1 SRI. M.V. MADHAVA RAO, COMMITTEE’S DRAFT OF A.P. UNIFIED COOPERATIVE SOCIETIES ACT 2012 INCORPORATING 97 TH CONSTITUTION AMENDMENTS AND INSTRUCTIONS IN LETTER L110114/4/2004 DATED 10 TH MAY 2010 L&M OF GOVERNMENT OF INDIA. Ministry of Agriculture A.P. UNIFIED COOP. SOCIETIES ACT, 2012 INDEX OF CONTENTS Section No. D E S C R I P T I O N Page No. CHAPTER – I PRELIMINARY 1 Preamble 12 2 State Policy on Co-operatives 12 3 Short title, extent and commencement 12 4 Definitions 13 CHAPTER – II REGISTRATION OF CO-OPERATIVE SOCIETIES 5 Appointment of Registrar 19 6 Organizations which may be registered 19 7 Application for registration of a Coop. Society 19 8 Registration of a Co-operative Society 21
INCORPORATING 97TH CONSTITUTION AMENDMENTS AND INSTRUCTIONS IN LETTER L110114/4/2004 DATED 10TH
MAY 2010 L&M OF GOVERNMENT OF INDIA.
Ministry of Agriculture
A.P. UNIFIED COOP. SOCIETIES ACT, 2012
INDEX OF CONTENTS
Section No. D E S C R I P T I O N
Page No.
CHAPTER – I
PRELIMINARY
1 Preamble 12
2 State Policy on Co-operatives 12
3 Short title, extent and commencement 12
4 Definitions 13
CHAPTER – II
REGISTRATION OF CO-OPERATIVE SOCIETIES
5 Appointment of Registrar 19
6 Organizations which may be registered 19
7 Application for registration of a Coop. Society 19
8 Registration of a Co-operative Society 21
2
9 Registration Certificate 22
10 Society to be a body corporate 23
11 Restriction on creation of any charge 23
12 De-Registration of a Coop. Society by Registrar 23
13 Display of Name 25
14 Classification of Societies 25
CHAPTER – III
BYE-LAWS
15 Bye-laws of Co-operative Societies 27
16 Amendment of byelaws of a Co-operative Society 31
17 Power to direct amendment of Bye-laws 32
18 Change of name 32
19 Transfer of assets and liabilities, division, amalgamation of a Co-operative Society
33
20 Promotion of subsidiary organization 34
21 Partnership of Co-operative Societies 35
22 Creation of new Organisation with others 36
CHAPTER – IV
FEDERATIONS
23 Co-operative Societies Federations/Unions 37
24 Functions of Federal Co-operative Society 37
25 Co-operative Unions 39
3
CHAPTER – V
MANAGEMENT OF FUNDS
26 Mobilisation of Funds 41
27 Restriction on borrowings 41
28 Restriction on holding shares 41
29 Disposal surplus 41-42
30 Liability for Deficit 42-43
31 Reserve and other Funds 43
32 Investment of Funds outside business 44
33 Restriction on contribution 45
CHAPTER – VI
MANAGEMENT
34 Membership 46-49
35 Nominal or associate member 50
36 Mode of serving of notice of Board
and general meetings
50
37 Quorum at general meeting 50-52
38 Meetings General meeting Special General meeting
52-55
39 Minutes of proceedings of general meetings
and of Board and other meetings
56
40 Vote of Members 57
41 Members not to exercise rights
till due payments made
58-59
42 Rights of Members 58-59
43 Redemption of shares 59
4
44 Transfer of share or interest 59
45 Liabilities of past member and estate of deceased member
60
46 Termination of Membership 60
47 Withdrawal of Membership 61
48 Cessation of Membership 61
49 Restriction on services to non-members 61
50 Board of Directors, Resignation of members of the Board. Suck Co-operative
62-63
51 Disqualification for Membership of the Board 64
52 Cessation of Membership of the Board 66
53 Cessation of Membership of the Board and reinstatement 67-68
54 Nominee of State Government on the Board 69
55 Disclosure of interests by Director 70
56 Interested Director not to be present in Board’s proceedings
70
57 Powers and functions of the Board of Directors 71
58 Staff and Chief Executive 74
59 Removal of Chief Executive Officer / Professional Director
75
60 Supersession of the Board of a Coop. Society 75-77
61 Appointment of Person-Incharge in certain circumstances 77
62 Delivery of possession of records and properties of a Co-operative Society
78
63 No-confidence motion against the Board
of a Co-operative Society
79
64 Election Authority or body for cooperatives 80
5
65 Role of Election Authority 80
66 Election Officer 81
CHAPTER - VII
CERTAIN ESSENTIAL PRIVILEGES TO CO-OPERATIVE SOCIETIES
67 First charge 81
68 Share or interest not liable for attachment 81
69 Register of Members 82
70 Admissibility of copy of entry as evidence 82
71 Exemption from compulsory registration of instruments 83
72 Deduction from salary to meet society’s claim in certain cases
83
73 Charge on the immovable property of a member for the loans borrowed Documentation for long term loans
84
85
74 Charge and set off in respect of shares or interest of members in the capital etc. of a Co-operative Society
86
75 Right to set off where a registered Co-operative Society purchases immovable property at a sale under the A.P. Revenue Recovery Act, 1864 for any amount due to it
86
76 Exemption from certain taxes, duties and fees 87
77 Percentage of loans to small farmers 87
78 Limit on interest in certain cases (Damdhuphat) 88
79 Employees’ Provident Fund 88
80 Gratuity 89
CHAPTER - VIII
MANAGEMENT OF INFORMATION
81 Accounts and records to be maintained 90
6
82 Filing of returns 93
CHAPTER - IX
AUDIT, INQUIRY AND SURCHARGE
83 A u d i t 94
84 Power to summon and examine documents and persons etc.
95
85 Audit objections waiver 97
86 Re-audit 97
87 Special Audit 98-99
88 I n q u i r y 100
89 Inspection of Books of account of a Co-operative Society 101
90 Inspection of State Aided Co-operative Society 102
91 Inspection of books by Financing Bank or Federal Society
103
92 Service of summons/notices/requisitions
And directions on parties
104
93 Action on special Audit Report or Inquiry Report 105
94 Suspension of officer or servant of society 106
95 S u r c h a r g e 106-108
CHAPTER – X
SETTLEMENT OF DISPUTES
96 Settlement of Disputes 109
97 Action to be taken by the Registrar on such reference 110
98 Powers of financing bank to proceed against members of a Co-operative Society for recovery of moneys due to it from such Co-operative Society
112
CHAPTER – XI
DISSOLUTION
7
99 Dissolution 114
100 Appointment of liquidator 114
101 Duties of liquidator 115
102 Powers of liquidator 117
103 Restriction on alienation of property by a member of a Co-operative Society under winding up
118
104 Cancellation of registration of a Co-operative Society 118
105 Restoration of a Co-operative Society wound up 118
106 Termination of dissolution proceedings 118
107 Disposal of surplus assets 119
CHAPTER - XII
EXECUTION OF DECREES, DECISIONS,
AWARDS AND ORDERS
108 Execution orders relating to recovery of amounts 120
109 Power of Registrar to issue certificate for recovery of sums due from members of a Co-operative Society
122
110 Attachment of property before decision or order 122-123
111 Recovery of amounts due to Government 123
112 Power to summon witnesses and requisition documents 124
113 Bar of jurisdiction of Courts 125
CHAPTER – XIII
114 Constitution of Co-operative Tribunals 126
115 A p p e a l s 128
116 No appeal in certain cases 130
117 R e v i s i o n 130
118 R e v i e w 131
CHAPTER - XIV
8
OFFENCES AND PENALTIES
119 O f f e n c e s 132-135
120 Presumption as to commission of offences in certain cases
135
121 Presumption as to statements 136
122 Authority to take cognizance 136
123-123 (30)
Financing bank / Primary Agricultural Cooperative societies (long term credit)
137-150
CHAPTER – XV
SPECIAL PROVISIONS RELATING TO ELIGIBLE CO-OPERATIVE BANKS AND URBAN BANKS
124 Definitions 151
125 Special provisions applicable to eligible
Co-operative Banks
151-160
CHAPTER - XVI
SPECIAL PROVISIONS APPLICABLE TO CO-OPERATIVE CREDIT SOCIETIES IDENTIFIED UNDER REVIVAL PACKAGE
126 Definitions 161
127 Special provisions applicable to Agricultural Co-operative Credit Societies
161-164
9
CHAPTER - XVII
Special provisions for
Co-operative Housing Societies
128 Application of this Chapter 165
129 Definitions 165
130 Conditions to be fulfilled precedent to registration of Co-operative Housing Society
166
131 Rights and privileges of members on allotment of plot or dwelling unit in a Co-operative Housing Society
167
132 Allotment of plots, flats or houses through draw of lots 168
133 Provision for nomination 168
134 Restriction on transfer of share or interest of a member 168
135 Registration of mortgage in favour of Co-operative Housing Society or Apex
169
136 Settlement of disputes in Housing Cooperatives 169
137 Recovery of dues and foreclosure 169-170
138 Expulsion of member 170
139 Housing Co-operative Societieswhich have achieved their objects
171
CHAPTER XVIII
SPECIAL PROVISIONS APPLICABLE TO NON-AGRICULTURAL CO-OPERATIVE CREDIT SOCIETIES OTHER THAN CO-OPERATIVE URBAN BANKS
140 Working aspects of Non-Agricultural Credit Societies 172-175
141 CHAPTER - XIX
SPECIAL PROVISIONS APPLICABLE TO CO-OPERATIVE CONSUMER STORES
176-180
10
142 CHAPTER - XX
SPECIAL PROVISIONS APPLICABLE TO LABOUR CONTRACT SOCIETIES
181-183
143 CHAPTER - XXI
SPECIAL PROVISIONS APPLICABLE TO JOINT FARMING CO-OPERATIVE SOCIETIES
184-189
144 CHAPTER - XXII
SPECIAL PROVISIONS APPLICABLE TO HANDLOOM WEAVERS’ CO-OPERATIVE SOCIETIES
190-194
145 CHAPTER - XXIII
SPECIAL PROVISIONS APPLICABLE TO FISHERMEN CO-OPERATIVE SOCIETIES
195-201
CHAPTER - XXIV M I S C E L L A N E O U S
146 Fee for services 202
147 Co-operative Rehabilitation and Re-construction Fund 202
148 Officers to be Public Servants 203
149 Powers of Registrar to give directions In Public interest 203
150 Power to exempt Co-operative Societies from conditions of Registration
203
151 Power to exempt class of societies 203
152 Acts of a Co-operative Society not to be invalidated by certain defects
204
153 Indemnity 204
11
154 Notice necessary in suits 204
155 Power of Government to give direction 204
156 Right to information of Members 205
157 Duties of Police Officer 205
158 Registrar to submit Annual Report to Government 205
159 Prohibition of the use of premises of a Cooperative society
206
160 Contribution of expenses to cooperative conference 206
161 Membership of employees in certain classes of cooperative societies
206
162 Power to direct amalgamation and reorganization 207
163 Restrictions on officers of a cooperative society appearing as legal practitioners
208
164 Cooperative advisory council 209
165 Schemes to carry out proceedings in Electronic form 209
166 Act to over side other laws 209
167 Power to remove difficulties 210
12
CHAPTER - I
PRELIMINARY
SECTION 1: PREAMBLE
An act to provide for the incorporation, regulation and winding up of Cooperative Societies based on the principles of Voluntary formation, democratic member control, member economic participation and autonomous functioning.
