five thousand rupees.

(3) Any officer or custodian who wilfully fails to hand over custody of books, accounts, documents, records, cash, security and other property belonging to a multi-State co-operative society of which he is an officer or custodian, to a person entitled un er section 54, or section 70, or section 78, or section 79, or section 89 shall be punishable with fine which may extend to two thousand rupees and in the case of a continuing breach, with a further fine which may extend to five thousand rupees for every day during which the breach is continued after conviction for the first such breach.

(4) Whoever, before, during or after the election of delegates under

the proviso to sub-section (1) of section 38 or election of members of the board,- (a) fraudulently defaces or fraudulently destroys any nomination paper; or (b) fraudulently defaces, destroys or removes any list, notice or other document affixed by or under the authority of a returning officer; or (c) fraudulently defaces or fraudulently destroys any ballot paper or the official mark on any ballot paper or any declaration of identity; or (d) 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 (e) fraudulently puts into any ballot box anything other than the ballot paper which he is authorised by law to put in; or (f) 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 (g) fraudulently or without due authority, as the case may be, attempts to do any of the foregoing acts or wilfully aids or abets the doing of any such acts; (h) offers any gift or promises to offer any gratification to any person with the object, directly or indirectly, of including- (i) a person to stand or not to stand as, or to withdraw or not to withdraw from, being a candidate at an election; or (ii) a 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; or (iii) a member for having voted or refrained from voting, shall be punishable with imprisonment for a term which may extend to six months or with fine or with both.

Cognizance of offences.

105. Cognizance of offences.-(1) No court inferior to that of a Metropolitan Magistrate or a Judicial Magistrate of the first class shall try any offence under this Act.

(2) No prosecution for offences under section 104 shall be instituted except on a complaint filed in writing by a member of a multi-State co-operative society or by the Central Registrar in the competent court. CHAP MISCELLANEOUS CHAPTER XV MISCELLANEOUS

Copies of bye-laws, etc., to be open to inspection. 106. Copies of bye-laws, etc., to be open to inspection.-Every multi-State co-operative society shall keep a copy of the rules and its bye-laws and also a list of its members, open to inspection free of charge at all resonable times, at the registered ad ress of the society.

Place of keeping and inspection of, registers and returns.

107. Place of keeping and inspection of, registers and returns.-(1) The register of members commencing from the date of the registration of multi-State co-operative society, the index of members, the register of debenture holders, and copies of all annua returns prepared together with the copies of certificates and documents, shall be kept at the registered office of the multi-State co-operative society.

(2) The registers, indexes, returns and copies of certificates and

other documents referred to in sub-section (1) shall be open during business hours (subject to such reasonable restrictions, as the hours in each day are allowed for inspection) to the inspection- multi-State co-operative society may impose, so that n t less than two (a) of any member or debenture holder, without fee; and (b) of any other person, on payment of such sum as may be prescribed for each inspection.

Inspection of books of account, etc., of multi-State co-operative society. 108. Inspection of books of account, etc., of multi-State

co-operative society.-(1) The books of account and other books and papers of every multi-State co-operative society shall be open to inspection during business hours- (i) by the Central Registrar, or (ii) by such officer of the Government as may be authorised by the Central Government in this behalf: Provided that such inspection may be made without giving any previous notice to that society or any officer thereof; (iii) by the members of the multi-State co-operative society.

(2) It shall be the duty of every director, other officer or employee of the multi-State co-operative society to produce to the person

making inspection under sub-section (1), all such books of account and other books and papers of the multi-State co-ope ative society in his custody or control and to furnish him with any statement, information or explanation relating to the affairs of such society as the said person may require of him within such time and at such place as he may specify.

(3) It shall also be the duty of every director, other officer or employee of the multi-State co-operative society to give to the person making inspection under this section all assistance in connection with the inspection which the multi-State co-operat ve society may be reasonably expected to give.

(4) The person making the inspection under this section may, during the course of inspection,- (i) make or cause to be made copies of books of account and other books and papers, or (ii) place or cause to be placed any marks of identification thereon in token of the inspection having been made.

