Multi State Cooperative Societies Act, 1984 Complete Act - Bare Act

18th August, 1984

An Act to consolidate and amend the law relating to co-operative societies with objects not confined to one State and serving the interests of members in more than one State. BE it enacted by Parliament in the Thirty-fifth Year of the Republic of India as follows:-

(1) This Act may he called The Multi-State Co-operative Societies Act. 1984.

(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.

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 or (ii) under any other law relating to co-operative societies in force in any State pr in pursuance of the Multi-unit. Co-operative Societies Act. 1942. and the registration of which has not been cancelled before such commencement: and

(b) all multi-State Co-operative Societies.

- In this Act, unless the context otherwise requires.-

(a) "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:

(b) "bye-laws" means the bye-laws for the time being in force which have been duly registered under this Act and includes amendments thereto which have been duly registered under this Act:

(c) "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:

(d) "Chief Executive" means a Chief Executive of a multi-State cooperative society appointed under section 44-.

(e) "co-operative bank" means a multi-State co-operative society which undertakes banking business:

(f) "co-operative principles" means the co-operative principles specified in the First Schedule:

(g) "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:

(h) "co-operative year", in relation to any multi-State co-operative society or class of such societies. means the year ending on the 30th day of June and where the accounts of such society or class of such societies are with the previous sanction of the Central Registrar, balanced on any other day, the year ending on such day:

(i) "Deposit Insurance Corporation" means the Deposit Insurance and Credit Guarantee Corporation established under section 3 of the Deposit Insurance Corporation Act. 1961-:

(j) "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-laws:

(k) "multi-State co-operative society" means a society registered or deemed to be registered under this Act and includes a national cooperative society:

(1) "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 lo the assets of the society, in the event of its being wound up:

(m) "national co-operative society" means .a multi-State co-operative society specified in the Second Schedule; ,

(n) "notification" means a notification published in Official Gazette:

(o) "officer means a president, vice-president, chairman, vice-chairman, managing director, secretary, manager, member of a board, treasurer, liquidator, an administrator appointed under section 48-and includes any other .person empowered under this Act or the rules or the bye-laws to give directions in regard to the business of a multi-State co-operative society;

(p) "prescribed" means prescribed by rules:

(q) "Reserve Bank" means the Reserve Bank of India constituted under the Reserve Bank of India Act, 1934: .

(r) "rules" means the rules made under this Act.

( 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 as 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 : Provided further that no officer of a State Government below the rank of the Registrar of Co- operative Societies shall be empowered to exercise any power exercisable by the Central Registrar under Section 87-.

(1) No multi-State co- operative society shall be registered Under this Act unless the main objects of the society are to serve the interests of members in more than one State.

(2) Subject to the provisions of sub-section (1). a multi-State cooperative society which has as its objects the promotion of the economic and social betterment of its members through mutual aid in accordance with the co-operative principles or a multi-State co-operative society established with the object of facilitating the operations of other such societies or of co-operative societies or of both may be registered under this Act.

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

(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 he prescribed.

(2) The application shall be signed-

(a) in the case of a multi-State co-operative society of which all the members arc individuals, by at least fifty persons from each of the States concerned:

(b) in the case of a multi-State co-operative society of which the members arc co-operative societies, by duly authorised representatives on behalf of at least two 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-

Stale 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 clause (b) or clause (c). as the case may be, shall be such as are not registered in the same State.

(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 Central Registrar may require.

( 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-Slate co-operative society satisfies the basic criterion that its objects are to serve the interests of members in more than one Slate:

(c) that there is no other multi-State co-operative society having similar area of operation and identical objects:

(d) that the proposed bye-laws arc not contrary to the provisions of this Act and the rules: and

(e) that the proposed multi-State co-operative society has reasonable prospects of becoming a viable unit. he may register the multi-State cooperative society and its bye-laws,

(2) Where the Central Registrar refuses to register a multi-State cooperative society, he shall communicate the order of refusal together with the reasons therefor, to such number of the applicants and in such manner as may he prescribed.

(3) The application for registration shall be disposed of by the Central Registrar within a period of six months from the date of receipt thereof by him:
Provided that if the Central Registrar is unable to dispose of the application within the period aforesaid. he shall make a report to the Central Government staling therein the reasons for his inability to do and the Central Government may allow him such further period or period as is considered necessary lo dispose of such application.

Where a multi-State co-cooperative 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 duly registered under this Act unless it is proved that the registration of the society has been cancelled.

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

(2) Every proposal for such amendment shall he forwarded to the Central Registrar and if 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 six months from the date of receipt thereof by him: Provided that if the Central Registrar is unable to register the amendment within the period aforesaid he shall make a report to the Central Government staling therein the reasons for his inability to do so and the Central Government may allow him such further period or periods as is considered necessary to register the amendment.

(3) 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 and such certificate shall be conclusive evidence that the amendment has been duly registered.

(4) 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 prescribed within seven days from the date of such refusal.

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.

(1) A multi-State co-operative society may. by an amendment of its bye-laws, change in name hut 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, and 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 societies in place of the former name and shall amend the certificate of registration accordingly.

Every multi-State co-operative society shall have a principal place of business and an address registered in the manner prescribed lo which all notices and communications may be sent and any change in the principal place of business of a multi-State co-operative society shall be made with the previous approval of the Central Registrar.

(1) No multi-State co-operative society with unlimited liability shall be registered after the commencement of this Act : Provided that where a multi-unit co-operative society with unlimited liability was functioning before the commencement of this Act such a society shall exercise the option within a period of one year from such commencement either to continue to function as such or to convert itself into a multi- State cooperative 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-unit cooperative society may, by an amendment of its bye-laws, change the extent of its liability.

(3) When a multi-unit co-operative society has passed a resolution to change the extent of its liability, it shall give notice thereof in writing to all its members and creditors, and, notwithstanding anything contained in the bye-laws or contract to the contrary any member or creditor .shall during the period of one month from the date of service of the notice upon him, have the option of withdrawing his shares, deposits or loans as the case may be.

(4) Any member or creditor who does not exercise his option within the period specified in sub-section (3) shall be deemed lo have assented to the change.

(5) An amendment of a bye-law of a multi-unit 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.

(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 with the prior consultation of the Central Registrar and 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-operative 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 : Provided that in the case of a co-operative bank, the Central Registrar shall not accord approval to any such resolution without the previous sanction in writing of the Reserve Bank.

(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 lo 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)

(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 subsection ( 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 societies or society, 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 17-, shall, so far as may be, apply to the multi-State cooperative society so divided or the multi-State co-operative societies so amalgamated.

(9) Where a resolution passed by a multi-State co-operative society under this section involves the transfer of any assets and liabilities, the resolution shall, notwithstanding anything contained in any other law for the time being in force, be a sufficient conveyance to vest the assets and liabilities in the transferee without any further assurance.

When an order of moratorium has been made by the Central Government under sub-section (2) of section 45 of the Banking Regulation Act, 1949in 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.

Notwithstanding anything contained in section 14-or any other provision of this Act, where a co-operative bank, being an insured bank within the meaning of the Deposit Insurance and Credit Guarantee Corporation Act, 1961, is amalgamated or reorganised and the Deposit Insurance Corporation has become liable to pay the depositors of the insured bank under sub-section (2) of section 16-of that Act, the 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 circumstances, to the extent and in the manner referred to in Section 21-of the Deposit Insurance and Credit Guarantee Corporation Act, 1961.

(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 14-, the registration of each of the amalgamation societies shall stand cancelled on the registration of the new society, and each of the amalgamation 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 14-, the registration of that society shall stand cancelled on 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 against 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 continued or commenced by or against the resulting multi-State cooperative society or societies.

(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)

(b) If the Central Registrar, after consulting the Registrars of Co-operative Societies of the States concerned, has satisfied himself that such amendment. fulfils the requirement of sub- section (2) of section 9-, he may register the amendment within a period of six months from the date of receipt thereof by him:
Provided that if the Central Registrar is unable to register the amendment within the period aforesaid, he shall make a report to the Central Government stating therein the reasons for his inability to do so, and the Central Government may allow him such further period or periods as is considered necessary to register the amendment.

(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 date of refusal.

(5)

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 of 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 societies in force in that State.

( 1 ) No person shall be admitted as 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-;

(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;

(f) any other corporation owned or controlled by Government;

(g) any Government company as defined in section 617 of the Companies Act, 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) Such number of individuals possessing such qualifications as may be prescribed may be admitted as members of the National Co-operative Union of India Limited, New Delhi.

(3) Save as otherwise provided in sub-section (2) and notwithstanding anything contained in sub-section ( 1 ), no individual shall be eligible for admission as a member of a national co-operative society.

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

(5) Every application for admission as a member of a multi-State cooperative 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 shall 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 deemed to have made a decision, on the date of expiry of such period, refusing admission to the applicant. '

(6) Notwithstanding anything contained in this section, the Central Government may, having regard to the fact that the interest of any person or class of persons conflicts or is likely to conflict with the objects of any multi-State co-operative society or class of multi-State co-operative societies, by general or special order published in the Official Gazette, declare that any person or class of persons engaged in or carrying on any profession, business or employment shall be disqualified from being admitted, or for continuing, as members or shall be eligible for membership only to a limited extent of any specified multi-State cooperative society or class of multi-State co-operative societies, so long as such person or persons is or are engaged in or carrying on, that profession, business or employment, as the case may be.

No member of a multi-State co-operative society shall exercise the rights of a member, unless he has made such payments to the society in respect of membership, or has acquired such interest in the society, as may be specified in the bye-laws.

(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 three years from the date of such expulsion :
Provided that the Central Registrar may, on application of the multi-State co-operative society and if satisfied that in the special circumstances of the case, it is necessary so to do in the interests of the multi-State co-operative society, sanction the re-admission or admission within the said period, of any such member as a member of the said society.

-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 an 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 Chairman shall have a second or casting vote;

(c)where any of the authorities referred to in clauses (c) to (g) of subsection (1) of section 19-is a member of a multi-State co-operative society, each person nominated by such authority, 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 members of which include cooperative societies or other multi-State co-operative societies, may provide for an equitable system of voting having regard to the membership of, and the extent of business carried on by such co-operative societies, or multi-State co-operative societies and other relevant circumstances.

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 which is a member of another multi-State co-operative society, may, subject to the provisions of sub-section (3) ofsection 29-and the rules, appoint its representative to vote on its behalf in the affairs of that other society.

No member, other than any of the authorities referred to in clauses (c) to (g) of sub-section (1) of section 19-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 :
Provided that the Central Government may, by notification, specify in respect of any class of societies a higher or lower maximum than one-fifth of the share capital.

The transfer of the share or interest of a member in the capital of multi-State co-operative society shall be subject to such conditions as to maximum holding as are specified in section 24-

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 19-shall be redeemable in accordance with the bye-laws of such multi-State co-operative 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.

(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 rules made in this behalf, or if there is no person so 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 share 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 member 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.

(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 cooperative society for the debts of the society as they 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 77-the liability of a past member who ceased to be 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 membership or death, as the case may be.

(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 subsection 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 cooperative is to be represented, such co- operative society or other multi State co-operative society shall be represented in such meeting only through the Chairman or the Chief Executive of such co-operative society or other multi-State co-operative society, as the case may be, and where there is no board of such co-operative society, or other multi-State cooperative society, for whatever reasons, through the administrator, by whatever name called, of such co-operative society or other multi-State co-operative society.

(1) Every multi-State co-operative society shall, within such period as may be prescribed, after the close of the year, call a general meeting of its members in the manner prescribed for the purpose of -

(a) consideration of the audit report and annual report

(b)disposal of net profits;

(c) approval of the programme of activities for the ensuing year:

(d) amendment of bye-laws;

(e) election, if any, of the members of the board, other than nominated members, subject to the provisions of section 35-. Provided that the Central Registrar may, by general or special order, extend the period for holding such meeting for a further period not exceeding three months:
Provided further that if in the opinion of the Central Registrar no such extension is necessary or such meeting is not called by the multi-State co-operative society within the extended period, if any granted by him the Central Registrar or any person authorised by him in this behalf may call such meeting in the manner prescribed, and that meeting shall be deemed to be a general meeting duly called by the society and the Central Registrar may order that expenditure incurred in calling such a meeting shall be paid out of the 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 general meeting.

(2) 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.

(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 eye-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 the 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.

Subject to the provisions of this Act and the rules, there shall be a board of directors for every multi-State co-operative society consisting of such number of members as may be provided for under the bye-laws.

Every multi- State co-operative society shall devise such procedure, as may be specified in the bye-laws or in the administrative instructions, for association of the representatives 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.

-No member of any multi-State co-operative society or nominee of a member-society on 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 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 eligible 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 where such date is extended, which in no case shall exceed six months, within the date 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 defaulter 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-operative Society of which he was a member or for election to the board of any other multi-State cooperative society;

(h) is a person against whom any amount due under 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. .

(1) The superintendence, direction and control of the preparation of the electoral rolls for, and the conduct of elections of the members of the board of such multi-State co-operative societies or class of multi-State co-operative societies as the Central Government may. By general or special order, notify, shall be vested in such returning officers as may be appointed by the Central Registrar in this behalf.'

(2) The vote at such elections shall be by secret ballot.

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

(4) 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.

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

Notwithstanding anything contained in this Act, no person shall be eligible to hold, at the same time, office of the president or chairman or vice- president or vice-chairman on the board of more than one multi-State co-operative society :
Provided that any person holding, at the commencement of this Act, the office of a president or chairman or vice-president or vice-chairman in more than one multi-State co-operative society shall, within three months from such commencement by notice in writing signed by him, intimate the name of the multi-State co-operative society in which he wishes to serve and thereupon his office in the other multi-State co-operative society in which he does not wish to serve shall become vacant:
Provided further that in default of such intimation, within the period referred to in the preceding proviso, his offices in all the multi-State co-operative societies shall at the expiration of the period aforesaid, become vacant.

No person shall be eligible to hold the office of a president or chairman or vice-president or vice-chairman on the board of a multi-State co-operative society, after he has held the office as aforesaid during two consecutive terms, whether full or part:
Provided that a person who has ceased to hold the office of a president or chairman continuously for one full term of three years shall again be eligible for election to the offices aforesaid.

Honorarium may be paid to the elected chairman or president of the board out of the profits of the multi-State co-operative society in respect of specific services rendered by him, subject to such restrictions and conditions as may be prescribed.

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 from the Central Registrar or otherwise be removed from the board upon a resolution of the general body passed at its meeting by a majority of not less than two-thirds 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 representation in the matter.

If in spite of cessation of office under circumstances mentioned in S. 34, S, 36, S. 37 or S. 39 a member of the board refuses to vacate his office the Central Registrar shall, by order in writing remove him from such office.

(1) Where the Central Government or a State Government has subscribed to the share capital of a multi-State co- operative society or 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, the Central Government or the State Government in this behalf, as the case may be, or any person authorised by the Central Government or the State Government, shall have the right to nominate on the board such number of persons as may be prescribed.

(2) The bye-laws of a multi-State co-operative society may provide for the nomination of persons in excess of the limits prescribed under subsection (1).

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

(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 power, such power shall include the power-

(a) to admit members,

(b) to interpret organisational objectives and set up specific goals to be achieved towards these objectives;

(c) to make periodic appraisal of operations;

(d) to appoint a Chief Executive and such other employees of the society (out of the list of persons referred to in section 50-) 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 approve annual and supplementary budget; (g) to acquire or dispose of immovable property; (h) to raise funds; (i) to sanction, loans to the members; and

(j) to take such other measures or to do such other acts as may be prescribed or required under this Act.

(1) The Chief Executive shall convene the meetings of the board at the instance of the chairman 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 may be such as may be prescribed
Provided that the Board shall meet at least once in every quarter.

(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 46-.

(3) The functional directors in national co-operative societies shall also be members of the board.