In order to facilitate the voluntary formation and democratic functioning of Co-operative Societies as members’ institutions based on self-help, thrift and mutual aid and enable them to promote their economic and social betterment, the legislature of the State of Andhra Pradesh, in the year ………. of the Republic of India, do hereby, enact as follows:
SECTION 2: STATE POLICY ON CO-OPERATIVES
The state shall endeavor to promote voluntary formation, autonomous functioning democratic control and professional management of cooperative societies.
The role of the Government shall inter-alia be limited to enacting suitable legislation for the timely conduct of General Body, Managing Committee meetings, elections; inspection and audit of accounts of the Co-operative Societies and incorporate measures to safeguard the interest of the members and other stake-holders in them.
The State shall not interfere in the internal management and operations of a Co-operative Society except where a Co-operative Society has violated the provisions of this Act or its byelaws or Co-operative principles. The State shall recognize Co-operative Society as democratic institutions owned, managed and controlled by its members for their economic and social betterment, operating their business on Co-operative principles.
SECTION 3: SHORT TITLE, EXTENT AND COMMENCEMENT
(1) This Act may be called A.P. Co-operative Societies Act, 2012. (2) It extends to the whole of the State of Andhra Pradesh. (3) It shall come into force on such date the Government may, by notification in the A.P. Gazette, appoint and from such date the Andhra Pradesh Co-operative Societies Act, 1964 and the Rules framed thereunder and the Andhra Pradesh Mutually Aided Co-operative Societies Act, 1995 shall stand repealed.
13 SECTION 4: DEFINITIONS
In this Act, unless the context otherwise requires:
(1) “Act” means the A.P. Co-operative Societies Act 20 ; (2) “Active Member” means any member availing such minimus level of services or products of the cooperative society and participates in the affairs of the cooperative society by attending required number of meetings as specified in the bye laws. (3) “Apex Co-operative Society” means a society whose area of operation extends to the whole of State and which has as its principal object the promotion of principal objects of its affiliated societies and the provision of facilities for their operations without running into competition inter-se. (4) “Associate member” means an individual or informal group working for similar objective of a society of which associate membership is sought for, provided such member shall not be entitled to vote or to any share in the profits or assets of the society provided this shall not be made applicable to Agricultural Co-operative Credit Societies which are governed by special provisions in Chapter XVI. (5) “area of operation” means the area from which the membership is drawn irrespective of the geographical boundaries of business operations as specified in the byelaws; (6) Authorised person means a person referred to as such in section 119. (7) “Board” means the board of directors or the governing body or administrator or person in charge of a Co-operative Society, by whatever name called, to which the direction and control of the management of the affairs of a society is entrusted. (8) “bye-laws” means the bye-laws of a Co-operative Society as originally registered or deemed to have been registered under this Act for the time being in force and includes amendments thereto which have been duly registered or deemed to have been registered under this Act; (9) “Chief Executive” means an Officer in a Co-operative Society in paid or honorary capacity, nominated or elected, where the byelaws so provide, or appointed by the board of the Co-operative Society from among members or directors or others, in accordance with the bye-laws, who is the person to sue or to be sued on behalf of the Co-operative Society and who performs such functions subject to superintendence, control and direction of Board and has such responsibilities as are specified in this Act and the byelaws and as are assigned by the Board; (10) “Chief Promoter” means a person who is chosen by, the applicants to obtain the registration of a Co-operative Society, from among themselves and with whom the Registrar may correspond on the application. (11) “Common need/interest” means that specific economic need/ interest which is common to all the applicants who have signed the application for registration of a Co-operative Society. (12) “Cooperative Principles” means the principles as approved by the International Cooperative Alliance and specified in the first schedule. (13) Cooperative society means a society registered or deemed to be registered under any law relating to cooperative societies for the time being in force in any state. “Co-operative Tribunal” means a Tribunal constituted under section (114) and having jurisdiction
(14) “Core Services” means those central services including value added services provided to members through which the Co-operative Society intends to meet that economic need common to all members for the fulfillment of which the Co-operative Society was established; and the fulfillment of which is expected to result in the social and economic betterment of members.
14 (15) “Creditor” means a person or a body corporate or institution to whom a debt is owed;
(16) “Decree” means any decree of a civil court and includes any decision or order or award referred to in Section (97) of the Act.
17) “Decree holder” means any society or person including the Government holding a decree.
(18) “Default” means failure on the part of a Co-operative Society, member or other person, to repay to the financing bank or any other Co-operative Society a loan or any other amount due to it within the time limits fixed for repayment, or return to the Co-operative Society within the time fixed, the finished goods in respect of raw material advanced or to keep any other obligation for the fulfillment of which a time limit has been specified in the byelaws;
(19) “Defaulter”, means any Co-operative Society, member or other person committing default;
(20) “Deficit” means the excess of expenditure over income arrived at the end of a financial year after the payment of interest on Share Capital not exceeding the interest paid by the Co-operative Society on fixed deposits; (21) “Deficit charge” means the amount collected from / debited to the accounts of members in proportion to the use and / or non-use of the services of the Co-operative Society in accordance with its byelaws and resolutions of the General Body, to meet deficit, if any, in whole or part after setting it off against Deficit cover fund and recovering the amount from persons responsible for deficit. (22) “Defunct Society” means a Society classified as ‘defunct’ in the final audit by the Registrar/Chief Auditor. (23) “Delegate” means a member nominated by a Co-operative Society to represent its interests at General meetings of another Co-operative Society of which the Co-operative Society is a member; (24) “Deposit Insurance Corporation” means the Deposit Insurance and Credit Guarantee Corporation established under Section 3 of the Deposit Insurance Corporation Act 1961 [47 of 1961];
(25) “Director” means a member elected or nominated in accordance with the byelaws to the Board of the Co-operative Society. (26) “Dividend” means a share of the net profit of the Co-operative Society divided among its members in proportion to the share capital held by each of them; (27) “Election autority for Co-operatives” means the regulatory body constituted by the Government under this Act for the purpose of ensuring timely conduct of all elections to the Co-operative Societies in the State supervising directing and controlling the preparation of electoral rolls. (28) “Federal Co-operative Society” means a Co-operative Society to which similar class of societies is affiliated;
15 (29) “Financial year” means the period commencing on the first day of April of any year and ending with the 31st day of March of the succeeding year; . (30) “Financing Bank” means a Co-operative Society the main object of which is to assist any affiliated or other Co-operative Society by giving loans or advancing moneys; and includes any scheduled bank as defined in the Reserve Bank of India Act 1934 [Central Act 2 of 1934] and such other body corporate or financial institution as may be notified by the Government from time to time, which gives financial or other aid to a Co-operative Society; (31) “Form” means a Form appended to this Act; (32) “Functional Director” means an officer other than Managing Director/ Chief Executive of the rank of Director or above allowed to be member of the Board of a Co-operative Society as per its bye-laws, but shall not have voting rights in the affairs of Co-operative Society except in matters which relate to his specialization for offering advice;
(33) “General Body” in relation to a Co-operative Society means all the members of that society and in relation to a federal Co-operative Society means all the delegates of the member Co-operative societies and includes a smaller body elected or selected in accordance with the bye-laws to exercise such powers of the general body, as may be specified therein;
(34) “General Meeting” means a meeting of the general body of the Co-operative Society and includes special general meeting called and conducted in accordance with the provisions of this Act and byelaws of the Co-operative Society; (35) “Government” means the State Government of Andhra Pradesh; (36) “Judgment Debtor” means any Co-operative Society against which or any person against whom a decree has been obtained; (37) “Member” means a person admitted to membership after registration in accordance with the provisions of this Act/ byelaws and includes an Associate Member; (38) “Multi State Cooperative Society” means a society with objects not confined to one state and registered or deemed to be registered under any law for the time being in force relating to such cooperatives. (39) “NABARD” means the National Bank for Agriculture & Rural Development established under the National Bank for Agriculture and Rural Development Act, 1981 [61 of 1981]; (40) “Net surplus” of a Co-operative Society means the amount calculated by deducting from the gross profit for the year all interest accrued and accruing in relation to amounts which are overdue, establishment charges, interest payable on loans and deposits, audit fee, working expenses, repairs, rents, taxes and depreciation, bonus payable to employees, bonus equilisation fund to be provided, provision for Income tax and for making approved donations under Income Tax Act, 1961, development rebate, provision for development fund, bad debts, price fluctuation fund, dividend equilisation fund, share capital redemption fund, investment fluctuation fund, provision for retirement benefits to employees, after providing and after writing off bad debts and losses not adjusted against any fund created out of profit; Provided that such Co-operative Society may add to the net profits for the year interest accrued in the preceding year but actually recovered during the year.