(5) Notwithstanding anything contained in any other law for the time being in force or any contract to the contrary, the Central Registrar

or an officer authorised under clause (ii) of sub-secion (1), making an inspection under this section shall have th same powers as are vested in a civil court under the Code of Civil Procedure, 1908 (5 of 1908), while trying a suit, in respect of the following matters, namely:- (i) the discovery and production of books of account and other documents, at such place and such time as may be specified by such person; (ii) summoning and enforcing the attendance of persons and examining them on oath; (iii) inspection of any books, registers and other documents of the multi-State co-operative society at any place.

(6) Where an inspection of the books of account and other books and papers of the multi-State co-operative society has been made under this section, the Central Registrar or an officer authorised under

clause (ii) of sub-section (1), making the inspecti n shall make a report to the Central Government.

Annual accounts and balance-sheet. 109. Annual accounts and balance-sheet.-At every annual general meeting of a multi-State co-operative society, the board shall lay before the multi-State co-operative society- (a) a balance-sheet as at the end of every co-operative year; and (b) a profit and loss account for that year.

Minutes of proceedings of general meetings and board and other meetings. 110. Minutes of proceedings of general meetings and board and other

meetings.-(1) Every multi-State co-operative society shall cause minutes of all proceedings of every general meeting and of all proceedings of every meeting of its board or of every com ittee of the board, to be kept by making within thirty days of the conclusion of every such meeting concerned, entries thereof in books kept for that purpose with their pages consecutively numbered.

(2) Each page of every such book shall be initialed or signed and the last page of the record of proceedings of each meeting in such books shall be dated and signed- (a) in the case of minutes of proceedings of a meeting of the board or of a committee thereof, by the chairperson of the said meeting or the chairperson of the next succeeding meeting; (b) in the case of minutes of proceedings of a general meeting, by the chairperson of the same meeting within the aforesaid period of thirty days or in the event of the death or inability of that chairperson within that period, by a member of the board uly authorised by the board for the purpose.

(3) In no case the minutes of proceedings of a meeting shall be attached to any such books as aforesaid by pasting or otherwise.

(4) The minutes of each meeting shall contain a fair and correct summary of the proceedings thereat.

(5) All appointments of officers made at any of the meetings aforesaid shall be included in the minutes of the meeting.

(6) In the case of a meeting of the board or of a committee of the board, the minutes shall also contain- (a) the names of the members of the board present at the meeting; and (b) in the case of each resolution passed at the meeting, the names of the members of the board, if any, dissenting from, or not concurring in, the resolution.

(7) Nothing contained in sub-sections (1) to (6) shall be deemed to require the inclusion in any such minutes of any matter which, in the opinion of the chairperson of the meeting- (a) is, or could reasonably be regarded as, defamatory of any person; (b) is irrelevant or immaterial to the proceedings; or (c) is detrimental to the interests of the multi-State co-operative society. Explanation.-The chairperson shall exercise an absolute discretion in regard to the inclusion or non-inclusion of any matter in the minutes on the grounds specified in this sub-section.

Minutes to be evidence. 111. Minutes to be evidence.-Minutes of meetings kept in accordance with the provisions of section 110 shall be evidence of the proceedings recorded therein.

Presumptions to be drawn where minutes duly drawn and signed. 112. Presumptions to be drawn where minutes duly drawn and signed.-Where minutes of the proceedings of any general meeting of the multi-State co-operative society or of any meeting of its board or a committee of the board have been kept in accordance wit the provisions of section 110, then, until the contrary is proved, the meeting shall be deemed to have been duly called and held, and all proceedings thereat to have duly taken place, and in particular, all appointments of directors or liquidators made at the meeting shall be deemed to be valid.

Inspection of minutes book of general meetings. 113. Inspection of minutes book of general meetings.-The books containing the minutes of the proceedings of any general meeting of a multi-State co-operative society shall- (a) be kept at the registered office of that society, and (b) be open, during business hours, to the inspection of any member of that society.