(4) Where the Central Government has subscribed to the extent of more than one-half of the share capital of a national co-operative society, it shall be obligatory on such a society to seek prior approval of the Central Government to the appointment of Chief-Executive and the functional directors.

The Chief Executive shall 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 cooperative 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 statement 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 cooperative society, the board and the Executive Committee and other committees or sub-committees constituted under sub-section (1) of section 46-and maintaining proper records for such meetings;

(f) making appointments to posts in the multi-State co-operative society in accordance with the rules made under clause (e) of sub-section (2) of section 42-except the posts in relation to which the powers of appointment vests in the board under clause (d) of that sub-section;

(g) assisting the board in the formulation of policies and 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) performing such other duties, and exercising such other powers, as may be prescribed or as may be specified in the bye-laws of the multi State co-operative society.

(1) The board may, subject to such conditions as may be prescribed, constitute an Executive Committee and other committees or subcommittees, as maybe considered necessary.

(2) The Executive Committee or other committee or sub-committee referred to in sub-section (i) shall perform such functions as are assigned to it in accordance with the bye-laws of the multi state co-operative society.

If the Central Government is satisfied that in the public interest or for the purposes of securing proper implementation of co-operative production and other development programmes approved or undertaken by the Central Government or to secure proper management of the business of the multi-State co-operative societies generally for preventing the affairs of the multi-State co-operative society being 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 multi-State co-operative societies generally or to any multi-State co-operative society or societies in particular, the Central Government may issue directions to them or to it, from time to time, and all such multi-State co-operative societies or the society concerned as the case may be shall be bound to comply with such directions.

(1) If in the opinion of the Central Registrar the board of any multi-State co-operative society is persistently making default or is negligent in the performance of the duties imposed on it by this Act or the rules or the bye-laws or has committed any act which is prejudicial lo interests of the society or its members, or has omitted or failed to comply with any directions given to it under section 47-or that there is a stalemate in the constitution or functions of the board, the Central Registrar 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 appoint one or more administrators, who need not be members of the society, to manage the affairs of the society for such period not exceeding one year, as may be specified in the order, which period may, at the discretion of the Central Registrar, be extended from time to time; so, however, that the aggregate period does not exceed two years.

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

(3) The administrator shall, subject to the control of the Central Registrar and to such instructions as he 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 multi-State co-operative 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 multi-State cooperative society.

(5) lf at any time during the period the administrator is in office, the Central Registrar considers it necessary or expedient so to do, he may, by order in writing giving reasons therefor, direct the administrator to arrange for the constitution of a new board for such multi-State cooperative 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 hoard and cease to function.

(6) Where a multi-State co-operative society is indebted to any financial institution, the Central Registrar shall, before taking any action, under sub-section (1) in respect of that society, consult the financial institution.

(7) Notwithstanding anything contained in this Act, the Central Registrar shall in the case of a co-operative bank. if so required in writing by the Reserve Bank in the public interest or for preventing the affairs of the cooperative bank being conducted in a manner detrimental to the interests of the depositors or for securing the proper management of a co-operative bank, pass an order for the supersession, the board of that co-operative bank and for the appointment of an administrator therefor for such period or periods not exceeding five years in the aggregate as may from time to time be specified by the Reserve Bank.

(1) If,-

(a) the records (including registers and books of accounts) 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 misappropriated or misapplied; or

(b) the board of a multi-State co-operative society is reconstituted at a general meeting of the society; or

(c) the board of a multi-State co-operative society is removed by the Central Registrar under sub-section (1) of section 48-; or

(d) a multi-State co-operative society is ordered to be wound up under section 77-and, the outgoing members of the board refuse to hand over charge of the records and property of the society to those having, or entitled to receive, such charge; the Central Registrar 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 administrator of the multi-State co-operative society 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.

- The Central Government shall-

(a) constitute a body of persons, in the manner prescribed for the preparation of a list of persons eligible for appointment to the posts of Chief Executives and other managerial posts in national co-operative societies the maximum pay scale of which exceeds such amount as may be prescribed;

(b) make rules for regulating the recruitment, remuneration, allowances and other conditions of service of officers and other employees of national co-operative societies.

No act of a multi-State co-operative society or of any board or of any committee or of any officer of the society shall be deemed to be invalid by reason only of the existence of any defect in the procedure in the constitution of the society or of the board or of the committee thereof or in the appointment or election of an officer or on the ground that such officer was disqualified to hold office.

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 to hold property, enter into contract, institute and defend suits and other legal proceedings and to do all things necessary for the purposes for which it is constituted.

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 member or past or deceased member and 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 payable to a member or past member or the estate of deceased member in or towards payment of any such debt.

(1) Subject to the provisions of section 53-, 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 liable 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 such 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 rules shall not be liable to attachment under any decree or order or a court in respect of any debt or liability incurred by the society.

- Any register or list of members or shares kept by any multi- State cooperative 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;

(b) the date on which any such person ceased to be a member.

(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 compelled 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 arbitrator made for a special cause.

- Nothing in clauses (b) and(c) of sub-section (1) of section 17 of the Registration Act, 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 registered 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 or transfer of any debenture issued by any such society.

(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 of 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 pay the amount so deducted to the society in satisfaction of any debt or other demand owing by the member 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 cooperative society by a requisition in writing and so long as the society does not intimate that the whole of such 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 wages payable on the day as required under the Payment of Wages Act, 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 or marks 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 priority in respect of the liability of such employer equal to that of the salary or wages in arrears.

- Notwithstanding anything contained in any law for the time being in force, the Central Government or a State Government may, with a view to promoting co-operative movement :-

(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 of 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.

(1) No part of the funds, other than net profits, of a multi-State cooperative 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 subsection (1) in respect of a society earning profits shall be calculated by deducting from the gross profits 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 force, and equalisation fund for such bonus, provision for payment of income-tax and making approved donations under the Income-tax Act, 1961, development rebate, provision for development fund, bad debts fund, price fluctuation fund, dividend equalisation 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 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.

(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; and

(b) credit such portion, as may be prescribed, to the co-operative education fund maintained by the National Co-operative Union of India Limited, New Delhi.

(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 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;

(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.

(3) The funds of a multi-State co-operative society shall not be utilised for any political purpose.

- A multi-State co-operative society may invest or deposit its fund-

(a) in a co-operative bank. State co-operative bank, co-operative land mortgage bank, co- operative land development bank or Central Cooperative Bank; or

(b) in any of the securities specified in section 20 of the Indian Trusts Act, 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 any other institution, with the previous approval of the Central Registrar; or

(e) with any bank; or

(f) in such other mode as may be prescribed.

(1) A multi-State co-operative society, other than a co-operative bank, shall not make a loan-

(a) to a member on the security of his share or on the security of a nonmember, or

(b) to a non-member Provided that with the general or special sanction of the Central Registrar, a multi-State co- operative society may make loans to another multi-State co-operative society.

(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.

A multi-State co-operative society shall receive deposits and loans only to such extent and under such conditions as may be specified in the bye-laws:
Provided that a co-operative bank shall be governed by the provisions of the Banking Regulation Act, 1949.

Save as provided in sections 63 and 64-, 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 may be prescribed.

(1) A multi-State co-operative society having such number or class of employees as maybe prescribed may establish a contributory provident fund for the benefit of such 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.

(3) Notwithstanding anything contained in this section, a provident fund established by a multi-State co-operative society to which the provisions of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952, apply, shall be governed by that Act.

(1) The Central Registrar shall audit, or cause to be audited by a person authorised by him by general or special order in writing in this behalf, the accounts of every multi-State co- operative society at least once in each year.

(2) The audit under sub-section (1) shall include an examination of overdue debts, if any, the verification of the cash balance and securities, and a valuation of the assets and liabilities of the multi-State co-operative society.

(3) The person auditing the accounts of a multi-State co-operative society shall have free access to the books, accounts, papers, vouchers, stock and other property of such society and shall be allowed to verify its cash balance and securities.

(4) The directors, managers, administrators and other officers of the multi-State co-operative society shall furnish to the person auditing the accounts of the society all such information as to its transactions and working as such person may require.

(5) The Central Registrar or the person authorised by him under subsection (1) to audit the accounts of a multi-State co-operative society shall have power, where necessary-

(a) to summon at the time of the audit any officer, agent, servant or member of the society, past or present, who, he has reason to believe can give valuable information in regard to transactions of the society or the management of its affairs; and

(b) to require the production of any book or document relating to the affairs of, or any cash or securities belonging to. the society by any officer agent, servant or member of the society in possession of such books, documents, cash or securities and in the event of serious irregularities discovered during audit, to take them into custody.

(6) If at the time of audit the accounts of a multi-State co-operative society arc not complete. the Central Registrar or the person authorised by him under sub-section (1) to audit may cause the accounts to be written up at the expense of the society.

(7) Audit tee. if any due from any multi-State co-operative society shall he determined by the Central Registrar and shall be recoverable in the same manner as is provided in section 89-.

(1) The Central Registrar, or any person authorised by him by general or special order in writing in this behalf, may inspect a multi- State cooperative 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 limes have access lo all books, accounts. papers, vouchers, securities, stock and other property of that 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 lo the general or special order of the Central Registrar lo call a meeting 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 lo the multi- State co-operative society within a period of three months from the dale of completion of such inspection.

(1) The Central Registrar may of his own motion or on the application of a majority of the members of the hoard or of not less than one-third of the members 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-State co-operative society.

(2) The Central Registrar or the person authorised by him under subsection (1) shall have the following powers, namely:--

(a) he shall at all reasonable times have free access to the hooks, 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 for 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 rule or 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 days at such lime 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 lo 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 lo appear before him at any place at the headquarters of the society or any branch thereof and may examine such person 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 a brief summary of the report of the inquiry to the multi-State co-operative society, the financial institutions, if any, to which the society is affiliated, and to the person or authority, if any, at whose instance the inquiry is made.

(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 behalf 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; and

(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.

Where an inquiry is held under section 69-or an inspection is made under section 70-, the Central Registrar may apportion the costs, or such part of the costs, as he may think fit, between the multi-State co-operative society, the members or creditor 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 ground on which the costs are apportioned.

Any sum awarded by way of costs under section 71-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 business, and such magistrate shall recover the same as if it were a fine imposed by himself.

(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 at any lime been an officer or an employee of the society, has made any payment contrary to this Act. the rules 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 retained any money or other property belonging lo 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 this 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 make, or direct the inquiry to be made, within such period not exceeding 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 may think 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 interest at such rate or to pay contribution and costs or compensation to such extent, as the Central Registrar may consider just and equitable.

(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) 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 member or a person 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 cooperative society or liquidator, past or present, 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 or the nominee, heirs or legal representatives of any deceased officer, deceased agent, or deceased employee of the multi-State cooperative 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 the Central Registrar for decision and no court shall have jurisdiction to entertain any suit or other proceedings in respect of such dispute : Provided that all disputes in which a national co-operative society is a party shall be referred to the Central Registrar or any officer empowered to exercise the powers of the Central Registrar.

(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 cooperative 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 debtor, 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 the Central Registrar is or is not a dispute touching the constitution, management or business of a multi-State co-operative society, the decision thereon of the Central Registrar shall be final and shall not be called in question in any court.

(1) Notwithstanding anything contained in the Limitation Act, 1963, but subject to the specific provisions made in this Act the period of limitation in the case of a dispute referred to the Central Registrar 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) of sub-section (1) of section 74 be six years from the date on which the act or omission, with reference to which the dispute arose, took place:

(c) when the dispute relates to a multi-State co-operative society which has been ordered to be wound up under section 77-or in respect of which an administrator has been appointed under section 48-, be six years from the date of the order issued under section 77-orsection 48-. as the case may be:

(d) 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 the Central Registrar shall be regulated by the provisions of the Limitation Act. 1963. as if the dispute were a suit and the Central Registrar a Civil Court.

(3) Notwithstanding anything contained in sub-sections (1) and (2) the Central Registrar may admit a dispute after the expiry of the period of limitation, if the applicant satisfies the Central Registrar that he had sufficient cause for not referring the dispute within such period.

(1) The Central Registrar may. on receipt of the reference of dispute under section 74-.-

(a) elect lo decide the dispute himself: or

(b) transfer it for disposal to any other person who has been invested by the Central Government with powers in that behalf.

(2) The Central Registrar may withdraw any reference transferred under clause (b) of sub- section ( 1 ) and decide it himself or refer the same for decision to any other person who has been invested by the Central Government with powers in that behalf.

(3) The Central Registrar or any other person to whom a dispute is referred for decision under this section may pending the decision of the dispute, make such interlocutory orders as he may deem necessary in the interest of justice.

(1) If the Central Registrar, after an inquiry has been held under section 69-or an inspection has been made under section 70-. or on receipt of an application made by not less than three-fourths of the members of a multi-State co- operative society. 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 representations, 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 co-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 muncial 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.

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 Reserve Bank in the circumstances mentioned in section 13D of the Deposit Insurance and Credit Guarantee Corporation Act. 1961-

Where a co- operative bank, being an insured bank within the meaning of the Deposit Insurance and Credit Guarantee Corporation Act. 1961

(1) Where the Central Registrar has made an order under section 77-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, lake 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 necessary 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 (k) of sub-section (1) of section 90-. an order for the winding of a multi-State co-operative society made under section 77-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 revest in the society.

(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 SO from the 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 detend 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 deceased members or by 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: the surplus, if any. remaining after payment of the claims being applied in payment of interest from the dale 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:

(1) 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 cooperative 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, debtor 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.

-The surplus assets, as shown in the report of a liquidator of a multi-State cooperative 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.

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 authority in accordance with the order of priority in insolvency proceedings.

(2) An order passed under sub-section (1) shall be communicated by registered post to the president of the multi-State co-operative society and to the financial institutions, if any, of which the society was a member.

- Every decision or order made under section 30-,section 31-,section 73-,section 76-,section 90-,section 92-orsection 93-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; or

(b) where the decision or order provides for the recovery of money, be executed according to the law for the time being in force for the recovery of arrears of land revenue : Provided .that any application for the recovery in such manner of any sum shall be made-

(i) to the Collector and shall be accompanied by a certificate signed by the Central Registrar or 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 the 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 has been made.

Every order made by the liquidator under section 81-shall be executed according to the law for the time being in force for the recovery of arrears of land revenue.

(1) Where the Central Registrar is satisfied that a party to any reference made to him under section 74-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 Central Registrar may unless adequate security is furnished, direct conditional attachment of the said property or such part thereof as he thinks 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.

-The Central Registrar or any person authorised by him in writing in this behalf shall be deemed, when exercising any powers under this Act for 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 purposes of article 136 of the Schedule to the Limitation Act, 1963.

(1) All sums due from a multi-State co-operative society, or from an officer or member or past member of multi-State co-operative society, to the Central Government or a State Government, including any cost awarded 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.

(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 estates 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 28-

( 1 ) Subject to the provisions of section 91-, an appeal shall lie under this section against-

(a) an order made by the Central Registrar under sub-section (2) of section 7-refusing to register a multi-State co-operative society:

(b) an order made by the Central Registrar under sub-section (4) of section 9-refusing to register an amendment of the bye-laws of a multi-State cooperative society:

(c) a decision of a multi-State co-operative society refusing or deemed to be refusing under sub-section (5) of section 19-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) a decision of a multi-State co-operative society under sub-section (1) of section 21-expelling any of its members:

(e) a decision of a multi-State co-operative society removing an elected member of a board under section 39-:

(f) an order made by the Central Registrar under section 40-removing a member from his office:

(g) an order made by the Central Registrar under section 48-superseding the board of directors of a multi-State co-operative society:

(h) an order made by the Central Registrar under section 71-apportioning the costs of an inquiry held under section 69-or an inspection made under section 70-:

(i) an order made under sub-section (2) of section 73-;

(j) a decision or order made under section 76-;

(k) an order made by the Central Registrar under section 77-directing the winding up of a multi-State co-operative society;

(1) an order made by the liquidator of a multi-State' co-operative society under section 81-;

(m) an order under section 87-directing attachment of property before award.