16 Provided further that in the case of such 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 byelaws;
(41) “Notification” means a notification published in the AP Gazette; (42) “Office-bearer” means a President or Vice-President, Chair person, Vice Chairperson, Secretary or a Treasurer of a Cooperative Society and includes any other person to be elected by the Board of any Co-operative Society; (43) “Officer” means a President, Vice-President, Chairperson, Vice-Chairperson, Managing Director, Secretary, Manager, member of a board, treasurer, liquidator, an administrator appointed under section (61) and Person-Incharge appointed under Section (62) of the Act includes any other person empowered under this Act or the bye-laws to give directions in regard to the business of a Co-operative Society; (44) “Ordinary Resolution” means a resolution of the General body which has the approval of the majority of members with the right to vote, present and voting at the general meeting; (45) “Owned capital” means the paid-up share capital, reserve fund and any other reserve which has been created out of net profit and not withdrawable without previous permission of the Registrar; (46) “Person” includes the Government and a Co-operative Society; (47) “Potential Member” means a person who needs the core services being offered by a Co-operative Society, may be accessing them, and is eligible to be a member of that Co-operative Society, but is not yet its member; (48) “Presenting Officer” means an officer of the Co-operation Department generally not below the rank of Special Category Deputy Registrar appointed by the Registrar of Co-operative Societies to receive, on his behalf and on behalf of the State Government, notices issued by the Co-operative Tribunals and, to present the case/ records pertaining to Government and its officers, to appear, act and plead on his behalf and on behalf of the State Government in all proceedings before the said Tribunals and includes any Officer authorized by the Registrar of Co-operative Societies for the said purpose.
(49) “Primary Co-operative Society” means a Society whose membership consists of :-
i) Individuals; or
ii) individuals and Government in case of State aided Co-operative Society; or
iii) the individuals and homogenous groups, not belonging to the same class;or
iv) individuals and the financing bank;
(50) “Promoter” means a person who has signed the application for the registration of a Co-operative Society.
(51) Registrar means the Central Registrar appointed by the Central Government in relation to multi state cooperative societies and the Registrar for Cooperative Societies appointed by the State Government under the State Cooperative Societies Act in relation to cooperative societies.
(52) “Reorganization” means change in the structure of a co-operative society through merger/amalgamation/conversion into another Co-operative Society.
17 (53) “Representative” means a member elected or selected by a section of members, in accordance with the byelaws, to participate on their behalf at the representative general body meeting.
(54) “Representative general body” in relation to a Co-operative Society means all the rpresentatives.
(55) “Representative General body meeting” means a meeting of the representatives called and conducted in accordance with the provisions of this Act and byelaws of the society.
(56) “Reserve Bank” means the Reserve Bank of India constituted under the Reserve Bank of India Act 1934 [2 of 1934].
(57)“Sale Officer” means, an officer of the Co-operative Department empowered by the Registrar by general or special order to attach and sell the properties of Judgment debtor or to execute any decree, decision or order by attachment and sale of property;
(58) “Schedule” means schedule appended to this Act;
(59) “Secondary Co-operative Society” means a Co-operative Society whose members are co-operative societies;
(60) “Section” means, a section of this Act;
(61) “Secured creditor” means a person who holds some security, such as a Mortgage / hypothecation / charge, for the money he has lent;
(62) “special resolution” means a resolution of the General Body, at a meeting called with at least 20 clear days notice, which has the approval of more than half of all the members of the Co-operative Society with right of vote at the time of the general meeting or of at least two-thirds of members present with right of vote in the general meeting whichever is less;
(63) "Society with limited liability" means a Co-operative Society in which the liability of its members for the debts of the society in the event of its being wound up is limited by its bye-laws;
To the amount, if any unpaid on the shares held by each of them; or
(a) To such amount as they may undertake to contribute to the assets of the society; (b) “State level Cooperative Society” means a Cooperative Society having its area of
operation extending to the whole of the state.
(64) “State Act” means any law made by the legislature of a State.
(65) “State level Cooperative Society” means a Cooperative Society having its area of operation extending to the whole of a State and defined as such in any Act made by the State.
(66) “Turnover” means money value of goods sold/ or loans issued;
18 (67)“Unsecured Creditor” means a persons who has lent money without obtaining any security, like the depositor;
(68) “Wilfull Defaulter” means a person who has financial ability to repay the debt due to a Co-operative Society in cash or in kind or by way of return of finished goods but fails to discharge that obligation to the Co-operative Society inspite of demand notices served on him; and the debt is not waived by government.
(69) “Working capital” includes such portion of the reserve fund, other reserves appropriated out of profits, paid-up share capital, loan and deposits received by a Co-operative Society and debentures issued, by a Co-operative Society, as have not been locked up in buildings and other fixed assets outstanding over dues and accumulated losses.
(70) Words and expressions defined in the Act and used but not defined in the byelaws of Co-operative Societies shall have the meanings respectively assigned to them in the Act.
19
CHAPTER—II
REGISTRATION OF CO-OPERATIVE SOCIETIES
SECTION 5: APPOINTMENT OF REGISTRAR
(1) There shall be appointed a Registrar of Co-operative Societies for the State and as many other persons as the Government think fit for the purposes of this Act.
(2)(a) The Government may, by general or special notification issued from time to time, direct that any power exercisable by the Registrar under this Act shall, in relation to such society, and such matters as may be specified in the notification, be exercisable by other persons subject to the general superintendence of the Registrar.
(b) Where any order has been made under sub-section (2) conferring on any person all or any of the powers of the Registrar under any provisions of this Act, such orders shall be deemed to confer on him all the powers under that provision as may be amended from time to time.
(c) The Government may by general or specific notification withdraw any power of the Registrar, conferred on any person as its pleasure.
SECTION 6: ORGANIZATIONS WHICH MAY BE REGISTERED
(1) An organization which has, as its main object, the promotion of the social and economic betterment of its members in accordance with the Co-operative principles or a federal Co-operative Society established with the object of facilitating the operation of such a Co-operative Society, may be registered under this Act.
(2) A Co-operative Society shall be registered with limited liability.
(3) Subject to the provisions of this Act, a Co-operative Society may by an amendment of its byelaws change the extent of its liability.
SECTION7: APPLICATION FOR REGISTRATION OF A CO-OPERATIVE SOCIETY
(1) An application for the registration of a Co-operative Society shall be made to the Registrar in Form [A1] either in person or through registered post.
(2) The application incorporating the core services of the proposed Co-operative Society/Federation shall be signed,
a) In the case of a Co-operative Society of which all the members are individuals, by at least 10 persons each being a member of a different family and every one of them possessing eligibility to become a member under the provisions of this Act;
20
b) In the case of a Co-operative Society of which the members are Co-operative societies, by duly authorized representatives on behalf of at least five such societies.
(3) The application shall be accompanied by:
a) The original and three copies of the proposed byelaws of the Co-operative Society duly signed by each of the promoters by whom or on whose behalf such application is made duly incorporating therein the core services of the proposed Co-operative Society in its objects;
b) A list of promoters with their addresses and occupation who have contributed to the Share Capital together with the admission fee paid by each of them;
c) A sworn statement in Form [A2] by each of the promoters;
d) Evidence in proof of contribution made by the Promoters towards the Share Capital of the proposed Co-operative Society;
e) A copy of the minutes of the meeting at which the byelaws of the proposed Co-operative Society were adopted and duly signed by the promoters, which shall also specify the name and address of the Chief Promoter.
(4) Where any promoter of a Co-operative Society to be registered is a Co-operative Society, a resolution authorizing the Chairperson or a member by the Board of Directors of the said Co-operative Society, shall be appended to the application.
(5) The list of promoters of the first board elected by the promoting applicants.
(6) A true copy of the minutes of the meeting at which the byelaws were adopted, duly signed by the Chairperson.
(7) A copy of the resolution indicating the name of one or more promoters who are authorized to make alterations or additions to the proposed byelaws shall be submitted with the application.
(8) Challan in proof of having remitted Registration fee amounting to one percent of the authorized share capital subject to a minimum of Rupees One thousand and a maximum of Rupees ten thousand, in Government treasury under the relevant Head of account.
(9) Where the objects of the Co-operative Society includes the raising of funds to be lent to its members and where all the promoters are individuals, they shall reside or own immovable property in the same town, village or group of villages or belong to the same class or pursue the same occupation.
(10) Where the objects of the Co-operative Society include production and sale activity by supplying raw materials to members for production of finished products and where all promoters are individuals, they shall reside in the area of operations proposed for the Co-operative Society and belong to the same class or pursue the same occupation; and it shall also be competent for the Government to specify by order such other class of Co-operative Societies, the promoters of
21 which shall reside in the area of operations as aforesaid and belong to the same class and pursue the same occupation.
(11) Where any question arises under clause (9) as to residence, ownership, group of villages, class or occupation, such question shall be decided by the Registrar whose decision thereon shall subject to appeal under the provisions of section (115), be final.
(12) The name of every Co-operative Society shall contain the expression “Co-operative” or its equivalent in English, Telugu and Urdu and in the case of every Co-operative Society with limited liability, the name of the Society shall have as its suffix, the expression “limited” or its equivalent in the said languages.
EXPLANATION I: “Member of family” means a wife, husband, father, mother, grand-father, grand-mother, step father, step mother, son, daughter, step son, step daughter, grandson, grand daughter, brother, sister, half brother, half sister and wife of brother or half brother.
SECTION 8: REGISTRATION OF A CO-OPERATIVE SOCIETY
On receipt of an application for registration of a Co-operative Society, the Registrar shall enter the particulars of the application in the Register of applications to be maintained in Form [3] either manually or electronically and give a serial number to the application and issue a receipt in acknowledgement thereof. The Registrar may before passing final orders on an application for registration of a Co-operative Society call for such further information or make such inquiry as he may deem necessary and in a meeting with the applicants explain the draft byelaws submitted with the application and alter any of them explaining the rationale for it.
(1) Where the Registrar is satisfied--
(i) That the application of the proposed Co-operative Society has complied with the provisions of this Act;
(ii) That the proposed Co-operative Society satisfies the basic criteria that its objects are to serve the economic interests/needs of its members;
(iii) That its byelaws provide for social and economic betterment of its members through the practice of thrift, self-help and mutual aid in accordance with the Co-operative principles;
(iv) That such Co-operative Society is likely to be economically sound and that its registration may not have an adverse effect on the development of the Co-operative movement as per the opinion of its federal Co-operative Society or financing bank;
(v) That the area of the operation of the proposed Co-operative Society does not overlap the area of operations of another Co-operative Society of the same class;
(vi) That the proposed byelaws are not contrary to the provisions of this Act or any other Act relevant to the proposed activities of the Co-operative Society, he shall register the Co-operative Society and its byelaws.
22 (2) The application for registration shall be disposed off by the Registrar:
a) In the case of a primary society with in a period of 45 days;
b) And in the case of any other society within a period of 60 days from the date of receipt of application.