Liquidator to be public servant. 114. Liquidator to be public servant.-Any person appointed as liquidator under the provisions of this Act shall be deemed to be a public servant within the meaning of section 21 of the Indian Penal Code.

Notice necessary in suits. 115. Notice necessary in suits.-No suit shall be instituted against a multi-State co-operative society or any of its officers in respect of any act touching the constitution, management or the business of the society until the expiration of ninety days n xt after notice in writing has been delivered to the Central Registrar or left at his office, stating the cause of action, the name, description and place of residence of the plaintiff and the relief which he claims, and the plaint shall contain a statem nt that such notice has been so delivered or left.

Power to amend Second Schedule.

116. Power to amend Second Schedule.-(1) If the Central Government is satisfied that any multi-State co-operative society should be designated as a national co-operative society or any national co-operative society specified in the Second Schedule shou d be omitted from the said Schedule, it may, by notification, amend the said Schedule so as to include therein such multi-State co-operative society or exclude therefrom such national co-operative society, and thereupon the said Schedule shall be deemed o have been amended accordingly.

(2) A copy of every notification under sub-section (1) shall be laid before each House of Parliament as soon as may be after it is made.

Bar of jurisdiction of courts.

117. Bar of jurisdiction of courts.-(1) Save as otherwise provided in this Act, no court shall have jurisdiction in respect of- (a) the registration of a multi-State co-operative society or its bye-laws or of an amendment of the bye-laws; (b) any matter concerning the winding up and the dissolution of a multi-State co-operative society.

(2) While a multi-State co-operative society is being wound up, no suit or other legal proceedings relating to the business of such society shall be proceeded with or instituted against the liquidator or against the society or any member thereof, except y leave of the Central Registrar and subject to such terms and conditions as he may impose.

(3) Save as otherwise provided in this Act, no decision or order made under this Act shall be questioned in any court.

Indemnity. 118. Indemnity.-No suit, prosecution or other legal proceedings shall lie against the Central Registrar or, any person subordinate to him or acting on his authority or against any other person, in respect of anything in good faith done or purporting to h ve been done under this Act.

Opening of branches. 119. Opening of branches.-Notwithstanding anything contained to the contrary in any law relating to co-operative societies in force in a State, a multi-State co-operative society, not being a co-operative bank, may open branches or places of business in ny place in India.

Filling of returns. 120. Filling of returns.-Every year within six months of the closure of the accounting year every multi-State co-operative society shall file the following returns with the Central Registrar, namely:- (a) annual report of the activities; (b) audited statements of accounts; (c) plan for surplus disposal as approved by the general body; (d) list of amendments to the bye-laws of the multi-State co-operative society; (e) declaration regarding date of holding of general body meeting and conduct of elections where due; (f) any other information required by the Central Registrar in pursuance of any of the provisions of this Act.

Certain Acts not to apply.

121. Certain Acts not to apply.-(1) The provisions of the Companies Act, 1956 (1 of 1956) and the Monopolies and Restrictive Trade Practices Act, 1969 (54 of 1969) shall not apply to the multi-State co-operative societies.

(2) The multi-State co-operative societies registered or deemed to be registered under the provisions of this Act shall not indulge in monopolistic and restrictive trade practices as defined in the Monopolies and Restrictive Trade Practices Act, 1969 (54 of 1969).

Central Government's power to give directions to specified multi-State co-operative societies in public interest. 122. Central Government's power to give directions to specified multi-State co-operative societies in public interest.-If the Central Government is satisfied that in the public interest or for the purposes of securing proper implementation of co-operativ production and other developmental programmes approved or undetaken by the Central Government or to secure proper management of the business of the specified multi-State co-operative societies generally or for preventing the affairs of such society bein conducted in a manner detrimental to the interests of the members, any depositors or creditors thereof, it is necessary to issue directions to any class of specified multi-State co-operative societies generally or to any specified multi-State co-operati e society or societies in particular, the Central Government may issue directions to it or to them, from time to time, and all such specified multi-State co-operative society or the societies concerned, as the case may be, shall be bound to comply with s ch directions.