(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,-

(a) if the decision or order was made by the Central Registrar, to the prescribed authority:

(b) if the decision was made by a multi-State co-operative society (other than a national co-operative society), or a liquidator of such society, to the officer who is empowered to exercise the powers of the Central Registrar under sub-section (2) of section 4-; or

(c) if the decision was made by a national co-operative society or a liquidator of such society, to the Central Registrar appointed under subsection (1) of section 4-.

(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 not exceeding sixty days 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 representations, pass such order thereon as that authority may deem fit.

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

- 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: or

(c) in respect of which an order for the supersession of the board and the appointment of an administrator therefor has been made no appeal, revision or review 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.

(1) Subject lo the provisions of section 91 the Central Government may. of its own motion or on an application, call for and examine (he records of any proceedings in which no appeal lies to the appellate authority under section 90-for the purpose of satisfying itself as to the legality or propriety of any decision or order made under this Act and if in any case it shall appear to the Central Government that any such decision or order should be modified, annulled or revised or remitted for reconsideration, the Central Government may. after giving the party to be affected thereby a reasonable opportunity of being heard, pass such order thereon as it may deem fit:
Provided that the application to the Central Government for the exercise of the power under this section shall be preferred within ninety days from the date on which the decision or order to which the application relates was communicated lo the applicant :
Provided further that the Central Government may. if satisfied that the appellant was prevented by sufficient cause from making the application within the said period of ninety days. admit the application after the expiry of the said period.

(2) The Central Government may suspend the execution of the decision or order pending the exercise of its power under sub-section (1) in respect thereof.

(3) The Central Government may award costs in proceedings under this section to be paid out of the funds, of the multi-State co-operative society concerned or by such party to the application for revision as the Central Government may deem fit.

(1) The appellate authority under section 90-may, on the application of any party interested, 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 dale of communication of the order of the appellate authority sought to be reviewed.

Where an appeal is made under section 90-or where the Central Government calls for the records of a case under section 92- the appellate authority or the Central Government, as the case may be may in order lo prevent the ends of justice being defeated make such interlocutory orders, including an order of stay pending the decision of the appeal or revision as such authority or the Central Government may deem fit.

(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 referred 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 prescribed, 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 existing 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 scheme 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 creditors 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 ail such societies.

(5) Notwithstanding anything contained in this section, where a scheme under sub-section (2)the transfer of the assets and liabilities of any multiState co-operative society referred to in clause (b) thereof, the scheme shall 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 member present at a meeting of its general body.

(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, requisition 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 may extend to two hundred rupees.

(2) Any employer who without sufficient cause, fails to pay to a multi State co-operative society the amount deducted by him under 58 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 hundred 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 under section 49-.section 67-.section 68-,section 69-orsection 80-shall be punishable with fine which may extend to two hundred rupees and in the case of a continuing breach, with a further fine which may extend to five hundred rupees for every day during which the breach is continued after conviction for the first such breach.

(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 shall be instituted under this Act without the previous sanction of the Central Registrar and such sanction shall not be given without giving to the person concerned a reasonable opportunity to represent his case.

Every multi-State co-operative society shall keep a copy of this Act, the rules and its bye-laws and also a list of its members, open to inspection free of charge at all reasonable times at the registered address of the society.

(2)

(i) exempt any multi-State co-operative society or any class of such societies from any of the provisions of this Act or of the rules: or

(ii) direct that such provisions shall apply to such society or class of societies with such modifications not affecting the substance thereof as may be specified in the order :

Provided that no order shall be made under sub-clause (ii) so as to prejudice the interests of such society or class of such societies without a reasonable opportunity being given to make representation in the matter.

(b) Every order made under clause (a) shall be published in the Official Gazette.

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.

-" 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 next after notice in writing has been delivered to the Central Registrar or left at his office, slating 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 statement that such notice has been so delivered or left.

(1) The provisions of the Companies Act, 1956 and the Monopolies and Restrictive Trade Practices Act. 1969 shall not apply to multi-State cooperative societies.

(2) The multi-State co-operative societies registered or deemed to be registered tinder 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.

(1) Every multi-State co-operative society existing immediately before the commencement of this Act which has been registered under the Cooperative Societies Act 1912 or under any other Act relating to cooperative societies in force, in any State or in pursuance of the provisions of the Multi-unit Co-operative Societies Act. 1942 shall be deemed to be registered 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 or the rules, continue to be in force until altered or rescinded.

(2) 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 this 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 77-for its being wound up.

(1) If the Central Government is satisfied that any multi-State cooperative society should be designated as a national co-operative society or any national co-operative society specified in the Second Schedule should 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 to have been amended accordingly.

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

( 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) the removal of board of directors:

(c) any dispute required under section 74-to be referred to the Central Registrar: and (d) 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 by leave of the Central Registrar and subject to such terms and conditions as be may impose.

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

( 1 ) In exercising the functions conferred on him by or under this Act, the Central Registrar, or any other person deciding a dispute under section 76-and the liquidator of a multi-State co-operative society and a person entitled to audit, inspect or hold an inquiry under this Act shall have all the powers of a civil court, while trying a suit under the Code of Civil Procedure. 1908. in respect of the following matters, namely :-

(a) summining and enforcing the attendance of any person and examining him on oath :

(b) requiring the discovery and production of any document: (c) proof of facts by affidavits: and (d) issuing commissions for examination of witnesses.

(2) In the case of an affidavit, any officer appointed by the Central Registrar, or any other person deciding a dispute or the liquidator, as the case may be may administer oath to the deponent.

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 have been done under this Act.

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

(2) Where a multi-State co-operative society opens branches or places of business in any State under sub-section (1) the Registrar of Cooperative Societies in such Stale shall not exercise any jurisdiction in relation to such branches or places of business nor shall call for any returns or information therefrom.

(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 :-

(i) the form to be used the particulars to be given and the conditions to be complied with in the 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:

(ii) the number of the applicants and the manner in which the order of refusal to register a multi-State co-operative society and its bye-laws shall be communicated under sub-section (2) of section 7-:

(iii) the manner in which the order of refusal to register any amendment of the bye-laws shall he communicated under sub-section (4) of section 9-andsection 18-:

(iv) the procedure and conditions for change in the extent of the liability of a multi-State co- operative society under section 13-:

(v) the matters in respect of which multi-State co-operative society may make bye-laws and the procedure to be followed in making, altering and abrogating bye-laws under section 9-orsection 18-and the conditions to be satisfied prior to such making, alteration or abrogation:

(vi) the conditions to be complied with under section 19-by persons applying for admission as members, for the election and admission of members and the payment lo be made and the interest to he acquired before the exercise of the right of membership:

(vii) the number of individuals who may he admitted as members of the National Co-operative Union of India Limited. New Delhi as required by section 19-and their qualifications:

(viii) the withdrawal and expulsion of members and the payments, if any, to be made to members who withdraw or are expelled and the liability of past members or the estates of deceased members:

(ix) the votes of members, as required by section 22-:

(x) the maximum number of shares of a multi-State co-operative society which may subject to the provisions of section 24-. be held by a member:

(xi) the constitution and powers of a smaller body representing the general body under section 29-:

(xii) general meeting of the members under section 30-the period within which such meeting be called and the procedure at such meetings and the powers to be exercised by such meetings;

(xiii) the proportion of individuals and multi-State co-operative societies in the constitution of the board of directors and the general body under section 32-:

(xiv) the election of members of the boards under section 35-, and nomination of members to such boards under section 41-, the appointment or election of officers and the powers to be exercised and the duties to be performed by the boards and other officers;

(xv) the restrictions and conditions subject to which honorarium may be paid under section 38-to the elected chairman or president or the board of directors for services rendered;

(xvi) the additional measures and acts which may be taken or, as the case may be, done by the board under section 42-;

(xvii) the number of meetings of the board, the venue of such meetings and the number of committees or sub-committees for purposes of sections 43-and46-;

(xviii) the appointment and regulation of work entrusted to persons replacing the board in pursuance of section 48-;

(xix) the constitution of a body of persons under section 50-for the preparation of a list of persons eligible for appointment to the posts of Chief Executives and other management posts in national co-operative societies and the amount of the maximum pay-scale applicable to such posts;

(xx) the recruitment, remuneration, allowances and other conditions of service of officers and other employees of national co-operative societies under section 50-;

(xxi) prohibiting a multi-State co-operative society from electing a defaulting member, or a representative of defaulting member-society, on its board;

(xxii) the returns to be submitted by a multi-State co-operative society to the Central Registrar, the persons by whom and the form in which such returns shall be submitted and in case of failure to submit any such returns, the levy of expenses of preparing it;

(xxiii) 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 56-and the charges to be levied for the supply of such copies;

(xxiv) the terms and conditions on which the Central Government may make share capital contribution or give financial or other assistance to multi-State co-operative societies under section 59-and the terms and conditions on which the Central Government may guarantee the payment of the principal or interest on debentures issued by multi-State co-operative societies or loans or deposits raised by them;

(xxv) the procedure to be followed in proceedings before the Central Registrar or other persons deciding disputes, including the appointment of a guardian for a party to the dispute who is a minor or who by reason of unsoundness of mind or mental infirmity, is incapable of protecting his interests, and the levy of expenses relating to such proceedings;

(xxvi) the mode in which the value of a deceased member's share or interest shall be ascertained and the nomination of a person to whom such share or interest may be paid or transferred;

(xxvii) the payments to be made and conditions to be complied with by members applying for loans, the period for which any loans may be made and the maximum amount which may be lent to any members;

(xxviii) the formation and maintenance of reserve funds and other funds under section 61-and the objects to which such funds may be applied, and the investment of any funds under the control of a multi-State co-operative society under section 62-:

(xxix) the conditions under which profits may be distributed under section 61-to the members of a multi-State co-operative society and the maximum rate of dividend which may be paid multi-State co-operative societies;

(xxx) the prohibitions and restrictions subject to which multi-State co-operative societies may, under section 65-, transact business with persons who are not members:

(xxxi) the accounts and books to be kept by a multi-State co-operative society and the audit of such accounts and the charges, if any, to be made for such audit under section 67-and the periodical publication of a balance-sheet showing the assets and liabilities of a multi-State co-operative society:

(xxxii) the calculation and writing off of bad debts by multi-State cooperative societies:

(xxxiii) the appointment of persons for settlement of disputes under section 76-:

(xxxiv) the procedure to be followed by a liquidator appointed under section 80-in respect of provisions of section 81-:

(xxxv) the manner in which the surplus assets may be divided amongst the members of the multi-State co-operative society under section 82-;

(xxxvi) the procedure for execution of decision under section 85-;

(xxxvii) the procedure to be followed in presenting and disposing of appeals under section 90-;

(xxxviii) the issue and service of processes and for proof of service thereof: (xxxix) the manner of effecting attachment; (xl) the custody, preservation and sale of property under attachment;

(xli) the investigation of claims by persons other than the defaulter to any right or interest in the attached property, and the postponement of sale pending such investigation;

(xlii) the immediate sale of perishable articles;

(xliii) the inspection of documents in the office of the Central Registrar or of any other officer or authority and the levy of fees for granting certified copies of the same;

(xliv) the manner in which funds may be raised by a multi-State co-operative society or a class of multi-State co-operative societies by means of shares or debentures or otherwise and the quantum of funds so raised;

(xlv) the procedure under section 95-for reconstitution and re-organisation of societies which become multi-State co-operative societies consequent on reorganisation of a State;

(xlvi) the method of communicating or publishing any decision or order required lo be communicated or published under this Act or the rules;

(xlvii) the manner and the periodicity of returns of pending cases of registration of multi-State co-operative societies and amendments of bye-laws to be sent by the Central Registrar to the Central Government:

(xlviii) 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 sessions, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, both Houses agree in making any modification to the rule or 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 as 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.

The Multi-Unit Co-operative Societies Act. 1942, is hereby repealed.

Membership of a multi-State co-operative society (hereafter in this Schedule referred to as the society should be voluntary and open without any social. political, or religions discrimination to all persons who can make use of its services, 2. In a society other than that with institutional membership, individual member should enjoy equal rights of voting - one member, one vote. 3. (i) Surplus or savings, if any arising out of the operations of the society belong to the society as a whole, and no individual member has a claim to the surplus. (ii) The surplus should he utilised for all or any of the following purposes, namely :- (a) providing for development of the business of the society: (b) providing services for the common enjoyment of members: (c) distribution among the members in proposition to their transactions with the society. 4. The society should undertake education of its members, officer-hearers and employees and the general public regarding the principles and practice of co-operation. 5. The society should actively co-operate in every practical way with other co-operative societies at local, national or international levels. 6. The share capital of a society shall receive strictly limited rate of interest (that is to say dividend). 7. The affairs of a society should he administered by the management in accordance with democratically expressed will of the members. 8. The management of the society is accountable to its own members.

National Co-operative Land Development Bunks Federation Limited Hyderabad. 2. National federation of State Co-operative Banks Limited. Bombay. 3. National Co-operative Union of India Limited. New Delhi. 4. National Agricultural Co-operative Marketing Federation of India Limited. New Delhi. 5. National Co-operative Consumers Federation of India Limited, New Delhi. 6. National Federation of Co-operative Sugar Factories Limited. New Delhi. 7. National Federation of Industrial Co-operatives Limited. New Delhi. 8. National Co-operative Housing Federation Limited. New Delhi. Indian Farmers' Fertiliser Co-operative Limited New Delhi. 10. All India Federation of Co-operative Spinning Mills Limited. Bombay 11. All India Industrial Co-operalive Banks Federation Limited Bangalore 12. National Co-operative Dairy Federation of India Limited. New Delhi: 13. Petrofils Co-operative l.imiled. New Delhi. 14. Nalional Heavy Engineering Co-operalive Limited New Delhi. IS. The All India Handloom Fabrics Marketing Co-operative Society Limited, Bombay. 16. The National Federation of Urban Co-operative Banks and Credit Societies Limited. New Delhi. 17. Krishak Bharati Co-operative Limited. New Delhi. 18. National Federation of Fishermen's Co-operative Limited. Bombay. 19, National Federation of Labour Co-operatives Limited, New Delhi. 20. National Co-operative Tobacco Growers' Federation Limited,

MULTI-STATE CO-OPERATIVE SOCIETIES (REGISTRATION, MEMBERSHIP, DIRECTION & MANAGEMENT, SETTLEMENT OF DISPUTES, APPEAL & REVISION) RULES 1985

RULE 1 SHORT TITLE AND COMMENCEMENT

1

(2) These rules shall come into force from the Sixteenth day of September, 1985.

RULE 2 DEFINITION

In these rules, unless the context otherwise requires :

(i) "Act" means theMulti-State Co-operative Societies Act, 1984 (51 of 1984)-.

(ii) "Form" means a form appended to these rules.

(iii) "General meeting" means a meeting of the general body including a representative general body referred to insection 29-.

(iv) "Section" means a section of the Act.

(v) "Schedule" means Schedule appended to these rules.

(vi) Words and expressions defined in the Act and used but not defined in these rules shall have the meanings respectively assigned to them in the Act.

* * * *

RULE 3 APPLICATION FOR REGISTRATION

(1) An application for registration of a Multi-State Co-operative Society under sub-section (1) of section 6-shall be made in Form I and shall, subject to the provisions of sub-section (2) of section 6-and sub-rules (2) and (3) be signed by the applicants and be accompanied by :

(a) four copies of the proposed bye-laws of the Multi-State Co-operative Society, duly signed by each of the persons who sign the application for registration,

(b) a list of persons who have contributed to the share capital, together with the amount contributed by each of them, and the entrance fee paid by them;

(c) a certificate from the bank or banks stating the credit balance in favour of the proposed Multi-State Co-operative Society ;

(d) a scheme showing the details explaining how the working of the Multi State Co-operative society will be economically sound ;

(e) certified copy of the resolution of the promoters which shall specify the name and address of one of the applicants to whom the Central Registrar may address correspondence under the rules before registration and dispatch or hand over registration documents.