(3) Where the Registrar refuses to register a Co-operative Society within the above period, he shall communicate the order of refusal together with the reasons therefor to the Chief Promoter within 15 days of such decision of refusal in writing.
Provided no order of refusal shall be made unless the Chief Promoter has been given a reasonable opportunity of being heard.
Provided further that if the application for registration is not disposed off within the above period or the Registrar fails to communicate the order of refusal within 15 days thereafter, the application shall be deemed to have been accepted for registration and the Registrar shall issue Registration Certificate in accordance with the provisions of this Act.
EXPLANATION: For the purpose of this section, the Co-operative Society shall be deemed to have commenced working if it has held the first general body meeting after its registration, admitted members, allotted shares and its first committee has been constituted.
(4) The Registrar shall maintain the following registers showing the names and addresses of all Co-operative Societies
a) Registered under this Act;
b) Liquidated and de-registered under this Act;
c) A register to monitor elections to Co-operative Societies;
He shall also keep a record of the byelaws of each such Co-operative Society with all subsequent amendments thereto arranged, in the order in which the amendments are registered from time to time and shall make available on demand, a certified copy of the byelaws to any person on payment of prescribed fee.
SECTION 9: REGISTRATION CERTIFICATE
(1) Where a Co-operative Society is registered, the Registrar shall issue a certificate of registration and byelaws registered signed and sealed by him indicating the class or category to which it belongs under Section (14) which shall be conclusive evidence that the cooperative society has been duly registered under this Act, unless it is proved that the registration of the Co-operative Society is cancelled.
(2) A copy of the certificate of the registration together with a copy of such byelaws shall be furnished by the Registrar to the financing bank / central, apex Co-operative Society concerned on payment of copying fees.
23 (3) On receipt of Registration Certificate, the promoters who have signed the application for the registration of the Co-operative Society shall conduct the affairs of the society for a period of one year from the date of registration or till the conduct of elections whichever is earlier.
(4) Every Co-operative Society registered, shall maintain at its registered address a registration file containing:-
(a) The certificate of registration; (b) The registered byelaws; (c) All registered amendments to the byelaws along with the certification of
registration of amendments; (d) A copy of this Act with upto date amendments;
The registration file shall be kept open for inspection at all time during the working hours to the Registrar for any other Officer authorized by him or any member of the Co-operative Society.
Provided that where the byelaws of a Cooperative Society so provide, the Government or the Registrar may nominate all are any of the members of the Board for such period as may be specified therein.
SECTION 10: SOCIETY TO BE A BODY CORPORATE
(1) The registration of a Co-operative Society shall render it as a body corporate for the purpose of State and Central Acts by the name under which it is registered having perpetual succession and a common seal and with power to acquire, hold and dispose of property, both movable and immovable, enter into contract, institute and defend suits and other legal proceedings and to do all things necessary for the purposes for which it is constituted.
(2) All transactions entered into in good faith prior to the registration of a Co-operative Society, in furtherance of its objects, shall be deemed to be its transactions after registration. Provided, acceptance of deposits, extending credit and purchase of fixed assets or trading in goods and services prior to registration shall not be deemed as transactions of the Society after registration.
SECTION 11: RESTRICTION ON CREATION OF ANY CHARGE
A Co-operative Society shall not dispose off or create any charge over its property without the prior approval of the Registrar and the consent of the Federal Co-operative Society or financing Bank concerned as the case may be.
SECTION.12: DE-REGISTRATION OF A CO-OPERATIVE SOCIETY BY REGISTRAR
(1) If the Registrar is satisfied that any Co-operative Society is registered on mis-representation of facts submission of, false or misleading information, suppression of material facts or fraud made by promoters or where the work of the Co-operative Society is completed or exhausted or the purposes for which the Co-operative Society has been registered are not served,
24 or where the Co-operative Society has not commenced work within two years of its registration or where it has ceased to work for the last three years and classified as defunct in audit and where the membership has fallen below the statutory minimum of ten (10) required for the registration of a Co-operative Society or where the Co-operative Society has been conducting its affairs in contravention of the Co-operative principles or in violation of the provisions of this Act and the Society’s byelaws, he may, at any time of his own motion and after giving an opportunity of being heard to the Board of Directors and the members of Co-operative Society to state their objections, if any, de-register the Co-operative Society; which is in existence for a period not exceeding four years.
Provided that where the number of members of the Co-operative Society is so large and it is not possible to ascertain the correct addresses of all such members from the records in the office of the Registrar and in the opinion of the Registrar it is not practicable to serve a notice of hearing on each such individual member, a public notice of the proceedings of de-registration shall be given in at least one newspaper published in Andhra Pradesh and in wide circulation in the district in which the Co-operative Society’s office is situated and a copy thereof shall be exhibited on the notice board of the office of the Registrar and of the Co-operative Society and the cost of publication shall be recovered from the assets of the Co-operative Society and in the absence of such assets from the Board of Directors of the Co-operative Society as may be decided by the Registrar. The service of the notice in the aforesaid manner shall be deemed to be notice to all the members of the Co-operative Society including Chief promoter and the members of the Board of Directors of the Co-operative Society and no proceedings in respect of de-registration of the Co-operative Society shall be called in question in any Court merely on the ground that individual notice is not served on any such member.
(2) When a Co-operative Society is de-registered under the provisions of sub-section (1), the Registrar may, notwithstanding anything contained in this Act or in any other Law for the time being in force make such incidental and consequential orders including appointment of official assignee, as the circumstances may require.
(3) The official assignee shall realize the assets and liquidate the liabilities within a period of one year from the date he takes over the charge of the property, assets, books, records and other documents which period may at the discretion of the Registrar be extended from time to time, so however, that the total period does not exceed three years in the aggregate.
(4) The remuneration of the official assignee shall be fixed by the Registrar as a percentage of the assets realized.
(5) The powers of the Registrar under sub-sections (1) and (2) shall not be exercised by any person or persons on whom all or any of the powers of the Registrar are conferred.
25 SECTION13: DISPLAY OF NAME
Every Co-operative Society shall display its full name as entered in registration certificate and address of its registered office and the words “Registered under A.P. Co-operative Societies Act, 20 ” in legible characters in a conspicuous position”. Short name if any, shall be in small letters in brackets below the full name.
(a) At the Head Office and every office or place at which it carries on its business;
(b) in all notices and other official publications;
(c) on all its contracts, business letters, orders for goods, invoices, statements of accounts, receipts and letters of credit; and
(d) on all bills of exchange, promissory notes, endorsements, cheques and orders for money it signs, or that are signed on its behalf.
SECTION 14: CLASSIFICATION OF SOCIETIES
The Registrar may classify the Co-operative Societies as follows and incorporate such classification in the certificate of registration:
(1) Thrift & Credit Co-operative Society; (2) Banking Co-operative Society; (3) Marketing Co-operative Society; (4) Producers & Sale Co-operative Society; (5) Processing & Manufacturing Co-operative Society; (6) Housing Co-operative Society; (7) Service Co-operative Society; (8) Construction & Labour Contract Co-operative Society; (9) Co-operative Union (10) Consumer Co-operative Society (11) Employees’ Co-operative Credit Society (12) Miscellaneous Co-operative Societies
For the purpose of this section, “Thrift & Credit Co-operative Society” means a Co-operative Society which has as its principal object, raising of funds from its members or external borrowings for the purpose of lending to its members.
“Banking Co-operative Society” means a Co-operative Society which has a license from RBI to carry on banking business and may be further categorized as Primary Agriculture Co-operative Society or Primary Co-operative Urban Bank or District Co-operative Central Bank or Apex Co-operative Bank.
“Marketing Co-operative Society” means a Co-operative Society, which has as its principal object the arranging for the marketing of agricultural and other produce or products of its members or the undertaking of the distribution of commodities and includes any Co-operative
26 Society which has as its principal object the provision of facilities for the operation of a marketing society;
“Producers and Sale Co-operative Society” means a Co-operative Society which has as its principal object the promoting of the interest of a class of producer members including facilitation of production, processing and marketing.
“Processing & Manufacturing Co-operative Society” means a Co-operative Society organized with the principal object of undertaking processing and manufacturing activities for the economic benefit of its members.
“Housing Co-operative Society” means a Co-operative Society which has as its principal object of providing Housing services including House Plots and / or Home Loans and / or Construction of houses and / or apartments.
“Service Co-operative Society” means a Co-operative Society which is formed with an aim to undertake any service activity to further the economic and / or social interests of its members.
“Construction & Labour Contract Co-operative Society” means a Co-operative Society formed to undertake construction activity on commercial lines and / or to supply construction material or labour or any other kind of skilled manpower on contractual terms.
“Co-operative Union” means a Co-operative Society established with the object of creating awareness about co-operative way of carrying out economic activity, providing training and / or undertaking education research and development activities for the benefit of its members / stake holders of Co-operative Societies.
“Consumer Co-operative Society” means a Co-operative Society which has as its principal object the supply of the domestic and other requirements of its members for the consumption of such members.
“Employees Co-operative Credit Society” means a Cooperative credit society exclusively formed for the serving employees of an organization to promote thrift and savings among them and meet their credit needs. Members of an Employees’ Co-operative Credit Society shall give a declaration at the time of their admission that they are not members of any Co-operative Urban Bank.
“Miscellaneous Co-operative Society” means a Co-operative Society not falling under any of the class of societies in this section.
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CHAPTER – III
BYE-LAWS
SECTION 15: BYELAWS OF CO-OPERATIVE SOCIETIES
(1) Except on such specific matters which the Act has provided for and on which the byelaws may further regulate on but not contravene, the functions of every Co-operative Society shall be regulated by its byelaw.
(2) Every Co-operative Society may make its byelaws consistent with the Co-operative principles and the provisions of this Act and model byelaws if any.
(3) It shall be mandatory for every Co-operative Society to
(a) Prescribe qualifications and fit and proper criteria for the post of Chief Executive Officer / Managing Director of the Co-operative Society.
(b) Make service bye-laws for its employees laying down staffing pattern, pay scales, recruitment procedures, career advancement plans, mandatory training requirements, compensation and terminal benefits and disciplinary procedures and relevant competent authorities thereof.
(4) A definition of ‘Active Member’ in relation to the aims and objects and activities of the Society shall be incorporated in the bye-law.