Supersession of board of specified multi-State co-operative society. 123. Supersession of board of specified multi-State co-operative

society.-(1) If in the opinion of the Central Government, the board of any specified multi-State co-operative society is persistently making default or is negligent in the performance of th duties imposed on it by this Act or the rules or the bye-laws or has committed any act which is prejudicial to the interests of the society or its members, or has omitted or failed to comply with any directions given to it under section 122 or that the e is a stalemate in the constitution or functions of the board, the Central Government may, after giving the board an opportunity to state its objections, if any, and considering the objections, if received, by order in writing, remove the board and appo nt one or more administrators, who need not be members of the society, to manage the affairs of the society for such period not exceeding six months, as may be specified in the order which period may, at the discretion of the Central Government, be exten ed from time to time; so, however, that the aggregate period does not exceed one year: Provided that in the case of a co-operative bank, the provisions of this sub-section shall have effect as if for the words "one year", the words "two years" had been substituted.

(2) The Central Government may fix such remuneration for the administrators, as it may think fit and the remuneration shall be paid out of the funds of the specified multi-State co-operative society.

(3) The administrator shall, subject to the control of the Central Government and to such instructions as it may from time to time give, have power to exercise all or any of the functions of the board or of any officer of the specified multi-State co-ope ative society and take all such actions as may be required in the interests of the society.

(4) Save as otherwise provided in sub-section (5), the administrator shall, before the expiry of his term of office, arrange for the constitution of a new board in accordance with the bye-laws of the specified multi-State co-operative society.

(5) If, at any time during the period the administrator is in office, the Central Government considers it necessary or expedient so to do, it may, by order in writing giving reasons therefor, direct the specified multi-State co-operative society in accordance with the bye-laws of such society and immediately on the constitution of such board, the administrator shall hand over the management of such society to such newly constituted boa administrator to arrange for the constitution of a ew board for such d and cease to function.

(6) Where a specified multi-State co-operative society is indebted to any financial institution, the Central Government shall, before taking

any action, under sub-section (1) in respect of that society, consult the financial institution. Explanation.-For the purposes of sections 122 and 123, "specified multi-State co-operative society" means any multi-State co-operative society in which not less than fifty-one per cent. of the paid-up share capital, or, of total shares, is held by the Ce tral Government.

Power to make rules.

124. Power to make rules.-(1) The Central Government may, by notification, make rules to carry out the provisions of this Act.

(2) In particular, and without prejudice to the generality of the foregoing power, such rules may provide for all or any of the following matters, namely:- (a) the form to be used, the particulars to be given and the conditions to be complied with in making of applications under section 6 for the registration of a multi-State co-operative society and the procedure in the matter of such applications; (b) the matters in respect of which a multi-State co-operative society

may make bye-laws under sub-section (2) of section 10; (c) the manner in which the order of refusal to register any amendment

of the bye-laws shall be communicated under sub-section (9) of section 11; (d) the manner in which a multi-State co-operative society shall have a principal place of business and registered address under section 14; (e) the procedure and conditions for change in the extent of the liability of a multi-State co-operative society under section 16; (f) the manner in which order of refusal to register an amendment of

bye-laws shall be communicated under sub-section (4) of section 22; (g) the classification of federal co-operative and other terms and

conditions applicable to in under sub-section (3) of section 23; (h) the restriction on holding the share capital of the society other than a member referred to in section 33; (i) the constitution and powers of smaller body representing the

general body under the proviso to sub-section (1) of section 38; (j) the period within which annual general meeting be called and the procedure at such meetings and the powers to be exercised by such meeting under section 39;

(k) the election of members of the board under sub-section (2) of section 45 through secret ballot; (l) the nomination of members under the second proviso to sub-section