(2) Where any member of a Multi-State Co-operative Society to be registered is a Multi-State Co-operative Society or a Co-operative Society the Chairman or Chief Executive of such Multi-State Co-operative Society or Co-operative Society, as the case may be, shall be authorised by that board by a resolution, to sign the application for registration and bye-laws on its behalf, and a copy of such resolution shall be appended to the application.

(3) Where any member of Multi-State Co-operative Society to be registered is a Governments Company, a corporate body or a society registered under the Societies Registration Act, 1860 (21 of 1860)-such member shall duly authorise any person to sign the application for registration and the bye-laws on its behalf and a copy of such resolution giving such authority shall be appended to the application.

(4) A copy of the resolution indicating the name of one or more applicants, who are authorised to make alterations or additions to the proposed bye-laws submitted with the application, as may be suggested by the Central Registrar, shall be submitted.

(5) The application shall either be sent by registered post or delivered by hand to the Central Registrar.

RULE 4 REGISTRATION

(1) On receipt of an application under Rule 3-, the Central Registrar shall enter particulars of the application in the register of applications to be maintained in Form II, give a serial number to the application and issue a receipt in acknowledgement thereof.

(2) If the Central Registrar is satisfied that the proposed Multi-State Co- operative Society has complied with the requirements of the Act and the Rules, he may register the society and its bye laws.

(3) Where the Central Registrar registers a Multi-State Co-operative Society, he shall issue to the said society a certificate of registration signed by him and bearing his official seal containing registration number and date of registration of the said society. The Central Registrar shall also issue, along with the certificate of registration, a certified copy of the bye-laws, as approved and registered by him, which shall be the registered by-laws of the said society for the time being in force.

RULE 5 EXTENSION OF PERIOD OF REGISTRATION OF SOCIETIES AND BYE-LAWS, ETC.

- The Central Government may, on the report of the Central Registrar, allow such further period not exceeding six months for registration of:-

(i) the Multi-State Co-operative Society under proviso to sub-section (3) of section 7-;

(ii) the amendment of bye-laws of the multi-State co-operative society under proviso to sub-section (2) of section 9-; and

(iii) the amendment of bye-laws extending the jurisdiction of the co- operative society under proviso to sub-section 2 of section 18-.

RULE 6 REFUSAL OF REGISTRATION

-Where the Central Registrar refuses to register a Multi-State Co-operative Society under sub-section (2) of Section 7-, he shall communicate the order of refusal together with reasons therefor to the person authorised under Clause (e) of sub-rule (1) of Rule 3-to the said society.

RULE 7 SUBJECT MATTER OF BYE-LAWS

-The Multi-State Co-operative Society and its branches :-

(i) the name and registered address of the Multi-State Co-operative Society and its branches;

(ii) the area of operation;

(iii) the objects for which the Multi-State Co-operative Society is established and the purpose for which its funds may be applied;

(iv) the terms and qualifications for admission and withdrawal of membership,

(v) the privileges, rights, duties and liabilities of members including nominal members;

Provided that the nominal members shall not be entitled to any share in any form whatsoever in the assets or profits of the Multi-State Co-operative Society and shall not have a right to vote :

(vi) the consequence of default in payment of any sum due by members;

(vii) the procedure for withdrawal, removal or expulsion of members;

(viii) the manner in which and the limits up to which the funds of the society may be raised the maximum share capital which any member may hold and the purpose to which the funds may be utilised ;

(ix) the mode of appointment and removal of the directors and other officers of the Multi-State Co-operative Society and the duties and powers of the board ;

(x) the mode of convening and conducting annual and special meetings of the general body and of the board, issue of notices and the business which may be transacted thereat ;

(xi) the disposal of net profits;

(xii) the manner of making, altering and abrogating bye-laws ;

(xiii) the powers, duties and functions of the Chairman or President and his removal on his losing support of the majority ;

(xiv) the powers and duties of the Chief Executive in addition to these mentioned in Section 45-;

(xv) the authorisation of an officer or officers to sign documents and to institute and defend suits and other legal proceedings on behalf of the Multi-State Co-operative Society ;

(xvi) the mode of custody and investment of funds; (xvii) the mode of keeping the accounts; (xviii) the strength of the board ;

(xix) the manner in which penalty may be levied on a member found guilty of breach of the bye-laws ;

(xx) the appointment of a provisional board, wherever necessary;

(xxi) the manner of sending notices;

(xxii) the formation or use of reserve fund;

(xxiii) the purpose for which surplus if any shall be utilised in the event of the winding-up of the Multi-State Co-operative Society;

(xxiv) the conduct of elections to the board and other bodies of a Multi State Co-operative Society including the number of members to be elected by different constituencies and appointment of returning officers;

(xxv) the procedure to be followed in cases of withdrawal, ineligibility and death of members;

(xxvi) the condition, if any, under which the transfer of share or interest of a member may be permitted;

(xxvii) the method of appropriating payments made by members from whom moneys are due;

(xxviii) the constitution and maintenance of various funds to be maintained under the provisions of the Act or Rules ;

(xxix) the constitution of a representative general body consisting of delegates or members of the Multi-State Co-operative Society and the method of election of such delegates to exercise the powers of the general body;

(xxx) the mode of conducting business such as manufacture, purchase, stock-taking and other allied matters ;

(xxxi) in the case of co-operative banks and Multi-State thrift and credit societies,-

(a) the maximum loan admissible per member ;

(b) the maximum rate of interest on loans to members ;

(c) the conditions on which loans may be granted to members ;

(d) the procedure for grant of loans and advances and for the grant of extension of time and for repayment of such loans, advances, etc.,

(e) the circumstances under which a loan may be recalled.

(1) The amendment to the bye-laws of a Multi-State Co-operative Society may be made by a resolution passed by a two-third majority of the members present and voting at general meeting of the society.

(2) No such resolution shall be valid unless notice of the proposed amendment has been given to the members of the Multi-State Cooperative Society in accordance with the bye-laws.

(3) In every case in which a Multi-State Co-operative Society proposes to amend its bye-laws, an application shall be made to the Central Registrar together with:-

(a) a copy of the resolution referred to in sub-Rule (1);

(b) the particulars indicating the date of the general meeting at which the amendments were made, the number of days notice given to convene the general meeting, the total number of members on the date of such meeting, the number forming the quorum, the number of members present at the meeting, the number exercising the right of voting and the number voting for the amendment;

(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 as they would stand after the amendment, signed by the officers duly authorised in this behalf by the board of the Multi-State Co-operative Society ;

(e) a copy of the notice given to the members of the Multi-State Co- operative Society and the proposal to amend the bye-laws ;

(f) a certificate signed by the presiding authority of the general meeting that the procedure specified in sub-rule (1) and sub rule (2) and in the bye-laws, has been followed ; and

(g) any other particulars that may be required by the Central Registrar in this behalf.

(4) Every such application shall be made within sixty days from the date of the general meeting at which such amendment was passed.

(5) Where the Central Registrar refuses to register an amendment of the bye-laws of a Multi-State Co-operative Society he shall pass an order of refusal together with the reasons therefor and communicate the same by registered post to the Chief Executive of the Multi-State Co-operative Society within seven days from the date of order of refusal.

(6) The procedure outlined above in this rule 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 provisions of section 18-.

RULE 9 MAINTENANCE OF REGISTRATION FILED BY THE SOCIETY

(1) Every Multi-State Co-operative Society shall maintain at its registered address a registration file containing :

(a) the certificate of registration ;

(b) the registered bye-laws ;

(c) all registered amendments to the bye-laws along with the certificates of registration of amendments ;

(d) a copy of the Act and the rules

(2) The registration file shall be kept open for inspection at all times during working hours to the Central Registrar or any other officer authorised by him or any member of the Multi-State Co-operative Society.

RULE 10 CHANGE IN NAME OF MULTI-STATE CO-OPERATIVE SOCIETY

(1) The name of a Multi-State Co-operative society may be changed under section 11-so, however, that it does not refer to any caste or religion denomination and is not inconsistent with the objects of the Multi-State Co-operative Society.

(2) Every change in the name of the Multi-State Co-operative Society shall be made by an amendment of its bye-laws.

(3) After the change in the name is approved by the Central Registrar the Multi-State Co-operative Society shall send the original registration certificate for amendment to the Central Registrar who shall return the same to the Multi-State Co-operative society duly amended.

* * * *

RULE 11 CONDITIONS TO BE COMPLIED WITH FOR ADMISSION FOR MEMBERSHIP

(1) No person shall be admitted as a member of a Multi-State Co- operative Society unless,-

(a) he has applied in writing in the form, if any, laid down by the Multi-State Co-operative Society or in the form specified by the Central Registrar, if any, for membership ;

(b) his application is approved by the board of the Multi-State Co-operative Society;

(c) he has purchased the minimum number of shares and paid the value thereof in full or in part in such calls as may be laid down in the bye-laws of the Multi-State Co-operative Society ;

(d) he has fulfilled all other conditions laid down in the Act, the rules and the bye-laws;

(e) in the case of a Multi-State Co-operative Society or a co-operative society or the national co-operative society or any other corporation owned or controlled by the Government or any Government Company or body of persons whether incorporated or not, the application for membership shall be accompanied by a resolution authorising it to apply for such membership.

(2) No person shall be eligible for admission as a member of a Multi State Co-operative Society if he :-

(a) has not attained the age of 18 years ;

(b) has been adjudged by a competent court to be an insolvent or an undischarge insolvent;

(c) has been sentenced in any offence, other than offence of a political character or an offence not involving moral turpitude and dishonesty and a period of five years has not elapsed from the date of expiry of the sentence.

(3) Notwithstanding anything contained in these rules or the bye-laws of the Multi-State Co-operative Society, if a member becomes or has already become subject to any disqualifications specified in sub-rule (2), he shall be deemed to have ceased to be a member of the society from the date when the disqualification was incurred.

(4) No individual being a member of a primary level Multi-State Co- operative Society or a Multi-State Credit Society, or a Multi-State Urban Co- operative Bank shall be the member of any other Multi-State Cooperative Society or Co-operative Society of the same class without the general or special permission of the Central Registrar and where an individual has become a member of two such co-operative societies aforesaid, then either or both of the societies shall be bound to remove him from membership on written requisition from the Central Registrar to that effect.

(5) No Multi-State Co-operative Society shall admit members within thirty days prior to the date of the meeting of its general body.

RULE 12 INDIVIDUAL MEMBERS IN THE NATIONAL CO-OPERATIVE UNION OF INDIA

-The ex-Presidents of the National Co-operative Union of India Limited, New Delhi who have served their full term of office and other individuals not exceeding 15 in number with the knowledge and experience in the field of co- operation may be admitted as members of the National Co-operative Union of India Limited, New Delhi, provided that : The ex-Presidents and other individuals admitted as members shall not be eligible to vote or contest in any ejections in the National Co-operative Union of India Limited.

RULE 13 REFUND OF SHARES

-The total refund of share capital of a Multi- State Co-operative Society in any co-operative year shall no exceed 10 per cent of the paid up share capital of the Multi-State Co-operative Society on the last day of the co-operative year immediately preceding.

RULE 14 NOMINATION OF HEIR

(1) For the purposes of transfer of his share or interest under sub-section (1) of section 27-, a member of a Multi-State Co-operative Society may nominate a person to whom in the event of his death his share or interest shall be transferred. Such member may, from time to time, revoke or vary such nomination.

(2) A nomination made by a member shall not be valid and shall not in the event of death of the member have effect unless,-

(a) it is made in writing and is signed by the member in the presence of two witness attesting the same ;

(b) it is recorded in the books of Multi-State Co-operative Society, kept for the purpose.

RULE 15 PROCEDURE OF ASCERTAINING THE VALUE OF SHARE OR INTEREST OF A MEMBER

--Where the member of a Multi-State Co-operative Society ceases to be a member thereof, the sum representing the value of his share or interest in the capital of the Multi-State Co-operative Society to be paid to him or his nominee, or heir or legal representative, as the case may be, shall be ascertained in the following manner, namely :-

(i) In the case of a Multi-State Co-operative Society with unlimited liability, it shall be the actual amount received by the Multi-State Co- operative Society in respect of such share or interest ;

(ii) In the case of a Multi-State Co-operative Society with limited liability, it shall be the amount arrived at by the valuation based on the financial position of such society as shown in the last audited balance sheet preceding cessation of membership:

Provided that the amount so ascertained shall not exceed the actual amount received by the Multi-State Co-operatives Society in respect of such share or interest.

RULE 16 RESTRICTION ON HOLDING OF SHARES

-No member referred to in Clauses (a) and (b) of sub-section (1) of Section 19-shall hold more than one-fifth of the share capital of the Multi-State Co-operative Society or have or claim any interest in the shares of the Multi-State Co-operative Society exceeding ten thousand rupees, whichever is less.

RULE 17 SHARES NOT TO BE HYPOTHECATED

-The shares of a Multi-State Co-operative Society shall not be hypothecated to that society or any other Multi- State Co-operative Society by the members as a security for a loan.

RULE 18 PROHIBITION ON ADMISSION OF MEMBERS AND TRANSFER OF SHARES ON THE EVE OF GENERAL MEETING

(1) No Multi-State Co-operative Society shall admit members or approve the transfer of shares within thirty days prior to the date fixed for the general body meeting.

(2) Any person admitted as member and any person in whose favour the transfer of shares have been approved in contravention of this rule shall not have the right to vote at the said general meeting.

RULE 19 DISQUALIFICATION OF DEFAULTING MEMBER

-A member of a Multi- State Co-operative Society or a representative of defaulting member society shall not be eligible to seek election to any office in, or continue, as a member of the board of such Multi-State Co-operative Society, if he or the society of which he is the representative, commits default in the payment of annual subscription or other sums due to such Multi-State Co-operative Society. A member, or a representative of a defaulting member society, if holding any office in a Multi-State Co- operative Society, shall forfeit the right to hold such office with effect from the date on which he, or the society of which he is the representative, becomes defaulter as per bye-laws of the Multi-State Co-operative Society or as determined by the board of directors of the Multi-State Co-operative Society.* * * *

RULE 20 ANNUAL GENERAL MEETING

-Every Multi-State Co-operative Society shall hold the annual general meeting of its members (referred to in Section 30-) within six months of the close of the co-operative year.

RULE 21 CONSTITUTION OF SMALLER GENERAL BODY

(1) Without prejudice to the provision of sub-section (3) of section 29-, a Multi-State Co-operative Society with a membership exceeding one thousand may provide in its bye-laws for the constitution of a smaller general body. The smaller general body so constituted shall exercise such powers as may be specified in the bye-laws of the Multi-State Cooperative Society.

(2) The bye-laws of such society may specify the principle or the basis for constitution of a representative general body and procedures thereto.

RULE 22 INTERIM BOARD AND GENERAL MEETING FOR FIRST ELECTION

(1) The board of directors selected by the applicants for the registration of the Multi-State Co-operative Society shall hold office till the directors are elected in the first general meeting of the Multi-State Co-operative Society.

(2) The first general meeting for this purpose shall be held within six months of the registration of the Multi-State Co-operative Society.

RULE 23 NOTICE FOR GENERAL MEETING

(1) Annual general meeting of a Multi-State Co-operative Society may be called by giving not less than fourteen days notice in writing.

(2) Special general meeting of a Multi-State Co-operative Society may be called by giving not less than seven days notice in writing,

(3) When a general meeting is called by the Central Registrar under the second proviso to sub-section (1) of section 30-, he may determine :-

(i) the period of notice of such meeting which shall not be less than seven days;

(ii) the time and place of such meeting; and

(iii) the subjects to be considered in such meeting. The Central Registrar or any person authorised by him may preside over such meeting.

(4) The notice of general meeting shall be accompanied by a copy each of the audited balance sheet, profit and loss account, together with the auditor's report thereon, relating to the preceding year and the report of the board.