(5) In particular and without prejudice to the generality of the foregoing power, such bye-laws may provide for all or any of the matters specified below and with such other matters incidental thereto as may be deemed necessary by the Co-operative Society.
1). The name, address and area of operations of the society; 2). The core objects and services of the Co-operative Society explicitly stated as common central need / interest of the members for which the Co-operative Society is being established and confining its activities and functions for the fulfillment of core services;
3). The co-operative principles as stated in this Act, according to which the Co-operative Society shall conduct its affairs;
4).Obligation to provide services and products to eligible members. 5).The eligibility for obtaining membership; 6).The value of a share; 7). The procedure for obtaining membership;
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8).Conditions for continuing as member; 9).The time limit before which a potential member must seek and obtain membership in order to continue to use the services of the Cooperative Society;
(10).The procedure for easy withdrawal/transfer of membership; (11).The procedure for termination and cessation, expulsion of membership; (12).The rights and duties of the members; (13).The payment, if any to be made or the interest to be acquired as a condition for exercising the right of membership; (14).The maximum capital to which a single member can subscribe; (15).The transfer of shares; (16).The redemption of shares; (17).The consequences of default in payment of any sum due by a member;
(18) The nature and amount of capital if any of the Co-operative Society;
(19) The nature and extent of the liability of office-bearers and members for the debts contracted by the Co-operative Society;
(20) The maximum interest/dividend payable to members on Paid up Share capital;
(21) The sources, types and extent of funds to be raised by the Co- operative society; (22) The purpose for which the funds may be applied;
(23)The extent and conditions under which deposits, loans, debentures and other funds may be obtained; (24) The conditions and purposes for which State aid or equity and financial aid from other financial institutions may be sought and obtained;
(25) The manner of allocation or disbursement of net profit of the Co-operative Society;
(26) The constitution of various reserves and their purposes;
(27) The manner of and frequency of convening general meetings, special general meetings and Board meetings and quorum required there for other than those provided under this Act in different contexts;
(28) The role of the general body and subjects which shall be dealt with by the general body;
(29) The procedure for notice and manner of voting in general and Board meetings;
(30) The manner of conducting elections and of filling casual vacancies;
(31) The manner of making or amending byelaws;
(32) The number of members of the Board not exceeding Twenty one;
29 (33) Eligibility, ineligibility for becoming and continuing as member of the Board on the basis of fit and proper criteria;
(34) Cessation of membership of the Board;
(35) The tenure of office of directors, chairperson and other office bearers of the Co-operative Society not exceeding five years;
(36) The procedure for removal of members of the Board and filling of vacancies;
(37) The manner of convening Board meetings and quorum;
(38) The frequency of Board meetings;
(39) Powers and functions of the Board;
(40) Powers and functions of office-bearers including Chair-person;
(41) Qualifications and fit and proper criteria for appointment of the Chief Executive, his powers and functions;
(42) Penalties for acting against the interests of members and for non- fulfillment of duties by members, directors and staff;
(43) The appointment and role of auditors and the procedure for conduct of audit where the Co-operative Society fails to make necessary arrangements and time limit for audit compliance;
(44) The authorization of an officer or officers to sign documents and to institute and defined suits and other legal proceedings on behalf of the Co-operative Society;
(45) The terms on which a Co-operative Society may deal with non-members;
(46) The terms on which a Co-operative Society may associate with other Co-operative Societies;
(47) The terms on which a Co-operative Society may deal with Organizations other than Co-operative societies.
(48) The rights, if any, which the Co-operative Society may confer on any other Co-operative Society, or federal Co-operative Society and the circumstances under which such rights may be exercised by the federal Co-operative Society;
(49) The procedure and manner of transfer of shares and interest in the name of a nominee in the case of death of a member;
(50) The minimum level of services to be used by the members of the Co-operative Society, financial commitment and participation in meetings to be eligible to exercise the rights of membership including the right to vote;
(51) The consequences of performing below the level fixed;
30 (52) The educational and training programmes to be conducted by the Co-operative Society;
(53) The manner of choosing delegates to higher tier Co-operative Societies and Federations;
(54) The mode of custody of valuable documents and manner of investment of funds and the manner of keeping accounts;
(55) The method of appropriating payments made by members from whom moneys are due;
(56) The preparation and submission of annual statements required by the Regulatory authorities and mode of publication of the same;
(57) Byelaws to specify in the case of a Co-operative Society engaged in production, processing and manufacturing, particulars relating to the procedures to be followed in utilization of labour, materials or other items of costs, purchasing and selling of stores, raw materials and finished products and other items of cost and procedure of stock taking;
(58) In the case of Employees Credit Societies, byelaws to empower employer to deduct the sum indicated in the requisition of the Employees’ Co-operative Society from the salary/ wages of the employee and remit the same to the Employees Society concerned on an agreement, executed by the employee in favour of the said society;
(59) Admission of minors as members for purpose of providing services or benefits to them in the case of Co-operative Societies formed exclusively for them;
(60) Compulsory thrift to be collected from members periodicity of collection, interest payable by the Co-operative Society on such collection and manner of linkage of thrift to eligibility of loans terms and conditions of thrift including its refund to the member;
(61) Manner of preparation and display of the list of members eligible to vote in general body or elections by the Chief Executive of the Co-operative Society;
(62) Mode of appointment of person-in-charge where needed;
(63) The manner of dissolution of the Co-operative Society;
(64) The manner of disposal of funds when the Co-operative Society is under dissolution and how surplus assets are to be dealt with;
(65) language in which business is to be conducted by the Co-operative Society;
(66) Financial year adopted by the Co-operative Society;
(67) Records to be maintained by the Co-operative Society;
(68) Functions of sub-committees.
31 SECTION 16: AMENDMENT OF BYELAWS OF A CO-OPERATIVE SOCIETY
(1) A Co-operative Society may amend any of its bye-laws by a resolution passed at a General meeting by a majority of the total membership with right of vote or of 2/3rd of the members present and voting, whichever is less;
Provided no such resolution shall be passed by the General Body unless at least twenty clear days of written notice of the resolution and of the General Meeting has been given along with a copy of the proposed amendment and its rationale to each member of the Co-operative Society.
(2) In the case of amendment of its byelaws with regard to the matters relating to items 1, 2, 12, 14, 19, 27, 31, 32, 35, 36, 39, 64 and 65 of sub-section 5 of Section (15), an application for the registration of the amendment shall be forwarded to the Registrar as stated in sub-section 3 of this section below. In the case of all amendments to the byelaws other than those specified in sub-section 2 above information about the amendment shall be forwarded by the Co-operative Society by Registrered Post to the Registrar within a period of thirty days from the date of resolution for his record.
(3) An application for the registration of the amendment shall be forwarded by Registered Post to the Registrar within a period of thirty days from the date of resolution duly signed by the Chairperson and two members of the Board and shall be accompanied by the following:--
(a) A copy of the resolution adopting the amendment
(b) A statement containing the particulars indicating—
I. The date of the general meeting at which the amendments to the bye-laws were approved;
II. The date of the notice issued for the general meeting; III. The total number of members on the rolls of the Co-operative Society having the right of
vote on the date of such general meeting; IV. The number of members having the right of vote present at such general meeting; and V. the number of members who voted for the resolution;
(c) Four copies of the text of the byelaws incorporating therein the proposed amendments.
(4) The Registrar, if the proposed amendment is in consonance with the provisions of this Act, shall register the amendment within a period of 30 days from the date of receipt of the application. An amendment of the byelaws, unless it is expressed to come into operation on a particular day comes into force on the day on which it is registered.
(5) The Registrar shall forward to the Co-operative Society within a period of 15 days after registration, a copy of the registered amendment together with a certificate signed and sealed by him and such certificate shall be conclusive evidence that the amendment has been duly registered.
32 (6) The Registrar, if the proposed amendment is not in consonance with the provisions of this Act, shall communicate the order of refusal together with the reasons therefor to the Chief Executive of the society within fifteen days from the date of such refusal.
Provided that no order of refusing to register the amendment shall be passed except after giving the Co-operative Society an opportunity of making its representation.
a) Where no order of refusal is communicated within the specified period, it shall be deemed that the Registrar has registered the amendment after the expiry of 45 days from the date of application.
Provided such action shall not in any way preclude the Registrar from proceeding against the cooperative society or its board where such amendments are contrary to the provisions of this Act.
SECTION 17: POWER TO DIRECT AMENDMENT OF BYELAWS
(1) If it appears to the Registrar that an amendment of the byelaws of a Co-operative Society is necessary or desirable in the interest of the Co-operative Society or of the Co-operative Movement, he may call upon the Co-operative Society by issuing a notice to adopt the amendment as proposed by him within (60) days from the date of receipt of the notice by the Co-operative Society.
(2) If the Co-operative Society fails to make the amendment within the time specified, he may refer the matter to the Co-operative Tribunal for decision. If the Co-operative Tribunal after giving the Co-operative Society an opportunity of being heard orders the registration of amendment, the byelaws shall be deemed to have been amended accordingly with effect from the date of order of the Co-operative Tribunal and the byelaws as amended shall subject to appeal within (60) days of the date of the order, if any, to A.P. High Court, be binding on the Co-operative Society and its members.
SECTION 18: CHANGE OF NAME AND ADDRESS
(1) A Co-operative Society may, by an amendment of its byelaws, change its name, however it shall be ensured that the name does not refer to any caste or religious denomination and is not inconsistent with the objects of the Co-operative Society.
(2) After the change is approved by the Registrar, the Co-operative Society shall send the original registration Certificate to the Registrar for amendment, who shall amend the certificate of registration accordingly, enter the new name in the register maintained in Form No.A3 in the place of its former name and return the amended certificate of registration to the Co-operative Society.
(3) Such change of name shall not affect any right or obligation of the 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 Co-operative Society by its former name, may be continued or commenced by or against its new name.
33 (4) Every Co-operative Society shall have a principal place of business and an address including its electronic mail address registered to which all notices and communications may be sent. Any change in address of the principal place of business of the Co-operative Society shall be reported to the Registrar within fifteen days of such change.
SECTION 19: TRANSFER OF ASSETS AND LIABILITIES, DIVISION, AMALGAMATION OF A CO-OPERATIVE SOCIETY
(1) A Co-operative Society may, by a special resolution of its general body,
Meeting decide to
(a) Change its extent of its limited liability;
(b) Amalgamate with another Cooperative Society;
(c) Transfer its assets and liabilities in whole or in part to any other Co-operative Society which agrees to such transfer by a resolution of its general body;
(d) Divide itself into two or more Co-operative Societies;
(e) And convert itself into another class of Co-operative Society.