(1) of section 48; (m) the additional measures and acts which may be taken or, as the case may be, done by the board under section 49; (n) the salary and allowances payable to and other terms and

conditions of the Chief Executive under sub-section (3) of section 51; (o) the conditions subject to which the board may constitute an Executive Committee and other committees or sub-committees under

sub-section (1) of section 53; (p) the persons by whom and the form in which copies of entries in books of multi-State co-operative societies may be certified under section 58 and the charges to be levied for the supply of such copies; (q) providing aid to multi-State co-operative societies on certain terms and conditions under clause (g) of section 61; (r) the conditions under which profits may be distributed to the members of a multi-State co-operative society and the maximum rate of dividend which may be paid by the multi-State co-operative societies under section 63;

(s) establishment of contributory provident fund under sub-section (1) of section 69; (t) the manner of disposing of the surplus under clause (k) of

sub-section (2) of section 90; (u) the manner in which surplus assets be divided by the Central Registrar with the previous sanction of the Central Government under clause (b) of section 91;

(v) the appellate authority to be specified under sub-section (2) of section 99; (w) the procedure under section 103 for reconstitution and reorganisation of societies which became the multi-State co-operative societies consequent on reorganisation of States; (x) the inspection of records of the society on payment of fees under

clause (b) of sub-section (2) of section 107; (y) any other matter which is required to be, or may be, prescribed.

(3) Every rule made under this section shall be laid, as soon as may be after it is made, before each House of Parliament, while it is in session, for a total period of thirty days which may be comprised in one session or in two or more successive sessio s, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, both Houses agree that the rule should not be made, the rule shall thereafter have effect only in such modified form or be of no effect, a the case may be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that rule.

Power to remove difficulties.

125. Power to remove difficulties.-(1) If any difficulty arises in giving effect to the provisions of this Act, the Central Government may, by order published in the Official Gazette, make such provisions not inconsistent with the provisions of this Act s may appear to be necessary for removing the difficulty: Provided that no order shall be made under this section after the expiry of two years from the commencement of this Act.

(2) Every order made under this section shall be laid, as soon as may be after it is made, before each House of Parliament.

Repeal and saving.

126. Repeal and saving.-(1) The Multi-State Co-operative Societies Act, 1984 (51 of 1984) is hereby repealed.

(2) Without prejudice to the provisions contained in the General Clauses Act, 1897 (10 of 1897) with respect to repeals, any notification, rule, order, requirement, registration, certificate, notice, decision, direction, approval, authorisation, consent, application, request or thing made, issued, given or done under the Multi-State Co-operative Societies Act, 1984 (51 of 1984) shall, if in force at the commencement of this Act, continue to be in force and have effect as if made, issued, given or done un er the corresponding provisions of this Act.

(3) Every multi-State co-operative society, existing immediately before the commencement of this Act which has been registered under the Co-operative Societies Act, 1912 (2 of 1912) or under any other Act relating to co-operative societies in force, in a y State or in pursuance of the provisions of the Multi-unit Co-operative Societies Act, 1942 (6 of 1942) or the Multi-State Co-operative Societies Act, 1984 (51 of 1984), shall be deemed to be registered under the corresponding provisions of this Act, an the bye-laws of such society shall, in so far as they are not inconsistent with the provisions of this Act, or the rules, continue to be in force until altered or rescinded.

(4) All appointments, rules and orders made, all notifications and notices issued and all suits and other proceedings instituted under

any of the Acts referred to in sub-section (1) shall, in so far as they are not inconsistent with the provisions of thi Act, be deemed to have been respectively made, issued and instituted under this Act, save that an order made cancelling the registration of a multi-State co-operative society shall be deemed, unless the society has already been finally liquidated, to be an order made under section 86 for its being wound up.

(5) The provisions of this Act shall apply to- (a) any application for registration of a multi-State co-operative society; (b) any application for registration of amendment of bye-laws of a multi-State co-operative society, pending at the commencement of this Act and to the proceedings consequent thereon and to any registration granted in pursuance thereof.

(6) Save as otherwise provided in this Act, any legal proceeding pending in any court or before the Central Registrar or any other authority at the commencement of this Act shall be continued to be in that court or before the Central Registrar or that au hority as if this Act had not been passed.