RULE 24 QUORUM AT A GENERAL MEETING

(1) Unless otherwise provided in the bye-laws, the quorum for a general meeting shall be one-fifth of the total number of members of the Multi State Co-operative Society.

(2) No business shall be transacted at any general meeting unless there is a quorum at the time when the business of the meeting is due to commence.

(3) If within half an hour from the time appointed for the meeting aquorum is not present, the meeting shall stand adjourned :

Provided that a meeting which has been called on requisition of the members shall not be adjourned but dissolved.

(4) If at any time during the meeting sufficient number or members are not present to form the quorum, the Chairman or the member presiding over the meeting on his own, or on his attention being drawn to this fact, shall adjourn the meeting and the business that remains to be transacted at this meeting, if any, shall be disposed of in the usual manner at the adjourned meeting.

(5) Where a meeting is adjourned under sub-rule (3) or sub-rule (4), the adjourned meeting shall be held either on the same day or on such date, time and place as may be decided by the Chairman or the member presiding over the meeting.

(6) No business shall be transacted at any adjourned meeting other than the business on the agenda of the adjourned meeting.

(7) No quorum shall be necessary in respect of an adjourned general meeting.

RULE 25 VOTING IN GENERAL MEETING

(1) All resolutions which are put to vote at the general meeting shall be decided by a majority of the members present and voting unless otherwise required under Act, these Rules or the bye- laws of the Multi-State Cooperative Society. Voting shall be by show of hands unless a poll is demanded by at least ten members present at the meeting. If no poll is demanded, a declaration by the Chairman/President of such meeting that a resolution has been carried or lost and an entry to that effect in the minutes of the proceedings shall be conclusive proof of the fact that such resolution has been duly carried or lost.

(2) If a poll is demanded, the votes shall be taken by ballot as may be decided by the Chairman of the meeting unless otherwise specified in the bye-laws in this behalf, and the result of the poll shall be deemed to be the decision of the general meeting regarding the resolution over which the poll is demanded.

(3) When a poll is taken, the number of members voting for or against a resolution shall be recorded in the minutes of the proceedings.

(4) In the case of equality of votes whether on a show of hands or on a poll, the Chairman of the meeting at which show of hands takes place or the poll is taken, shall have a second or casting vote.

RULE 26 MINUTES OF THE GENERAL MEETING

-Minutes of the proceedings of the general meeting shall be entered in a minutes book kept for the purpose and shall be signed by the Chairman of the meeting. The minutes so signed, shall be an evidence of the correct proceedings of that meeting.

RULE 27 PROCEDURE FOR CONDUCT OF ELECTIONS

(1) Notwithstanding anything contained in these rules, and without prejudice to the generality of the powers of the Central Government under sub-section (1) of section 35-, the election of the members of the board of directors of the National Co-operative Society specified in the Second Schedule to the Act and such other Multi-State Co- operative Society or class of Multi-State Co-operative Societies as the Central Government may, by general or special order, notify, shall be conducted by such returning officer or officers as may be appointed by the Central Registrar in this behalf. The election in such societies shall be conducted in the manner specified in Schedule.

(2) Notwithstanding anything contained in sub-rule (1) where a requisition to appoint a returning officer to conduct an election is received from not less than 1/5 of the total number of members eligible to vote in a Multi-State Co-operative Society sixty days in advance of the date for election, the Central Registrar shall appoint a returning officer to conduct election in the manner specified in the Schedule.

RULE 28 ELECTION OF OFFICE-BEARERS

--As soon as the members of the board have been elected, the returning officer referred to in sub-rule (1) of Rule 27-, or the person presiding over the general meeting, as the case may be, shall, notwithstanding anything contained in the bye-laws of the Multi-State Co-operative Society specifying the period of notice, convene a meeting of the newly elected members of the board for the purpose of election of the President Chairman, Vice-President /Vice-Chairman or other elected office-bearers of the society, by whatever name they are called. Such a meeting of the board shall not be conducted unless a majority of the number of members of the newly constituted board, as per bye-laws, are present.

RULE 29 CUSTODY OF RECORD OF ELECTIONS CONDUCTED

-After declaration of the result of election, the returning officer, (referred to under sub-rule (1) of Rule 27-) or the Chairman of the meeting, as the case may be, shall handover the ballot papers and records, if any, relating to the election of the members of the Board of Directors and the office-bearers to the Chief Executive of the Multi-State Co- operative Society in sealed cover. They shall be preserved by the Chief Executive of the society for a period of six months from the date of election or till such time a dispute or an appeal thereof regarding elections, if any, is disposed of, whichever is later, and shall thereafter be destroyed.

RULE 30 RESTRICTIONS AND CONDITIONS FOR PAYMENT OF HONORARIUM TO THE CHAIRMAN AND THE PRESIDENT

-A Multi-State Co-operative Society may provide in its bye-laws for the payment of honorarium to the elected Chairman or President of the Board of Directors, out of profits, in respect of specific services rendered by him, on such scale as may be laid-down in the bye-laws of such a society, but in no case exceeding the limit and terms and conditions hereunder referred to :

(a) that the society's financial position is sound ;

(b) that for its recurring expenses it does not depend on grants or subsidies from the Central Government or the State Government ; and

(c) that the honorarium to be paid, whether as a consolidated amount or in the shape of daily allowance in respect of the days of halt at the head quarters, in addition to the sitting fees in respect of board meetings as and when such meetings are held, is limited to rupees twenty-five thousands per year.

RULE 31 CENTRAL GOVERNMENT OR STATE GOVERNMENT NOMINEES ON THE BOARD

(1) Where the Central Government or the State Government has subscribed to the share capital of a Multi-State Co-operative Society, or has guaranteed the repayment of principal and payment of interest on debentures issued by such society, or has guaranteed the repayment of principal and payment of interest on loans and advances to such society, or has provided grant or subsidy to such society, the Central Government or the State Government, as the case may be, or any other person authorised by the Central Government or the State Government, shall have the right to nominate on the board such number of persons not exceeding 3 or l/3rd of the total number of members thereof, whichever is less.

(2) Notwithstanding anything contained in these rules, the bye-laws of a Multi-State Co-operative Society may provide for the nomination by the Central or State Government of persons in excess of the limits referred to in sub-rule (1).

RULE 32 ADDITIONAL MEASURES AND ACTS TO BE UNDERTAKEN BY THE BOARD

-The board may take any of the measures or do any of the acts mentioned below as may be necessary or expedient for the purposes of carrying out its functions under the Act and the Rules made thereunder :

(i) placing before the general body the annual report and the audit report;

(ii) recommending the distribution of profits to the general body ;

(iii) taking decisions on matters relating to withdrawals, transfer, retirement, refund or forfeiture of shares ;

(iv) purchasing, selling, or otherwise acquiring or disposing of movable property of such value as may specified in the bye-laws ;

(v) laying down criteria for determining defaults by members ;

(vi) determining the terms and conditions of collaboration with other co- operative societies and others;

(vii) sanctioning of contracts of any values, unless otherwise specified in the bye-laws of a Multi-State Co-operative Society ;

(viii) appointment of trustee or trustees, attorney or attorneys, agent or agents for the business of the Multi-State Co-operative Society ;

(ix) acceptance or rejection of resignation from the members of the board.

RULE 33 MEETING OF THE BOARD

(i) The board shall meet at least once in every quarter, provided that the total number of the meetings of the board shall not ordinarily exceed six in a year.

Provided further that this provision will not apply to Multi-State Thrift and Credit Societies.

(ii) The meeting of the board of the Multi-State Co-operative Society shall ordinarily be held at the registered office of such society.

RULE 34 COMMITTEES OF THE BOARD

(i) The board of a Multi-State Co- operative Society may constitute an Executive Committee and other committees or sub-committees as may be considered necessary.

(ii) Besides the Executive Committee, the number of other committees or sub-committees referred to in sub-section (1) of section 46shall not exceed two.

Provided that the board may with the approval of the Central Registrar constitute more than two Committees.

RULE 35 CONSTITUTION OF NATIONAL CO-OPERATIVE SOCIETIES SELECTION COMMITTEE

(1) The Central Government shall constitute a body to be called the National Co-operative Societies Selection Committee (hereinafter referred to as the Selection Committee) consisting of the following persons :

(i) The Secretary to the Government of India Department of Agriculture and Co-operation Chairman;

(ii) The Additional Secretary to the Government of India Department of Agriculture and Co-operation dealing with Co-operation Member ;

(iii) Chairman of two National Co-operative Societies to be nominated by the Central Government Member ;

(iv) One expert in the management to be nominated by the Central Government Member;

(v) The Managing Director, National Co-operative Development Corporation Member;

(vi) Central Registrar of Co-operative Societies Member Secretary.

(2) The Selection Committee shall prepare a list of persons eligible for appointment to the post of the Chief Executive and other managerial posts in the National Co-operative Societies, the maximum pay-scale of which exceeds rupees four thousand per month in the manner hereinafter provided.

(3) The Central Registrar shall, on the requisition received from the National Co-operative Society, convene the meeting of the Selection Committee for the purpose of preparation of list for the appointments to the post or posts for which the requisition has been received.

(4) The Selection Committee shall,-

(a) take appropriate steps to advertise, circulate or otherwise call for the names for the posts referred to in sub-rule (2) ;

(b) screen the names received and prepare list of persons, after interview if necessary, suitable for appointment for the said posts in order of merit and forward it to the Central Government for its onward transmission to the concerned National Co-operative Society ;

Provided that in the case of the existing Chief Executive or persons employed in other

managerial posts in the National Co-operative Society on the date of the coming into

force of these rules, who are in regular employment of the society, no such reference to the Selection Committee will be necessary.

Provided further that in the case of the Chief Executives or persons employed in other

managerial posts who are on deputation with the National Co- operative Society on the

date of the enforcement of these rule 2-, a reference to the Selection Committee shall be necessary on the expiry of the terms of deputation of such Chief Executives or persons.

(5) The National Co-operative Society shall appoint the persons to the post of the Chief Executive and other managerial posts mentioned in sub-rule (2) from the list of persons recommended by the Selection Committee.

(6) The Selection Committee may co-opt two experts at the time of selection of persons according to the requirements of posts or category of posts for which the list of persons is to be prepared.* * * *

RULE 36 PROCEDURE IN PROCEEDINGS BEFORE CENTRAL REGISTRAR

(1) A reference to the Central Registrar of any dispute under section 74shall be in writing. Every such reference shall be accompanied with a fee of rupees ten for the money claims not exceeding rupees one thousand and rupees fifty in all other cases.

(2) On receipt of a reference under sub-rule (1) the Central Registrar may elect to decide the dispute himself or refer it for disposal to any other person who has been invested with powers of the Central Registrar under section 76by the Central Government.

(3) The Central Registrar or other person deciding the dispute shall record a brief note of the evidence on the parties and witnesses who appear before him and upon the evidence so recorded and after consideration of any documentary evidence produced by the parties, a decision shall be given in accordance with justice, equity and good conscience by the Central Registrar or other person deciding the dispute. The decision given shall be in writing. In the absence of any party duly summoned to attend, the dispute may be decided ex-parte. Ex-parte decision may, on sufficient cause for non-attendance being shown, be set aside by the Central Registrar or other person deciding the dispute, and the dispute ordered to be re-taken on the register of disputes and disposed of:

Provided that no application for setting aside an ex-parte decision shall lie unless made within thirty days from the dale of such decision and the party for whose non-attendance such decison was made had been duly served with the notice, or in other cases within thirty days from the date of knowledge of such decision having been made.

(4) The decision shall be communicated to the parties by,-

(i) Pronouncement of the decision ; or

(ii) Registered post to any party which may be absent on the date the decision is given.

(5) The Central Registrar or the person deciding the. dispute, shall have power to appoint or remove a guardian for the party to the dispute, if any such party is a minor or a person with unsound mind or mental infirmity, and is incapable of protecting his interests.

(6) A duly certified copy of the decison shall, on application, be given to the parties to the dispute by the Central Registrar or the person deciding the dispute, on payment of copying charges at the rate of rupee one per page. * * * *

RULE 37 APPEALS AGAINST ORDER OF CENTRAL REGISTRAR

-For the purpose of Clause (a) of sub-section (2) of section 90-of the Act, an appeal against any decision or order shall be made if the decision or order was made by :-

(a) the Central Registrar appointed under sub-section (1) of section 4-of the Act, to the Secretary to the Government of India in the Department of Agriculture and Cooperation ;

(b) any officer of the Central Government or any officer of the State Government of the rank of Registrar on whom powers of the Central Registrar have been conferred under sub-section (2) of section 4-of the Act, to the Additional Secretary to the Government of India in the Department of Agriculture and Co-operation ;

(c) any other officer of the State Government on whom powers of Central Registrar have been conferred under sub-section (2) of section 4-of the Act, to the Chief Director (Co-operation) in the Ministry of Agriculture and Co-operation.

RULE 38 PROCEDURE REGARDING APPEALS AND APPLICATION FOR REVISION

(1) An appeal under sub-section (2) of section 90-or an application for revision under Section 92-shall be either presented in person or sent by registered post to the appellate or revising authority.

(2) The appeal or the application for revision shall be in the form of a memorandum and shall be accompanied by the original or certified copy of the order appealed for or sought to be revised.

(3) Every appeal or application for revision shall :-

(a) specify the name and address of the appellant or applicant and also the name and address of the respondent, as the case may be;

(b) state by whom the order appealed for or sought to be revised was made;

(c) set forth concisely and under distinct heads, the grounds of objection to the order appealed from or sought to be revised together with a memorandum of evidence;

(d) state precisely the relief which the appeallant or the applicant claims ; and (e) give the date of order appealed for or sought to be revised; (4) Where-

(a) an appeal under sub-section (2) of section 90-is preferred after the expiry of sixty days specified in the said sub-section, or

(b) an, application for revision under sub-section (1) of section 92-is made after the expiry of ninety days from the date on which the decison or order to which the application relates is communicated to the applicant. It shall be accompanied by a petition supported by an affidavit setting forth the facts on which the appellant or the applicant relies to satisfy the appellate or revising authority that he had suffcient cause for not prefering the appeal or the application for revision within the period mentioned in Clauses (a) and (b).

(5) On receipt of the appeal or the application for revision, the appellate or revising authority shall as soon as possible examine it and ensure that.-

(a) the person presenting the appeal or the application has the locus standi to do so;

(b) it is made within the prescribed time limit, and

(c) it conforms to all the provisions of the Act and these Rules.

(6) The appellate or revising authority may call upon the appellant or the application for revision to remedy the defects, if any, or furnish such additional information as may be necessary, within a period of fifteen days of the receipt of the notice to do so. If the appellant or the applicant for revision fails to remedy the defects or furnish the additional information called for within the said period, the appeal or the revision petition may be dismissed.

(7) The appellate or revising authority may, before passing orders under section 90-or under section 92-obtain from any subordinate officer such further information in regared to the enquiry or the proceedings for the purpose of verifying the regularity of such proceedings or the correctness, legality or propriety of any decision passed or order made therein. The appellate or revising authority may also call for and obtain from the parties connected with such enquiry or proceedings such information as is necessary with reference to the examination of the records of enquiry or proceedings and the information obtained from the subordinate officer.

(8) The appellate or revising authority shall on the basis of the enquiry conducted and with reference to the records examined, pass such order on the appeal or on the application for revision as may seem just and reasonable.

(9) Every order of the appellate or revising authority under sub-section (2) of sections 90-or92-shall be in writing and it shall be communicated to the appellant or applicant and to such other parties as in the opinion of that authority are likely to be affected by the decision or order and to the officer concerned against whose order the appeal of the application for revision was made.

RULE 39 APPLICATION FOR REVIEW

(1) Every application under section 93-shall be in the form of a memorandum setting forth concisely and under distinct heads the new and important facts which after the exercise of due diligence, were not then within the knowledge of the applicant or could not be produced by him when the order was made or mistake or errors apparent on the face of the record or other reasons on the basis of which review is sought. It shall be accompanied by evidence.