(2) Every resolution of a Co-operative Society under this section shall be passed at its general meeting by a majority of total members with right of vote or two thirds of members present and voting whichever is less and such resolution shall contain all particulars of the liability, transfer, division, amalgamation, and conversion as the case may be.
(3) Where a Co-operative Society has passed a special resolution under this section, it shall give notice thereof together with a copy of the resolution to all its members, federal Co-operative Societies to which it is affiliated and creditors who may give their consent. Otherwise, notwithstanding any byelaw or contract to the contrary, any member, federal Co-operative Society or creditor shall, during a period of one month from the date of service of the notice have the option of withdrawing their shares, deposits, loans, or services as the case may be.
(4) Any member, federal Co-operative Society or creditor who or which does not exercise within the specified period the right under sub-section(4) shall be deemed to have assented to the resolution.
(5) A resolution passed by a Co-operative Society under this section shall not take effect until:
a) (i) All the members, federal Co-operative Society and creditors have assented or are deemed to have assented to the resolution under sub-section (3) or sub-section (4); or
(ii) All claims of the members, federal Co-operative Society and creditors who have exercised the option referred to under sub-section (3) within the period specified therein have been met in full or otherwise satisfied; and
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b) (i) In the case of change of extent of limited liability, amendment of the byelaws of the Co-operative Society concerned is registered by the Registrar or deemed to have been registered; or
(ii) In the case of division, amalgamation or conversion, the certificate of registration of the Co-operative Society or the Co-operative Societies, as the case may be, is issued by the Registrar or deemed to have been issued.
(6) Notwithstanding any thing contained in the Transfer of Property Act, 1882 (iv of 1882) or the Registration Act, 1908 (xvi of 1908) when a resolution passed by a Co-operative Society under sub-section (1) takes effect, the resolution shall be a sufficient conveyance to vest the assets and liabilities in the transferee of the original Co-operative Society to new Co-operative Society without any further assurance.
(7) The registration of the Co-operative Society shall stand cancelled and the Co-operative Society shall be deemed to have been dissolved and shall cease to exist as a corporate body;
(a) When the whole of the assets and liabilities of such Co-operative Society are transferred to another Co-operative Society; or
(b) When such Co-operative Society divides itself into two or more Co-operative Societies; or
(c) When it converts itself into another class of Co-operative Society.
(8) Where two or more Co-operative Societies are amalgamated into a new Co-operative Society or a Co-operative Society has been divided or converted, the registration of such Co-operative Societies shall stand cancelled and on the date of registration of the amalgamated Co-operative Society or converted Co-operative Society or the new Co-operative Society between which the Co-operative Society may have been divided shall be deemed to have been dissolved and shall cease to exist as corporate bodies.
(9) The amalgamation or division or conversion of a Co-operative Society shall not effect any rights or obligations of Co-operative Societies so amalgamated or Co-operative Society so divided or converted or rendered defective any legal proceedings which might have been continued or commenced by or against the Co-operative Societies which have been amalgamated or divided or converted and accordingly such legal proceedings may be continued or commenced by or against the amalgamated Co-operative Society or as the case may be the converted Co-operative or the new Co-operative Societies.
SECTION 20: PROMOTION OF SUBSIDIARY ORGANIZATION
(1) A Co-operative Society may, with the prior permission of the Registrar, by a resolution passed at general meeting by a majority of members with right to vote present and voting, promote one or more subsidiary organizations for the furtherance of its stated objectives, and such organization or organizations may be registered under any law for the time being in force, as agreed to by the general body.
Provided that a Co-operative Bank shall not promote a subsidiary, nor shall a Co-operative Society promote a subsidiary whose byelaws permit the carrying of banking business without
35 obtaining the prior permission of the Reserve Bank of India in writing. Provided further that in the case of a mutually aided cooperative society, prior permission of Registrar is not necessary
Provided also that same individuals of Board of management of the Co-operative Society shall be the management of the subsidiary organization or control the Board of Directors or members of the Governing body of such institution or hold more than half in nominal value of equity share of such institution or if one or more members of such Co-operative Society hold whether by themselves or together with subsidiary institution or the relatives as the case may be, the majority of equity shares in that institution.
Provided also that the Co-operative Society shall not transfer or assign its substantive part of business or activities to such subsidiary institution.
(2) The annual reports and accounts of any such subsidiary organization shall be placed before the general meeting of the promoting Co-operative Society each year.
(3) A subsidiary institution shall not include a partnership firm.
(4) Any subsidiary organization created under sub-section (1) shall exist only as long as general body of the promoting Co-operative Society deems its existence necessary.
SECTION 21: PARTNERSHIP OF CO-OPERATIVE SOCIETIES
(1) Any two or more co-operative societies may, by resolutions passed at their general meetings by a majority of members present with a right to vote and voting in each such Co-operative Society, enter into a contract of partnership for carrying out any specific business permissible under the byelaws on such terms and conditions as may be mutually agreed upon by such Co-operative Societies.
Provided each member has had clear twenty days of written notice of the resolution and date of the meeting.
(2) Where such partnership requires the creation of a new organization, the participating Co-operative Societies shall be its members.
Provided that a Co-operative Bank shall not enter into such a partnership without obtaining prior permission of the Reserve Bank of India in writing.
(3) Provided further that when such Co-operative Societies are members of a federal society or are in receipt of assistances from a financing bank or State aid they shall obtain the prior consent of the federal society or the financing bank or the Registrar as the case may be.
(4) Nothing in the Indian Partnership Act, 1932 (Central Act 9 of 1932) shall apply to all such partnership.
36 SECTION 22: CREATION OF NEW ORGANISATION WITH OTHERS
(1) Where the collaboration between a Co-operative Society or Co-operative Societies and any other organization with similar core services requires the creation of the new organization, the new organization shall be any Government undertaking and any other undertaking approved by the State Government with highest crisil rating to carry out one or more specified business provided in the byelaws of such Co-operative Society or Co-operative Societies including industrial investment, financial aid or marketing and managing expertise as appropriate for the fulfillment of the objective with which it was created, and such collaboration shall be reviewed every year by the general body of the Co-operative Society.
Provided that no such scheme of collaboration shall be entered into with out the prior approval of the Registrar in the case of a Cooperative Society and Reserve Bank of india in the case of a Cooperative Bank.
(2) Before approving such scheme of collaboration under sub-section (1) the Registrar or the Reserve Bank of India, as the case may be, shall have due regard to the following matters namely:-
(a) The scheme is economically viable;
(b) It can be implemented without in any way altering the co-operative character of the Co-operative Society or Co-operative Societies;
(c) The scheme is in the interests of the members of the Co-operative Society or Co-operative Society or in the public interest or in the interest of Co-operative movement in general;
(d) In the case of Co-operative Bank, the scheme is not detrimental to the interest of the depositors or banking policy
Provided that no such scheme of collaboration shall be entered into without the prior approval of the Registrar in the case of Stated Aided Co-operative Society and the Reserve Bank of India in the case of a Co-operative Bank.
Provided further that in the case of a mutually aided cooperative society, the prior permission of Registrar is not necessary for seeking collaboration with a new organization.
(1) Federal Co-operative societies / Co-operative Unions consisting of primary and/ or secondary Co-operative Societies as members shall obtain registration certificate in accordance with the provisions of this Act.
(2) Every federal Co-operative Society shall in its general meeting be represented by its member Co-operative Societies.
(3) A federal Co-operative Society may be classified with reference to the nature of its activities. Not more than one federal Co-operative Society shall be registered with similar and identical objects in the same area of operation.
(4) A federal Co-operative Society for the sake of promotion of constituent members shall make suitable provisions in their byelaws to avoid competition with their member-societies.
(5) All provisions of this Act, applicable to a Co-operative Society shall, as far as may be, apply to a federal Co-operative Society.
SECTION 24: FUNCTIONS OF FEDERAL CO-OPERATIVE SOCIETY
(1) Subject to the provision of this Act and any other law for the time being in force, a federal Co-operative Society may discharge the functions to facilitate the voluntary formation, autonomous and democratic functioning of co-operative societies based on thrift, self-help and mutual aid.
(2) Without prejudice to the generality of the provisions contained in sub-section (1) the federal Co-operative Society may perform the following functions;
(a) Safeguard the observance of the Co-operative principles by its constituents.
(b) Promote and organize the Co-operative Societies for this purpose, assist its constituents in framing byelaws and guidelinesfor framing service regulations and business policies for consideration by constituent Co-operative Societies.
(c ) Encourage and Assist Co-operative training, Education and information Programmes and propagation of co-operative principles and practices undertaken by the A.P. State Co-operative Union;
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(d) Assist in the preparation of perspective development plans for its member Co-operative societies.
(e) Promote harmonious relations amongst member Co-operative societies. (f) Help member Co-operative societies to settle disputes among themselves. (g)Represent the interests of member Co-operative societies and lobby for policies and legislation favorable to Co-operative societies through State Co-operative Council. (h) Undertake business services on behalf of its member Co-operative Societies, if specially required by or under the resolution of the general body or the board or byelaws of a member Co-operative Society. (i) Provide Co-operative management Development services to a member Co-operative Society including participation in board meetings where invited. (j) Arrange for timely conduct of annual statutory audit in member Co-operative Societies when they fail to get their statutory audit of accounts conducted on time. (k) Assist member Co-operative Societies in regular conduct of general meetings. (l) Evolve code of conduct for observance by member Co-operative Societies.
(m) Evolve viability norms for member Co-operative Societies
(n) Provide legal aid and advice to member Co-operative Societies.
(o) Assist member Co-operative societies in organising self-help groups of people living in its area of operations.
(p) Develop market information system, logo brand promotion, quality control and technology up-gradation.
(q) Provide any other services, stated in its bye-laws, at the behest of member Co-
operative societies.
39 SECTION 25: CO-OPERATIVE UNIONS
(1) There shall be a State Co-operative Union for the State of Andhra Pradesh called “A.P. State Co-operative Union Ltd.,” and as many District Co-operative Unions as may be deemed necessary for a district or part thereof to provide cooperative education and training for the members and office bearers of cooperative societies in the state
(2) Notwithstanding any thing contained in section (34) every Co-operative Society registered shall with effect on and from the date of commencement of this Act or with effect on and from the date of its registration whichever date is later be deemed to be a member of the District Co-operative Union or A.P. State Co-operative Union, as the case may be, if such Co-operative Society is eligible to become a member of any such Union in accordance with the byelaws of such Union.