(2) The application shall be accompanied by the original or a certified copy of the order to which the application relates.

(3) No application for review shall be entertained unless it is accompanied by such additional number of copies as there are parties to the original order.

(4) The application shall, so far as it may be necessary, be disposed of by the Appellate Authority in such manner as may be deemed fit, provided that no order prejudicial to any person shall be passed unless such person has been given an opportunity of making his representation.

MULTI-STATE CO-OPERATIVE SOCIETIES (PRIVILEGES, PROPERTIES AND FUNDS, ACCOUNTS, AUDIT, WINDING UP AND EXECTUTION OF DECREES, ORDERS AND DECISIONS) RULES, 1985

Ministry of Agriculture (Department of Agriculture and Cooperation), No. G. S. R. 812tE), dated October 28, 1985, published in the Gazette of India, Extra., Part II, Section 3(i), dated 28th October, 1985, pp. 12-26. [No. L-11012/1/84-L & M] In exercise of the powers conferred by

Section 109 of the Multi-State Co-operative Societies Act, 1984 (51 of 1984), the Central Government hereby makes the following rules, namely:-

RULE 1 SHORT TITLE AND EXTENT

(1) These rules may be called the Multi- State Co-operative Societies (Privileges, Properties and Funds, Accounts, Audit, Winding up and Execution of Decrees, Orders and Decisions) Rules, 1985.

(2) They shall come into force on the date of their publication in the official Gazette.

RULE 2 DEFINITION

-In these rules, unless the context otherwise requires,-

(i) "Act" means theMulti-State Co-operative Societies Act) 1984 (51 of 1984)-;

(ii) "authorised officer" means an officer authorised by the Central Government for the purposes of section 95-;

(iii) "decree" means any decree of a civil court and includes any decision or order referred to inSection 85-;

(iv) "decree-holder" means any person holding a decree as defined in clause (iii);

(v) "defaulter" means any multi-State co-operative society, any cooperative society, member or any other person committing default;

(vi) "Form" means a Form appended to these rules;

(vii) "general meeting" means a meeting of the general body including a representative general body referred to inSection 29-;

(viii) "judgment-debtor" means any multi-State co-operative society against which or any person against whom a decree has been obtained;

(ix) "Recovery Officer" means any person authorised to exercise the powers of the Central Registrar under section 85-;

(x) "Sale Officer" means a person authorised by the Central Registrar, by general or special order, to attach and sell the property of judgment- debtor or to execute any decree by attachment and sale of property;

(xi) "section" means a section of the Act;

(xii) words and expressions defined in the Act and used but not defined in these rules shall have the meaning respectively assigned to them in the Act.

RULE 3 CERTIFYING COPIES OF ENTRIES IN BOOKS

(1) For the purposes specified in sub-section (1) of section 56-, a copy of any entry in a book of a multi-State co-operative society regularly kept in the course of its business shall be certified-

(i) by the Chief Executive of the society or any other member or employee authorised by the bye-laws of the society;

(ii) where an order has been passed under section 48-superseding the board and appointing an administrator, by the administrator or any other officer authorised by him; and

(iii) where an order has been passed under sub-section (1) of section 80-appointing a liquidator of the multi-State co-operative society, by the liquidator.

(2) Every certified copy shall bear the seal of the multi-State co-operative society.

RULE 4 CONTRIBUTION TOWARDS CO-OPERATIVE EDUCATION FUND

(1) Every multi-State co-operative society shall credit a sum calculated at one per cent of its net profits every year as contribution to the cooperative Education Fund maintained by the National Co-operative Union of India Limited, New Delhi. The co-operative education fund shall be administered by a committee nominated for that purpose consisting of the following members:-

(i) The President of the National Co-operative Union of India Limited, New Delhi Chairman

(ii) The Central Registrar Member

(iii) The Financial Adviser to the Department of Agriculture & Go-operation in the Ministry of Agriculture Member

(iv) Two representatives of the multi-State co-operative societies to be nominated by the Central Government for every two years Members

(v) The Director General National Council for Co-operative Training, New Delhi Member

(vi) The Director, Vaikunth Mehta National Institute of Go-operative Management, Pune Member

(2) The co-operative education fund shall be utilised for the purposes connected with the education of members and human resources development for co-operatives.

RULE 5 DISPOSAL OF NET PROFITS

-The net profits of every multi-State co-operative society shall be disbursed or utilised subject to the following terms and conditions :-

(a) No dividend shall be declared or paid except from out of the net profits and shall not exceed 12 per cent per annum on the paid-up share capital.

(b) No dividend shall be declared or paid while a claim due from the multi-State co-operative society to a depositor or lender remains unsatisfied.

(c) No donation made by the multi-State co-operative society out of the net profits of any year ahall exceed rupees five lakhs.

RULE 6 INVESTMENT OF FUNDS

-A multi-State co-operative society may invest or deposit its funds in any one or more of the following modes:-

(i) any mode provided in clauses (a) to (e) of section 62-;

(ii) any post office savings bank;

(iii) any savings scheme launched by the Central or the State Government;

(iv) the shares of a corporation or other body corporate in which the Central or the State Government or both hold more than fifty per cent of the shares; and

(v) the debentures floated by a corporation or a body corporate if such debentures are guaranteed by the Central or the State Government or by the Reserve Bank of India.

RULE 7 OBJECTS AND INVESTMENTS OF RESERVE FUND

(1) Every multi-State co-operative society shall maintain a reserve fund to meet any one or more of the following objects :-

(i) unforeseen losses;

(ii) claim of the creditors of the society which cannot be otherwise met; and

(iii) such other financial needs in times of special scarcity.

(2) Every multi-State co-operative society may, with the permission of the Central Registrar invest or deposit its reserve fund in : -

(i) acquisition or purchase of land and building and construction of building for-

(a) its office, staff and equipment;

(b) installation or operation of its machinery or plant;

(ii) purchase of machinery or plant which is required for its main business;

(iii) acquisition or purchase of land and building and construction of buildings for the purposes mentioned in clause (i) (a) and also for the benefit of its members in accordance with the provisions of its bye-laws; and

(iv) its own business.

(3) The reserve fund of a multi-State co-operative society shall be indivisible and no member shall have any claim or a share in it.

(4) No multi-State co-operative society whose reserve fund has been separately invested or deposited shall draw upon, pledge or otherwise employ such fund except with the sanction of the Central Registrar previously obtained.

(5) The utilisation of the reserve fund for the objects mentioned in subrule (1) shall be subject to the condition that any amount drawn shall be reimbursed from the profits accruing in subsequent co-operative year or years as directed by the Central Registrar. The Central Registrar may, however, having regard to the special circumstances of the society, permit that the reserve fund drawn and utilised for the objects mentioned under clauses (ii) and (iii) of sub-rule ( 1 ) may not be reimbursed wholly or partially as he may direct.

(6)

(i) salary and wages or other payments, if any, due to the employees of the multi-State co-operative society;

(ii) security deposits of staff, if any;

(iii) borrowings held from Government or on the guarantee of Government) if any; (iv) deposits of non-members, if any; (v) loans, if any ; and (vi) deposits of members, if any.

(b) The balance, if any, after discharging the liabilities mentioned in clause (a) shall be applied to the re-payment of the paid-up share capital and thereafter to the payment of dividend where it has not been paid.

(c) Notwithstanding anything contained in clause (b), no dividend shall be paid if the bye-laws of the multi-State co-operative society do not provide for payment of dividend.

(7) Any surplus remaining after payments mentioned in sub-rule (6) shall be applied by the liquidator, after consulting members, for contribution to National Defence Fund or to co-operative education fund referred to inRule 4-or to any other charitable purpose or local objects of public utility subject to the approval of the Central Registrar.

RULE 8 WRITING OFF OF BAD DEBTS AND LOSSES

-All loans including interest thereon and recovery charges in respect thereof which are found irrecoverable and are certified as bad debts, by the auditor appointed under section 67-, shall first be written off against the Bad Debt Fund and the balance, if any, may be written off against the Reserve Fund and the share capital of the multi-State co-operative society. All other dues and accumulated losses or any other loss sustained by the multi-State co-operative society which cannot be recovered and have been certified as irrecoverable by the auditor may be written off against the Reserve Fund of the multi-State cooperative society;

Provided that-

(a) no bad debts or losses shall be written off without the sanction of the general body;

(b) before any such bad debts or losses are written off, the multi-state cooperative society shall obtain the approval of the Central Registrar.

Provided further that the Central Registrar may, while giving the approval, impose such

conditions as to the recoupment of the Bad Debt Fund and restoration of part or whole

of the amount written off against the Reserve Fund, from out of future profits as he deems fit.

RULE 9 TRANSACTIONS WITH NON-MEMBERS

-Save as otherwise provided for inSection 65-and except with the general or special sanction of the Central Registrar, no multi-State co-operative society shall enter into any credit transaction with a person other than a member, unless the bye-laws of the multi-State co-operative society permit it to enter into such transactions.

RULE 10 APPLICATION FOR LOAN

(1) Anapplication for loan shall be in such form as may be required by the board of the multi-State co-operative society and shall state the purpose for which the loan is required in the manner laid down in the bye-laws of the society.

(2) For every loan, a member shall furnish such security as may be required under the bye-laws of the multi-State co-operative society.

(3) The period of repayment of the loan shall be as may be provided in the bye-laws) but in no case exceed five years.

(4) In any multi-State co-operative society in which the liability of the members is limited by shares, no loan shall be granted to a member exceeding ten times the amount of share capital paid by him or as may be laid down in the bye-laws.

RULE 11 CONTRIBUTORY PROVIDENT FUND

(1) Every multi-State co-operative society which has in its service 5 or more regular employees shall establish a Contributory Provident Fund referred to in sub-section (1) of section 66-.

(2) The multi-State co-operative society creating such a fund shall provide for the following in its bye-laws :-

(a) Authority to administer the fund.

(b) Amount of contribution to be deducted from the employee's salary.

(c) Mode of nomination for payment of the amount of the contributory provident fund in case of employee's death.

(d) Purpose for which, the extent to which, and the period after which,

advances may be made against the security of such fund and the number of monthly instalments in which advance is to be repaid.

(e) Refund of employee's contribution and contribution made by the society.

(f) Maintenance of accounts of such fund.

(3) The amount of contribution that can be deducted from the salary of an employee of the multi-State co-operative society shall not be less than 8.33 per centum of his basic salary.

(4) The multi-State co-operative society may make such contribution every year to the employees' contributory provident fund as may be approved by the board. Such contribution shall not exceed 8.33 per centum of the basic salary of the employee.

RULE 12 RESTRICTION ON BORROWINGS OF LIMITED LIABILITY OF MULTI-STATE CO-OPERATIVE SOCIETY

-No multi-State co-operative society with limited liability shall accept deposits or loans, or by any other way incur liability exceeding 10 times the sum of the paid-up share capital plus accumulated reserves minus any losses :

Provided that the Central Registrar, for reasons to be recorded in writing, may permit a multi-State co-operative society to incur liabilities exceeding the aforesaid limit.

RULE 13 MAINTENANCE OF LIQUID RESOURCES AND DISTRIBUTION OF ASSETS

-Every multi-State co-operative society which obtains any portion of its working capital by deposits, shall,-

(a) maintain such liquid resources and in such form as may be specified by the Reserve Bank of India in the case of those multi-State co-operative credit societies which are coming under the purview of theBanking Regulation Act, 1949 (10 of 1949)-and by the Central Registrar in the case of other multi-State co-operative societies; and

(b) utilise only such portion of its working capital in lending business and distribute its assets in accordance with such standards as may be specified from time to time by the Central Registrar.

RULE 14 SHARES NOT TO BE HYPOTHECATED TO THE MULTI-STATE CO-OPERATIVE SOCIETY

-The shares of a multi-State co-operative society shall not be hypothecated to that society by its members as security for a loan.

RULE 15 LOAN ON SECURITY OF NON-MEMBERS

-No multi-State co-operative society shall make any loan to a member on a security bond given by a non-member:

Provided that the Central Registrar may for reasons, to be recorded in writing, exempt any multi-State co-operative society or class of multiState co-operative societies from the operation of this rule.

RULE 16 BOOKS OF ACCOUNT

-Every multi-State co-operative society shall keep books of account with respect to,-

(a) all sums of money received and expended and the matters in respect of which the receipt and expenditure take place

(b) all sales and purchase of goods ;

(c) the assets and liabilities ;

(d) in the case of a multi-State co-operative society engaged in production, processing and manufacturing, particulars relating to utilisation of materials or labour or other items of costs as may be specified by the Central Registrar.

RULE 17 SUBJECT-MATTER OF AUDIT

(1) The audit of a multi-State co-operative society under sub-section (1) of section 67-shall include, in addition to the matters specified in subsection (2) of that section, the following particulars:-

(a) Whether the auditor has obtained all the information and explanations

which, to the best of his knowledge and belief, are necessary for the purposes of his audit;

(b) Whether in his opinion proper books of account as specified in these rules and bye-laws have been kept by the multi-State co-operative society so far as it appears from the examination of those books and proper returns adequate for the purposes of his audit have been received from the branches not visited by him.

(c) Whether the balance-sheet and profit and loss account exhibit a true and fair view of the state of affairs of the multi-State cooperative society according to best of his information and explanations given to him and as shown by the books of the multi-State co-operative society; and

(d) Whether there has been any material impropriety or irregularity in the expenditure or in the realisation of money due to the multi-State co-operative society.

(2) Where in any of the matters referred to in sub-rule (1) the answer is in the negative or in the affirmative with any remark, the auditor shall give reasons for such answer with facts and figures in support of such remarks.

(3) The audit report shall also contain schedules with particulars of:-

(a) all transactions which appear to be contrary to the provisions of the Act, the rules or the bye-laws of the multi-State co-operative society.

(b) any money belonging to the multi-State co-operative society which appears to the auditor to be bad or doubtful of recovery.

(c) the loans given by the multi-State co-operative society to the members of the board ; and

(d) any other matter as may be specified by the Central Registrar in this regard.

(4) The auditor shall make his report to the multi-State co-operative society and also send a copy of that report direct to the Central Registrar. The Central Registrar may for reasons to be recorded in writing, direct that if any portion ot the audit report which appears to him of objectionable nature or not justified, be expunged and the portion so expunged shall not form part of the audit report.

(5) The audit report given by the auditors shall be considered by the board of a multi-State co-operative society and placed before the general body with their comments.

(6) The defects pointed out by the auditors in the working of the multiState co-operative society shall be specifically considered by the board and a compliance report explaining the measures taken to rectify the defects be submitted to the Central Registrar within three months of the receipt of the audit report.

RULE 18 PROCEDURE TO BE ADOPTED BY LIQUIDATOR

-Where a liquidator has been appointed under sub-section (1) of section 80-the following procedure shall be adopted:-

(a) The appointment of the liquidator shall be notified by the Central Registrar in the official Gazette.

(b) The liquidator shall, as soon as the order of winding up of the multiState co-operative society takes effect, publish by such means as he may think proper, a notice, requiring all claims against the multi-State cooperative society, the winding up of which has been ordered, to be submitted to him within two months of the publication of the notice. All liabilities recorded in the account books of a multi-State co-operative society shall be deemed ipso-facto to have been duly submitted to him under this clause.

(c) The liquidator shall investigate all the claims against the multi-State co-operative society and decide questions of priority arising between claimants.

(d) The liquidator shall recover all sums and other properties to which the multi-State co-operative society is entitled and may institute such suits for that purpose or such suits incidental to liquidation proceedings as he may think proper.

(e) The liquidator may empower any person, by general or special order in writing, to make collections and to grant valid receipts on his behalf.

(f) The liquidator shall, after setting the assets and liabilities of multiState co-operative society, as they stood on the date on which the order of winding up is made, proceed next to determine from time to time the contribution including debts, due and costs of liquidation to be made or remaining to be made by each of its members, past members, or by the estates, or nominees, heirs or legal representatives of deceased members or by any officers or former officers, to the assets of the multi-State cooperative society, under clause (b) of sub-section (2) of section 81-. Should necessity arise, he may also make a subsidiary order regarding such contributions and such order shall be enforceable in the same manner as the original order.

(g) All funds in the charge of the liquidator shall be deposited in the Post Office Savings Bank or in a co-operative bank or with such other banks as may be approved by the Central Registrar and shall stand in his name.

(h) The Central Registrar shall fix the amount of remuneration, if any, to be paid to the liquidator. The remuneration shall be included in the cost of liquidation, which shall be payable out of the assets of the multi-State cooperative society in priority of all other claims.

(i) The liquidator may call for the meeting of the members of the multiState co-operative society under liquidation.

(j) The liquidator shall submit to the Central Registrar a quarterly report in such form as the Central Registrar may, specify showing the progress made in liquidation of the multi-State co-operative society.

(k) The liquidator shall keep such books and accounts as may from time to time be specified by the Central Registrar who may at any time cause such books and accounts to be audited.

(l) At the conclusion of the liquidation, the liquidator shall call for a general meeting of the members of the dissolved society at which the liquidator or any other person authorised by him, by special or general order in writing in this behalf, shall summarise, the result of his proceedings and shall take a vote as to the disposal of any surplus funds. The liquidator shall submit his final report to the Central Registrar with a copy of the proceedings of the general meeting referred to above and make over to the Central Registrar all books and registers and accounts etc., belonging to the multi-State co-operative society and all books and accounts relating to the liquidation proceeding kept by him.

(m) If any liability cannot be discharged by the liquidator owing to the whereabouts of the claimants not being known or for any other cause, the amount covered by such undischarged liability may be deposited in a Go-operative Bank and shall be available for meeting the claims of the person or persons concerned.

(n) A liquidator may, at any time, be removed by the Central Registrar and he shall on such removal be bound to hand over all the property and documents relating to the society under liquidation to such persons as the Central Registrar may direct.

(o) All the books and records of a multi-State co-operative society whose registration has been cancelled and the proceedings of liquidation of a multi-State co-operative society ordered to be wound up may be destroyed by the Central Registrar after the expiry of three years from the date of the order cancelling the registration of the multi-State cooperative society.

RULE 19 APPLICATION OF ASSETS OF THE MULTI-STATE COOPERATIVE SOCIETY

-The assets of the multi-State co-operative society shall be applied in order of priority as given below for payment of the liabilities :-

(1) Pro-rata payment of all outside liabilities.

(2) Pro-rata repayment of loans and deposits of members.

(3) Pro-rata refund of share capital.

(4) Pro-rata payment of dividend on the share at the rate not exceeding 6.25 per cent per annum for the period of liquidation.

RULE 20 DISPOSAL OF SURPLUS ASSETS

-For the purpose of sub-section (b) ofSection 82-the surplus assets shall be distributed among the members in proportion to the share capital held by the members or in proportion to the business done by the members with the multi-State co-operative society as may be determined by the Central Government before according sanction under sub-clause (b) ofSection 82-

RULE 21 PROCEDURE IN EXECUTION OF DECREES, ORDERS AND DECISIONS

(1) Any decree-holder requiring the provisions of clause (c) of section 85-to be applied, shall apply to the Recovery Officer in whose jurisdiction the cause of action arose and shall deposit the necessary costs as fixed by the Central Registrar. If the judgment-debtor resides or the property to be proceeded against is situated outside the jurisdiction of such Recovery Officer, the Recovery Officer shall transfer the application to the Recovery Officer in whose jurisdiction the judgment-debtor resides or the property is situated.

(2) Every such application shall be made in the Form specified by the Central Registrar and shall be signed by the decree-holder. The decree-holder may indicate whether the wishes to proceed against the immovable property mortgaged to the decree-holder or other immovable property or to secure the attachment of movable property.

(3) On receipt of such application, the Recovery Officer shall verify the correctness and genuineness of the particulars set forth in the application with the records, if any, in the office of the Central Registrar and prepare a demand notice in writing in duplicate in the form specified by the Central Registrar, setting forth the name of the defaulter and the amount due and forward it to the Sale Officer.

(4) Unless the decree-holder has expressed a desire that proceedings should be taken in a particular order as laid down in sub-rule (2), execution shall ordinarily be taken in the following manner:-

(i) movable property of the defaulter shall be first proceeded against, but this shall not preclude the immovable property being proceeded against simultaneously in case of necessity,

(ii) if there is no movable property, or if the sale proceeds of the movable property, or properties attached and sold are insufficient to meet in full the demand of the decree-holder, the immovable property mortgaged to the decree-holder, or other immovable property belonging to the defaulter may be proceeded against.

(5) In the seizure and sale of movable property the following rules shall be observed:-

(a) The Sale Officer, shall after giving previous notice to the decree-holder, proceed to the village or place where the defaulter resides or the property to be distrained is situated and serve a demand notice upon the defaulter if he is present. If the amount due together with the expenses be not at once paid, the Sale Officer shall make the distress and shall immediately deliver to the defaulter a list or inventory of the property distrained and an intimation of place and day and hour at which the distrained property will be brought to sale if the amounts due are not previously discharged. If the defaulter is absent, the Sale Officer shall serve the demand notice on some adult male member of his family, or on his authorised agent, or when such service cannot be effected, shall affix a copy of the demand notice on some conspicuous part of his residence. He shall then proceed to make the distress and shall fix the list of the property attached on the usual place of

residence of the defaulter, endorsing thereon the place where the property may be lodged or kept and an intimation of the place, day and hour of sale.

(b) After the distress is made, the Sale Officer may arrange for the custody of the property attached with the decree-holder or otherwise. If the Sale Officer requires the decree-holder to undertake the custody of the property he shall be bound to do so and any loss incurred owing to his negligence shall be made good by the decree-holder. If the attached property is livestock, the decree-holder shall be responsible for providing the necessary food therefor. The Sale Officer may, at the instance of the defaulter or of any person claiming an interest in such property, leave it in the village or place where it was attached, in the charge of such defaulter or person, if he entered into a bond in the form specified by the Central Registrar with one or more sufficient sureties for the production of the property when called for.

(c) The distress shall be made after sunrise and before sunset and not at any other time.

(d) The distress levied shall not be excessive, that is to say, the property distrained shall be as nearly as possible proportionate to the sum due by the defaulter together with interest and all expenses incidental to the distraint, detention and sale.

(e) If crops or ungathered products of the land belonging to a defaulter are attached, the Sale Officer may cause them to be sold when fit for reaping or gathering, or at his option may cause them to be reaped for gathered in due season and stored in proper place until sold. In the latter case, the expense of reaping or gathering and storing such crops or products shall be defrayed by the owner upon his redeeming the property or from the proceeds of the sale in the event of its being sold.

(f) The Sale Officer shall not work the bullocks or cattle, or make use of the goods or effect distrained; and he shall provide the necessary food for the cattle or livestock, the expense attending which shall be defrayed by the owner upon his redeeming the property or from the proceeds of the sale in the event of its being sold.

(g) It shall be lawful for the Sale Officer to force open any stable, cow house, granary, godown, out-house or other building and he may also enter any dwelling house, the outer door of which may be open and may break open the door of any room in such dwelling house for the purpose of attaching property belonging to a defaulter and lodged therein, provided always that it shall not be lawful for the officer to break open or enter apartment in such dwelling house appropriated for the zenana or residence of women except as hereinafter provided.

(h) Where the Sale Officer may have reason to suppose that the property of a defaulter is lodged within a dwelling house the outer door of which may be shut or within any apartments appropriated to women which by custom or usage are considered private, the Sale Officer shall represent the fact to the officer-in-charge of the nearest police station. On such representation the officer-incharge of the said station shall send a police officer to the spot in the presence of whom the Sale Officer may force open the other door of such dwelling house, in like manner as he may break open the door of any room within the house except the zenana. The Sale Officer may also, in the presence of a police officer, after due notice given for the removal of women within a zenana and, after furnishing means for their removal in a suitable manner if they be women of rank who, according to the custom of usage cannot appear in public, enter the zenana apartments for the purpose of distraining the defaulter's property, if any, deposited therein, but such property, if found, shall be immediately removed from such apartments after which they shall be left free to the former occupants.

(i) The Sale Officer shall on the day previous to and on the day of sale cause proclamation of the time and place of the intended sale to be made by beat of drum in the village or place in which the defaulter resides on two consecutive days previous to the date of sale and on the day of sale prior to the commencement of the sale and in such other place or places as the officer may consider necessary to give due publicity to the sale. No sale shall take place until after the expiration of the period of 15 days from the date on which the sale notice has been served or affixed in the manner prescribed in clause (a) :

Provided that where the property seized is subject to speedy and natural decay, or where the expense of keeping it in custody is likely to exceed its value, the Sale Officer may sell it at any time before the expiry of the said period of 15 days, unless the amount due is sooner paid.

(j) At the appointed time the property shall be put up in one or more lots, as the Sale Officer may consider advisable, and shall be disposed of to the highest bidder:

Provided that it shall be open to the Sale Officer to decline to accept the highest bid

where the price offered appears to be unduly low or for other reasons. Where the

property is sold for more than the amount due, the excess amount after deducting the interest and the expenses of process and the other charges, shall be paid to the defaulter:

Provided, further, that the Sale Officer may, in his discretion, adjourn the sale to a

specified day and hour recording his reasons for such adjournment. Where a sale is so

adjourned for a longer period than 7 days, a fresh proclamation under clause (i) shall be made unless the judgment debtor consents to waive it.

(k) The property shall be paid for in cash at the time of sale, or as soon thereafter as the officer holding the sale shall appoint, and the purchaser shall not be permitted to carry away any part of the property until he has paid for it in full. Where the purchaser may fail in payment of purchase money, the property shall be resold.

(l) Where any property which has been attached under these rules has been forcibly or clandestinely removed by any person, the Sale Officer may apply to a civil court having jurisdiction for restoration of such property. Where the court is satisfied about the truth of the facts, as alleged in the application, it may order forthwith such property to be restored to the Sale Officer.

(m) Where prior to the day fixed for sale, the defaulter or any person acting on his behalf or any person claiming an interest in the property attached, pays the full amount due including interest, batta and other costs incurred in attaching the property, the Sale Officer shall cancel the order of attachment and release the property forthwith.

(n) The movable properties mentioned as exempt from attachment in the proviso to Section 60 of the Code of Civil Procedure, 1908 (5 of 1908)-, shall not be liable to attachment or sale under these rules.

(6) Where the movable property to be attached is the salary or allowance or wages of a public servant or a servant of a local authority or a firm or a company, the Recovery Officer may, on receiving a report from the Sale Officer, order that the amount shall, subject to the provisions of section 60 of the Code of Civil Procedure, 1908 ( 5 of 1908)-be withheld from such salary or allowances or wages either in one payment or by monthly instalments as the Recovery Officer may direct and upon receipt of the order, the officer or other person whose d uty it is to disburse such salary or allowance or wages shall withhold and remit to the Sale Officer, the amount due under the order or the monthly instalment, as the case may be.

(7)

(ii) Where the property to be attached is negotiable instrument not deposited in a court, nor in the custody of a public officer, the attachment shall be made by actual seizure and the instrument shall be brought to the office of the Recovery Officer ordering the attachment and be held subject to his further orders.

(iii) Where the property to be attached is in the custody of any court or public officer, the attachment shall be made by a notice to such court or officer, requesting that such property and any interest or dividend becoming payable thereon may be held subject to the further orders of the Recovery Officer issuing the notice :

Provided that where such property is in the custody of a court or Recovery Officer of another district) any question of title or priority arising between the decree-holder and any other person not being the defaulter) claiming to be interested in such property by

virtue of any assignment) attachment or otherwise shall be determined by such court or Recovery Officer.

(8)

(ii) Where the Central Registrar makes an order under clause (i) he shall on the application of the decree-holder who has attached the decree, proceed to execute the attached decree and apply the net proceeds in satisfaction of the decree sought to be executed.

(iii) The holder of a decree sought to be executed by the attachment of another decree of the nature specified in clause (i), shall be deemed to be the representative of the holder of the attached decree and to be entitled to execute such attached decree in any manner for the holder thereof.

(iv) Where the property to be attached in execution of a decree is a decree other than a decree of the nature referred to in clause (i), the attachment shall be made by the issue of a notice by the Recovery Officer to the holder of such decree) prohibiting him from transferring or charging the same in any way.

(v) The holder of a decree attached under this sub-rule shall give the Recovery Officer executing the decree such information and aid as may reasonably be required.

(vi) On the application of the holder of a decree sought to be executed by the attachment of another decree, the Recovery Officer making an order of attachment under this sub-rule shall give notice of such order to the judgment-debtor bound by the decree attached; and no payment or adjustment of the attached decree made by the judgment-debtor in contravention of such order after receipt of notice thereof, either through the said Recovery Officer or otherwise, shall be recognised so long as the attachment remains in force.

(9) Where the movable property to be attached is-

(a) a debt due to the defaulter in question,

(b) a share in the capital of a corporation or a deposit invested therein, or

(c) other movable property not in the possession of the defaulter, except property deposited in or in the custody of, any civil court, the attachment shall be made by a written order signed by the Recovery Officer prohibiting,

(i) in the case of a debt, the creditor from recovering the debt and the debtor from making payment thereof;

(ii) in the case of a share or deposit, the person in whose name the share or the deposit

may be standing, from transferring the share or deposit or receiving any dividend or interest thereon; and

(iii) in the case of any other movable property, the person in possession of it from giving it over to the defaulter. A copy of such order shall be sent in the case of debt to the debtor, in the case of the share or deposit, to the proper officer of the corporation and in the case of the other movable property to the person in possession of such property. As soon as the debt referred to in clause (a) or the deposit referred to in clause {b) matures, the Recovery Officer may direct the person concerned to pay the amount to him. Where the share is not withdrawable, the Recovery Officer shall arrange for its sale through a broker. Where the share is withdrawable, its value shall be paid to the Recovery Officer or to the party referred to in clause (c). In the case of other movable property referred

to in sub-clause (iii) of clause (c) the person concerned shall place it in the hands of the Recovery Officer when it becomes deliverable to the defaulter.

(10) Immovable property shall not be sold in execution of a decree unless such property has been previously attached :

Provided that where the decree has been obtained on the basis of a mortgage of such property it shall not be necessary to attach it.

(11) In the attachment and sale, or sale without attachment of immovable property, the following rules shall be observed :-

(a) The application presented under sub-rule (2) shall contain a description of the immovable property to be proceeded against, sufficient for its identification and in case such property can be identified by boundaries or numbers in a record of settlement or survey, the specification of such boundaries or numbers and the specification of the defaulter's share or interest in such property to the best of the belief of the decree-holder and so far as he has been able to ascertain it.

(b) The demand notice issued by the Recovery Officer under sub-rule (3) shall contain the name of the defaulter, the amount due, including the expenses, if any, and the bhatta to be paid to the person who shall serve the demand notice, the time allowed for payment and in case of non-payment, the particulars of the properties to be attached and sold or to be sold without attachment, as the case may be. After receiving the demand notice, the Sale Officer shall serve or cause to be served a copy of the demand notice upon the defaulter or upon some adult male member of his family at his usual place of residence, or upon his authorised agent or if such personal service is not possible, shall affix a copy thereof on some conspicuous part of the immovable property about to be attached and sold or sold without attachment, as the case may be :

Provided that, where the Recovery Officer is satisfied that a defaulter with intent to defeat or delay the execution proceeding against him is about to dispose of the whole or any part of his property, the demand notice issued by the Recovery Officer under sub-

rule (3) shall not allow any time to the defaulter for payment of the amount due by him and the property of the defaulter shall be attached forthwith.