(3) Every Co-operative Society shall pay to the Co-operative Union of which it is deemed to be a member under sub-section (2) an annual subscription at such rate as may be specified by the Union and become eligible for services offered by the Union such as free supply of monthly journal “Sahakara Samacharamu” and other literature including amendments to Co-operative Law.
(4) Where District Co-operative Union alone is the member of the A.P. State Co-operative Union, it shall share its membership subscription and Education Fund collected from its member-societies, with the A.P. State Co-operative Union in the ratio of 50:50.
(5) The A.P. State Co-operative Union shall
(a) Organise problem and situation oriented Member Education Programmes for the members of Co-operative Societies in various sectors. (b) Undertake induction training programmes to personnel who intend joining the co-operative movement.
(c) Undertake inservice programme for junior and intermediate personnel working in co-operative depart- ment and also in Co-operative Societies.
(d) Undertake printing of different types of accounts books, forms and byelaws required by co-operative societies.
(e) Collect from all the co-operative societies the Co-operative Education Fund set apart for its use, annual member subscription and other contributions and maintain related accounts thereto. (f) Represent the interests, problems and welfare of all types of Co-operative societies at district and State level to the competent authorities as resolved in Conferences and Seminars conducted for each sectoral societies by the A.P. State Co-operative Union.
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(g) Promote new forms of Co-operative societies.
(h) Undertake experimental projects towards the application of Co-operative ideology.
(i) Liaise on behalf of and amongst Co-operative societies in the State.
(j) Service as a data bank on Co-operative societies.
(k) Undertake Research & Evaluation studies.
(6) The District Co-operative Union shall be the nodal agency at District level in assisting the A.P. State Co-operative Union in carrying out its objectives, besides organizing District level sectoral Seminars to collect the problems faced by sectoral co-operative societies and communicate them to the State Co-operative Union, State Co-operative Council for appropriate action. It shall also monitor the Member Education Programmes and induction training for freshers joining the co-operative movement in junior Co-operative Training Centres.
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CHAPTER - V
MANAGEMENT OF FUNDS
SECTION 26: MOBILISATION OF FUNDS
A Co-operative Society may mobilize funds in the shape of share capital, deposits, debentures, loans and other contributions from its members and others to such extent and under such conditions as may be specified in the Bye-laws and other relevant laws and regulations like Banking Regulation Act, 1949 (Central Act 10 of 1949).
SECTION 27: RESTRICTION ON BORROWINGS
(1) A Co-operative Society may receive deposits and raise loans only to such extent under such conditions as may be specified in the byelaws.
(1) Any Co-operative Society may accept funds or guarantee from Government or funds from other financing institutions for the fulfillment of its objects on such terms and conditions as are mutually agreed upon under a Memorandum of Understanding. A cooperative society may issue non-convertible debentures or other instruments subject to the provisions of any law for the time being in force to raise resources for the fulfillment of its object to the extent of its paid up share capital, free reserves and surpluses
Provided that the Cooperative society doing banking business shall be governed by directions issued by the reserve bank of India or any other competent authority to do so under any law for the time being in force.
SECTION 28: RESTRICTION ON HOLDING SHARES (1) No member in a Primary Co-operative Society, shall at any time, hold more than one tenth of the total paid up share capital of the Co-operative Society.
(2) A Co-operative Society shall accept funds from the Government by way of share capital, provided the State Government’s equity in the Co-operative Society does not exceed 25% of its paid up share capital.
(3) Share capital already received from the Government should be repatriated and Government should accept the amount returned on the face value or book value of shares whichever is higher and in case where the Co-operative Society is unable to return the Government share capital it shall enter into a Memorandum of Understanding with the Government agreeing to such conditions that Government may stipulate in regard to repatriation of Government’s share capital.
SECTION 29: DISPOSAL SURPLUS
42 (1) No part of the funds other than the surplus of a Co-operative Society shall be paid by way of bonus or dividend or otherwise distributed among its members.
Provided a member / Chairperson of a Co-operative Society may be paid remuneration/ honorarium from the funds of the Co-operative Society for guiding activities such as marketing of agricultural produce of members and finished goods of a production and sale society on the scale fixed by the Co-operative Society with reference to the financial condition of such Co-operative Society.
(2) A Co-operative Society shall set apart 2% of its budget to Co-operative Education Fund besides 1% of its gross surplus in a year towards the same fund.
(3) A Co-operative Society shall credit an amount not being more than 30% of gross surplus or 2% of its working capital whichever is less in a year to the Administrative and contingent fund towards pay and allowances of its employees and contingencies and 10percent towards election funds.
(4) Out of its net surplus, a Co-operative Society in any financial year;-
(a) Transfer an amount not being less than 25% of its net profit to the Statutory Reserve Fund;
(b) Credit 10% of its net profit as decided by the General Body towards bad debt reserve;
(c) Pay towards dividend on share capital to its members not less than 15%;
(d) Pay towards rebate to members not less than 15% of its net profit on the amount or volume of business done by them with the society;
(e) Credit towards deficit cover fund not less than 15% of net profit.
(f) Balance of net profit may be utilized for all or any of the following purposes;-
(i) Constitution of special funds as specified in the byelaws including election fund; (ii) Payment of bonus to its employees; iii) Donation not exceeding 10% for any charitable purposes as defined in section 2 of Charitable Endowments Act of 1890 in the area of operation of the Co-operative Society.
(5) Reserves created under sub-section (4) and invested in business shall be costed by crediting an annual interest equal to the rate paid by the Co-operative Society on fixed deposits.
SECTION 30: LIABILITY FOR DEFICIT
(1) Where a Co-operative Society is left with an operational deficit in any given year, the reasons for deficit are to be examined by the Statutory auditor and his report shall be placed by the Board of Directors in the first following annual general body meeting along with the names of the persons responsible, if any, and the manner in which the deficit is proposed to be met.
43 (2) The general body of the Co-operative Society shall decide to have the deficit covered by setting it off against the amounts recovered by legally proceeding against the persons responsible for the deficit, the amount available in the deficit cover fund and if there is still unsatisfied balance it shall be met from future profits. Provided in the case of a mutually cooperative society the deficit will be set off against the deficit cover fund credited out of net profit and the balance will be debited to members.
(3) Any deficit arising from shall be met out of the provisions made for non-performing assets/ non-realisable assets as decided by the general body.
SECTION 31: RESERVE AND OTHER FUNDS
(1) A Co-operative Society may create statutory and non-statutory reserves and other funds for the promotion of the objects of the Co-operative Society.
(2) Statutory Reserve fund at not less than 25% of the net profit and Bad debt reserve not less than 10% shall be invested outside the business in one or more of the modes mentioned in section (32).
(3) Statutory Reserve fund is intended to meet unforeseen losses and when it exceeds 20% of its working capital, the excess may be utilized in the business with the approval of the General body subject to recoupment as decided by it.
No Co-operative Society whose Reserve fund has been separately invested shall draw upon, pledge or otherwise employ such funds except with the previous permission of the General body in writing.
(4) On winding up of a Co-operative Society the Reserve fund together with other funds constituted by the Co-operative Society as per byelaws shall be applied by the liquidator to the discharge of such liabilities of the Co-operative Society as may remain undischarged out of the assets of the Co-operative Society in the following order namely:-
(a) The outside debts of the Co-operative Society; (b) Paid up share capital; and (c) Any claim relating to the dividend upon paid up share capital due on the date of
winding up of the Co-operative Society. (5) The balance, if any may be constituted as a trust for carrying out objects of public utility as may be suggested by the General body, in the case of Co-operative Societies other than a financing bank, or deposited with the financing bank working in the area of the Co-operative Society till a new Co-operative Society with similar objects is formed and when one such Co-operative Society is formed, the surplus fund may be transferred to the Reserve Fund of the new Co-operative Society and when there is no prospect of a new Co-operative Society being formed, the General body of the Co-operative Society under winding up may resolve to assign the fund to the Bad debt reserve or Reserve fund of the financing bank in that area.
(6) In the case of a financing bank under winding up, its General body may resolve to deposit the surplus in any other financing bank in the area or deposit with the A.P. State Co-operative
44 Bank or with the Reserve fund of a new financing bank organized, in consultation with the Reserve Bank of India.
SECTION 32: INVESTMENT OF FUNDS OUTSIDE BUSINESS
(1) Such of its funds as are not needed for use by a Co-operative Society may be invested or deposited outside its business by a resolution of majority of the board, with due care and diligence.
(a) In any regulated Co-operative Society of which it is a member; or
(b) In any nationalized bank or scheduled bank;
(c) In any of the securities specified in section (20) of the Indian Trust Act, 1882;
(d) In the local postal savings bank.
Provided that investment of funds, not immediately required for its business by Urban Co-operative Bank shall be invested according to the Banking Regulation Act, 1949.
Provided further that every Primary Agricultural Co-operative Society and every Co-operative Central Bank shall invest or deposit in each financial year towards the bad debt reserve of the said Co-operative Society or Bank, a sum equal to 1/4th percentum of the amount granted by it as short-term loans or medium-term loans to its members during the financial year from out of the amounts borrowed by it from other co-operative financial institutions for granting such loans, so however that no such investment or deposit shall be necessary when the total amount so invested or deposited towards bad debt reserve becomes equal to the amount of bad debts of the Co-operative Society as estimated by the auditor appointed under section (83).
Provided also that a Co-operative Society may by a resolution of the Board invest the whole or any portion of its funds other than the Reserve Fund and such other funds not available for investment on such terms as determined by the General Body:-regarding the conditions of recoupment.