(c) If the defaulter fails to pay the amount specified in the demand notice within the time allowed, the Sale Officer shall proceed to attach and sell, or sell without attachment, as the case may be, the immovable property noted in the application for execution in the following manner.

(d) Where attachment is required before sale, the Sale Officer shall, if possible, cause a notice of attachment to be served on the defaulter personally. Where personal service is not possible, the notice shall be affixed in some conspicuous part of the defaulter's last known residence, if any. The fact of attachment shall also be proclaimed by beat of drum or other customary mode at some place on, or adjacent to, such property and at such other place or places as the Recovery Officer may consider necessary to give due publicity to the sale. The attachment notice shall set forth that, unless the amount due with interest and expenses be paid within the date therein mentioned, the property will be brought to sale. A copy shall be sent to the decree-holder. Where the Sale Officer so directs the attachment shall also be notified by public proclamation in the official Gazette.

(e) Proclamation of sale shall be published by affixing a notice in the office of the Recovery Officer and the taluk office at least thirty days before the date fixed for the sale and also by beat of drum in the village (on two consecutive days previous to the date of sale and on the day of sale prior to the commencement of the sale). Such proclamation shall, where attachment is required before sale, be made after the attachment has been effected. Notice shall also be given to the decree-holder and the defaulter. The proclamation shall state the time and place of sale and specify as fairly and accurately as possible-

(i) the property to be sold,

(ii) any encumbrance to which the property is liable,

(iii) the amount for the recovery of which sale is ordered, and

(vi) every other matter which the Sale Officer considers material for a purchaser to know in order to judge the nature and value of the property.

(f) When any immovable property is sold under these rules, the sale shall be subject to the prior encumbrances on the property, if any. The decree-holder shall, when the amount for the realisation of which the sale is held exceeds Rs. 100, furnish to the Sale Officer within such time as may be fixed by him or by the Recovery Officer, an encumbrance certificate from the Registration Department for the period of not less than twelve years prior to the date of attachment of the property sought to be sold, or in cases falling under the proviso to sub-rule (10), prior to the date of the application for execution.

The time for production of the encumbrance certificate may be extended at the discretion of the Sale Officer, or the Recovery Officer, as the case may be. The sale shall be by public auction to the highest bidder:

Provided that it shall be open to (he Sale Officer to decline to accept the highest bid where the price offered appears to be unduly low or for other adequate reasons :

Provided further that the Recovery Officer or the Sale Officer may in his discretion adjourn the sale to a specified day and hour recording his reason for such adjournment. Where a sale is so adjourned for a longer period than 7 days, a fresh proclamation under clause (e) shall be made, unless the defaulter consents to waive it. The sale shall be held after the expiry of not less than thirty days calculated from the date on which notice of the proclamation was affixed in the office of the Recovery Officer. The time and place of

sale shall be the village where the property to be sold is situated or such adjoining prominent place of public resort as may be fixed by the Recovery Officer:

Provided also that in cases where an encumbrance certificate is not obtainable owing to the destruction of the connected records an affidavit from the village patwari or corresponding officer in regard to the encumbrances known to him supported by a certificate from the Registration Department that the encumbrance certificate cannot be

granted owing to the destruction of the connected records, shall be accepted in place of an encumbrance certificate.

(g) A sum of money equal to 15 per cent of the price of the immovable property shall be deposited by the purchaser in the hands of the Sale Officer at the time of the purchase, and in default of such deposit, the property shall forthwith be resold:

Provided that, where the decree-holder is the purchaser and is entitled to set off the

purchase money under clause (k), the Sale Officer shall dispense with the requirements of this clause.

(h) The remainder of the purchase money and the amount required for the general stamp for the sale certificate shall be paid within fifteen days from the date of sale :

Provided that, the time for payment of the cost of the stamps may, for good and

sufficient reasons, be extended at the discretion of the Recovery Officer up to thirty days from the date of sale:

Provided further that, in calculating the amounts to be paid under this clause) the

purchaser shall have the advantage of any set off to which he may be entitled under clause (k).

(i) In default of payment within the period mentioned in clause(h) the deposit may, if the Recovery Officer thinks fit, after defraying the expenses of the sale, be forfeited to the Central Government and the defaulting purchaser shall forfeit all claims to the property or to any part of the sum for which it may subsequently be sold.

(j) Every resale of immovable property in default of payment of the amounts mentioned in clause (h) within the period allowed for such payment, shall be made after the issue of a fresh proclamation in the manner and for the period herein before prescribed for the sale.

(k) Where a decree-holder purchases the property, the purchase money and the amount due on the decree shall be set off against one another, and the Sale Officer shall enter satisfaction of the decree in whole or in part accordingly.

(12) Where prior to the date fixed for a sale, the defaulter or any person acting on his behalf or any person claiming an interest in the property sought to be sold tenders payment of the full amount due together with interest, bhatta and other expenses incurred in bringing the property to sale including the expenses of attachment) if any, the Sale Officer shall forthwith release the property after cancelling, where the property has been attached, the order of attachment.

(13)

(a) for payment to the purchaser a sum equal to 5 per cent of the purchase money, and

(b) for payment to the decree-holder, the amount of arrears specified in the proclamation of sale as that for the recovery of which the sale was ordered together with interest thereon and the expenses of attachment, if any, and sale and other costs due in respect

of such amount, less amount which may since the date of such proclamation have been received by the decree-holder.

(ii) If such deposit and application are made within thirty days from the date of sale the Recovery Officer shall pass an order setting aside the sale and shall repay to the purchaser, the purchase money so far as it has been deposited, together with 5 per cent deposited by the applicant:

Provided that, if more persons than one have made deposit and application under this

sub-rule the application of the first depositor to the officer authorised to set aside the sale, shall be accepted.

(iii) If a person applies under sub-rule (14) to set aside the sale of immovable property, he shall not be entitled to make an application under this sub-rule.

(14)

Provided that, no sale shall be set aside on the ground of irregularity or fraud unless the Recovery Officer is satisfied that the applicant has sustained substantial injury by reason of such irregularity, mistake or fraud.

(ii) If the application be allowed, the Recovery Officer, shall set aside the sale and may direct a fresh one.

(iii) On the expiration of thirty days from the date of sale if no application to have the sale set aside is made or if such application has been made and rejected the Recovery Officer shall make an order confirming the sale:

Provided that, if he shall have reason to believe that the sale ought to be set aside

notwithstanding that no such application has been made or on grounds other than those

alleged in any application which has been made and rejected) he may, after recording his reasons in writing, set aside the sale.

(iv) Whenever the sale of any immovable property is not so confirmed or is set aside) the deposit or the purchase money, as the case may be, shall be returned to the purchaser.

(v) After the confirmation of any such sale, the Recovery Officer shall grant a certificate of sale bearing his seal and signature to the purchaser, and such certificate shall state the property sold and the name of the purchaser and it shall be conclusive evidence of the fact of the purchase in all courts and tribunals, where it may be necessary to prove it and no proof of the seal or signature of the Recovery Officer shall be necessary unless the authority before whom it is produced shall have reason to doubt its genuineness.

(vi) An order made under this sub-rule shall be final, and shall not be liable to be questioned in any suit or other legal proceedings.

(15) Where any lawful purchaser of immovable property is resisted and prevented by any person other than a person (not being the defaulter) claiming in good faith to be in possession of the property on his own account from obtaining possession of the immovable property purchased, any court of competent jurisdiction on application, and production of the certificate of sale provided for by sub-rule (14) shall cause the proper process to be issued for the purpose of putting such purchaser in possession, in the same manner as if the immovable property purchased had been decreed to the purchaser by a decision of the court.

(16) It shall be lawful for the Sale Officer to sell the whole or any portion of the immovable property of a defaulter in discharge of money due :

Provided that so far as may be practicable, no larger section or portion of immovable property shall be sold than may be sufficient to discharge the amount due with interest and expenses of attachment, if any, and sale..

(17) Persons employed in serving notice or in other process under these rules shall be entitled to bhatta at such rates as may from time to time be fixed by the Recovery Officer.

(18) Where the cost and charges incurred in connection with attachment and sale of movable property or the attachment and sale or sale without attachment of immovable property under this rule, exceeds the amount of the cost deposited by the decree-holder under sub-rule (1) such excess shall be deducted from the sale proceeds of the property sold or the moneys paid by defaulter, as the case may be, and the balance shall be made available to the decree-holder.

(19) Every person making a payment towards any money due for the recovery of which application has been made under this rule shall be entitled to a receipt for the amount signed by the Sale Officer or other officer empowered by the Recovery Officer in that behalf; such receipt shall state the name of the person making the payment and the subject-matter in respect of which the payment is made.

(20)

Provided that no such investigation shall be made when the Sale Officer considers that the claim or objection is frivolous.

(b) Where the property to which the claim or objection relates has been advertised for sale, the Sale Officer may postpone the sale pending the investigation of the claim or objection.

(c) Where a claim or an objection is preferred, the party against whom an order is made may institute a suit to establish the right which he claim to the property in dispute, but, subject to the result of such suit, if any, the order shall be conclusive.

(21)

(ii) Where the property may on the second sale, sell for a higher price than at the first sale, the defaulting purchaser at the first sale, shall have no claim to the difference or increase.

(22) Where any property has been attached in execution of a decree, but by reason of the decree-holder's default the Recovery Officer is unable to proceed further with the application for execution, he shall either dismiss the application or for any sufficient reason adjourn the proceeding to a future date. Upon the dismissal of such application, the attachment shall cease.

(23) Where assets are held by the Sale Officer and before the receipt of such assets, demand notices in pursuance of application for execution of decree against the same defaulter have been received from more than one decree-holder and the decree-holders have not obtained satisfaction, the assets after deducting the costs of realisation, shall be reteably distributed by the Sale Officer among all such decree-holders in the manner provided inSection 73 of the Code of Civil Procedure, 1908 (5 of 1908)-.

(24) Where a defaulter dies before the decree has been fully satisfied, an application under sub-rule (1) may be made against the legal representative of the deceased and thereupon all the provision of this rule shall, save as otherwise provided in this sub-rule, apply as if such legal representative were the defaulter. Where the decree is executed against such legal representative, he shall be liable only to the extent of the property of the deceased which has come to his hands and has not been duly disposed of; and for the purpose of ascertaining such liability, the Recovery Officer executing the decree may, of his own motion or on the application of the decree-holder compel such legal representative to produce such accounts as he thinks fit.

RULE 22 MODE OF MAKING ATTACHMENT BEFORE JUDGMENT

(1) Attachment of property under section 87-shall be made in the manner provided inRule 22-.

(2) Where a claim is preferred to property attached under sub-rule (1) such claim shall be investigated in the manner and by the authority specified inRule 22-.

(3) Where a direction is made for the attachment of any property under sub-rule (1), the Recovery Officer shall order the attachment to be withdrawn-

(a) when the party concerned furnishes the security required, together with the security for the costs of the attachment ; or

(b) when the liquidator determines under clause (b) of sub-section (2) of section 81-that no contribution is payable by the party concerned ; or

(c) when the Central Registrar passes an order under sub-section (1)

of section 73-that the party concerned need not repay or restore any money

or property or contribute any sum to the assets of the society by way of compensation ; or

(d) when the dispute referred to in sub-section (1) of section 76-has been decided against the party at whose instance the attachment was made.

(4) Attachment made under sub-rule (1) shall not affect the right existing prior to the attachment of persons not parties to the proceedings in connection with which the attachment was made, nor bar any person holding a decree against the person whose property is attached from applying for the sale of property under attachment in execution of such decree.

(5) Where property is under attachment by virtue of the provisions of this rule and a decree is subsequently passed against the person whose property is attached, it shall not be necessary upon an application for execution of such decree to apply for re-attachment of the property.

RULE 23 MODE OF SERVICE OF SUMMONS

(1) Every summons issued under the Act or these rules shall be in writing, shall be authenticated by the seal, if any, of the officer by whom it is issued and shall be signed by such officer or by any person authorised by him in writing in that behalf. It shall require the person summoned to appear before the said officer at a stated time and place, and shall specify whether his attendance is required for the purpose of giving evidence, or to produce a document, or for both purposes ; and any particular document the production of which is required, shall be described in the summons with reasonable accuracy.

(2) Any person may be summoned to produce a document, without being summoned to give evidence; and any person summoned merely to produce a document shall be deemed to have complied with the summons if he causes such document to be produced, instead of attending personally to produce the same.

(3) The service of summons under the Act or these rules on any person) may be effected in any of the following ways :-

(a) by giving or tendering it to such person;

or

(b) if such person is not found, by leaving it at his last known place of abode

or business or by giving or tendering it to some adult member of his family ; or

(c) if the address of such person's known to the Central Registrar or other

authorised person by sending it to him by registered post acknowledgement due; or

(d) if none of the means aforesaid is available, by affixing it in some conspicuous part of his last known place of abode or business.

(4) Where the serving officer delivers or tenders a copy of the summons to the defendant personally or to an agent or other person on his behalf, he shall require the signature of the person to whom the copy is so delivered or tendered as an acknowledgement of service endorsed on the original summons.

(5) The serving officer shall in all cases in which the summons have been served under sub-rule (4), endorse or annex, or cause to be endorsed or annexed, on or to the original summons a return staling the time when and the manner in which the summons was served and the name and address of the person, if any, identifying the person served and witnessing the delivery or tender of the summons.

(6) Where the defendant to be summoned is a public officer or is a servant of a company or a local authority, the officer issuing the summons may if it appears that the summons may be conveniently so served, send it by registered post acknowledgement due for service on the party to be summoned, to the head of the office in which he is employed together with a copy to be retained by the defendant.

RULE 24 PREPARATION OF A SCHEME FOR THE RECONSTITUTION OR REORGANISATION OF MULTI-STATE COOPERATIVE SOCIETIES

(1) The Central Registrar or an authorised officer, shall prepare a scheme referred to in sub-section (2) of section 95-for the reconstitution or reorganisation of any multi-State co-operative society rendered as such, consequent on the reorganisation of the States and referred to in subsection (1) of section 95-, and forward a copy of the scheme to the President or the Chairman of the multi-State co-operative society with the direction that the scheme be placed before a meeting of the general body of the multi-State co-operative society specially convened for the purpose.

(2) The meeting referred to in sub-rule (1), shall be convened not less than 40 days after the date of issue of the notice to the members and the creditors of the multi-State co-operative society in the manner specified in sub-rule (3).

(3) A written notice specifying the date, hour and place of meeting and the business to be transacted there at shall be given to every member and shall be accompained by a copy of the scheme to be considered at the meeting. The notice to each member and creditor shall :-

(i) be delivered or tendered to him in person;

(ii) be sent to him by registered post; or

(iii) be served on him in such other manner as may be specified in the bye- laws of the society.

(4) Notwithstanding anything to the contrary contained in any rule or bye-law governing the multi-State co-operative society, where the Central Registrar or the authorised officer in this behalf is satisfied that the President or Chairman of the society has failed to convene the special meeting as required under sub-rule (1), the Central Registrar or the authorised officer, as the case may be, shall convene a meeting of the general body of the multi- State co-operative society by giving 14 days notice to all the members and creditors of the multi-State co-operative society.

RULE 25 ADDRESS OF A MULTI-STATE CO-OPERATIVE SOCIETY

-The bye-laws of every multi-State co-operative society shall contain the address of the society to which all notices and communications may be sent. The address of the multi-State co-operative society shall include the name of the State, the district, post office and the village or town. Any change in the address of the multi-State co-operative society shall be communicated to the Central Registrar within a month of such change.

RULE 26 REPEAL AND SAVINGS

(1) TheMulti-State Co-operative Societies Rules, 1958are hereby repealed.

(2) Notwithstanding such repeal, anything done or any action taken under any of the rules so repealed shall, unless such thing or action is inconsistent with the provisions of these rules, be deemed to have been done or taken under the corresponding provisions of these rules.