(a) In the purchase of shares of corporate bodies formed for the benefit of such Co-operative Societies or class of societies; and
(b) In the purchase or lease of land or other immovable property or in the acquisition, construction or re-construction of any building that may be necessary to conduct its business provided that the funds so invested shall be recouped on such terms as may be determined in each case by the General Body;
(2) This provision shall not apply:-
(a) To immovable property purchased
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(i) By a Co-operative Society at a sale held in execution of a decree obtained by it for any sum due to it; or
(ii) By a financing bank at a sale held in execution of a decree obtained by it for the recovery of any sum due to such Co-operative Society at a sale brought about by the liquidator of such Co-operative Society;
(b) To the purchase or lease of lands or purchase, construction or re-construction of building by a Co-operative Society whose objects according to its byelaws includes such purchase, lease, construction or re-construction;
(3) No recoupment of the amount invested shall be necessary where the investment is made:-
(a) By a Co-operative Society from its building fund constituted out of its profits; and
(b) By a Co-operative Society other than a credit co-operative society in which the share capital raised from the members is intended to build up the special kind of business for which it has been registered. SECTION 33: RESTRICTION ON CONTRIBUTION
No Co-operative Society shall make a contribution either in money or in kind whether directly or indirectly to an Institution which has an object of furtherance of the interest of a political party or of an religious faith.
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CHAPTER – VI
MANAGEMENT
SECTION 34: MEMBERSHIP
Membership shall be available in a cooperative society:
(a) To any person as provided for in the cooperative principles without any discrimination on the grounds of caste, religion or sex.
(b) Any person, who needs the services of the Co-operative Society, to accepts the responsibilities of membership and fulfils such other conditions as may be specified in the byelaws of the Co-operative Society, and is in a position to use the services and competent to contract may be admitted as a member;
(c) Any Co-operative Society;
(d) The Central Government
(e) The State Government
(f) The National Co-operative Development Corporation established under the National Co-operative Development Corporation Act, 1962;
(g) Any other Corporation owned or controlled by the Government;
(h) Any Government Company as defined in Section 617 of the Companies Act, 1956;
(i) Any statutory body constituted for the purpose of development of a particular industry may become a member of a Co-operative Marketing or Processing Society of growers or workers engaged in such industry;shall be eligible for admission of a member of Co-operative Society
Provided that a student, who has not attained the age of majority, shall be eligible for the membership of a Co-operative Society formed for students in an educational institution to which he belongs.
Provided further that a Co-operative Society shall admit an individual or institutions or a Co-operative Society referred to above as a member, subject to the condition that the Society is in a position to extend its services to such individual or Co-operative Society.
Provided also that no individual shall be eligible for admission as a member of any financing bank or federal Co-operative Society.
Provided further that the applicant for membership is not already a member of any other Co-operative Society registered under this Act providing the same or similar services.
(2) Every applicant for membership and every member of a Co-operative Society shall keep each Co-operative Society of which the person is a member informed of membership in other Co-
47 operative Societies and in case of plural membership the Board may by resolution refuse admission or terminate from membership as the case may be.
(3) An individual who seeks admission into an Agricultural Credit Society shall hold agricultural land either as an owner or tenant in the area of operations of the Co-operative Society in such a manner as may be stated in the byelaws.
EXPLANATION:
(i) For the purpose of this section, “family” means— Husband, wife, unmarried sons, unmarried daughters and other dependents in the household.
(ii) “Weaver” means an individual not being a master weaver who attends to operations of weaving cloth or fabric or product on the loom whether such operation is carried on in private dwelling house or any other place and is dependent on weaving as profession and income thereof.
(4) Any firm, company or any other body corporate constituted under any law for the time being in force or a Society registered under the relevant Societies’ Registration Act or a local authority or a public trust registered under any law for the time being in force relating to the registration of such Trust which is immediately before the commencement of this Act, a member of a Co-operative Society deemed to be registered under this Act shall have, subject to the other provisions of this Act the right to continue to be such member on and after commencement of this Act.
(5) The requirements specified in clauses in regard to the qualifications of individuals signing the application for registration of a Co-operative Society shall also apply to individuals seeking admission as members of such Co-operative Society after registration.
(6) Every Co-operative Society shall organize, a co-operative educational course for all persons seeking membership before registration and shall provide funds for Co-operative education and training of its members, staff and directors and to organize into self-help groups for people living in its area to promote collective action for their economic development with the assistance of A.P. State Co-operative Union.
(7) Admission of members may be made only by an elected board of directors or by the general body where such a board does not exist. The Administrator appointed, shall not admit any new member without the prior approval of the Registrar. The name of every person admitted shall be entered in the Admission Register by the Chief Executive Officer of the Co-operative Society and he shall issue a photo identity card to every person admitted, duly attested by him in the form given in the byelaws and also ensure that every person admitted makes a nomination for the transfer of such member’s share or interest in the profits or assets of the Co-operative Society or value thereof in the event of his death to any person or persons and that such nomination or variation or revocation in writing if any by the member attested by two witnesses are entered in the books of the Co-operative Society within fifteen days from the date of receipt of the nomination papers as provided in the byelaws.
48 (8) Every individual person and a delegate representing an eligible institution under this section, admitted as member shall be issued a photo identity card at the time of admission by the Chief Executive of the Co-operative Society containing details of his name, age, father’s name, member No., and shares held and whether he belongs to SC/ST/BC/OC category. The identity card shall bear the seal of the society, the signature of the member attested by President / Chief Executive Officer.
DISQUALIFICATIONS FOR MEMBERSHIP OF COOPERATIVE SOCIETY
(9) The byelaws shall contain the following as disqualifications for being admitted as and for being a member if a person:-
(i) Is an applicant to be adjudicated an insolvent or is an undischarged insolvent; or
(ii) Has been sentenced for any offence involving moral turpitude, such sentence not having been reversed and a period of five years has not elapsed from the date of expiration of the sentence; or
(iii) Is a paid employee of a Co-operative Society or its financing bank or of any Co-operative Society for which it is the financing bank; or
(iv) Has been expelled from membership under this Act and a period of five years has not elapsed from the date of such expulsion; or
(v) Fails to give information relevant to him to the Co-operative Society as required by the byelaws.
The provisions of clause (ii) above shall not apply to a person seeking admission to or to a member of a Co-operative Society exclusively formed for the reclamation of such class of persons as from time to time notified by the Government in A.P. Gazette.
The provisions of the clause (iii) above shall not apply to a person seeking admission to, or to a member of –--
(a) A Co-operative Society which has as its principal objects the provision of employment to its members; or
(b) Such other society as may be notified by the Government in A.P. Gazette.
Where any person, who is not eligible for being admitted as member has been admitted as member or where the member who is disqualified to continue as such under this Section is continued as member, he shall be removed by the Board on its own motion or on a representation made to it by any member of the Co-operative Society or its Federal Co-operative Society or its financing bank;
Provided that no member shall be removed under the said sub-section unless he had an opportunity of making a representation against the proposed action. A copy of the resolution removing the member shall be communicated to such person in the manner provided in Section
49 92 of the Act for the service of summons and on such communication he shall be deemed to have ceased to be a member of the Society.
(10) In addition to such disqualifications stated above, the following shall be reckoned as an ineligibility for obtaining and retaining membership of a Co-operative Society:-
(a) Of a person to obtain or retain membership where the person’s business is in conflict or competition with such business of the Co-operative Society as specified in the byelaws;
(b) Of the person to retain membership where the person has not used for two consecutive years, the services of the Co-operative Society made available to the minimum level specified in the byelaws and such non-performance has not been condoned by the general body;
(c) Of the person to retain membership where the person has not attended three consecutive general meetings of the Co-operative Society and such absence has not received the consent of the general body;
(d) Of a person to retain membership where the person is in default regarding any payment to be made to the Co-operative Society, exceeding the period specified in the byelaws or has been penalized for wilful default of any act to be performed under this Act.
(e) Of a person who fails to avail the products and services made available by the Cooperative Society as specified in the Bye laws
(f) No Co-operative Society shall, without sufficient cause, refuse admission to any person duly qualified for membership under the byelaws. Where admission is so refused, the decision with the reasons shall be communicated by registered post to such person within fifteen days of the date of the decision, or within forty five days from the date of application for membership, whichever is earlier;
Provided that no refusal of admission shall be made without giving an opportunity to the applicant of being heard.
(g) Where a person has been refused membership or any service available with the Co-operative Society by the Board of Directors, an appeal shall lie to the District Co-operative Officer against the decision of the board within fifteen days of receipt of the order by the aggrieved party. If the District Co-operative Officer is satisfied that the refusal of membership or any service is unreasonable, improper or discriminatory, he may after giving the Board an opportunity of making its representation if any, and after consulting the financing bank/federal Co-operative Society as the case may be within thirty days of receipt of the appeal by order direct the Board to admit the person as member and make available the service. If the Board is aggrieved by the order of the District Co-operative Officer it may appeal to the Co-operative Tribunal against the order.
(11) No Co-operative Society shall admit members within thirty days prior to the date of meeting of its general body.
50 SECTION 35: NOMINAL OR ASSOCIATE MEMBER
Notwithstanding anything contained in this Act, a Co-operative Society may admit any individual or informal group such as Self Help Group for poor rural women, Rythumitra Group, non-governmental organization working for the welfare of farmer community in the area of operation as nominal or associate member, but such member shall be entitled to vote, subject to satisfying section (127)(a) and (b) of this Act. The associate member shall not be entitled to any share in any form whatsoever in the profits or assets of the Co-operative Society. Such member shall not have privileges, rights and liabilities of a member except those specified in the byelaws of the Co-operative Society.
Provided that the members without holding any agricultural land in Agricultural Credit Societies and tenants shall be treated as associated members.
SECTION 36: MODE OF SERVING OF NOTICE OF BOARD AND GENERAL MEETINGS
The Chief Executive or the senior most paid employee or where there is no paid staff, the Chairperson or the person authorized under the byelaw of the Co-operative Society, after the date, time and venue of the meeting has been decided by the Chairperson shall send notice along with the agenda of the Board meeting to the Board members and the notice along with the agenda of the general meeting to all the members of the General Body by certificate of posting or by notification in the local district newspaper besides displaying the notices and agenda of the Board and general body meetings on the Notice Boards of the Co-operative Society at Headquarters and all its branches giving clear number of days notice specified in the byelaws. Unless the contrary is proved, such service shall be deemed to have been effected properly in good time.
Where the chairperson of the cooperative society fails to fix a date of meeting of the Board the Chief Executive shall on receipt of requisition from 1/4th of the directors convene the meeting of the board.
SECTION 37: QUORUM AT GENERAL MEETING
(1) The quorum at a general body meeting shall be the percentage of the strength of the general body and shall be as below:
i) For a strength of below 100 members, the quorum shall be 50% of the total members with right to vote;
ii) For a strength of 100 to 500 members, the quorum shall be 40% of the total members with right to vote;
iii) For a strength of 500 to 1,000 members, the quorum shall be 35% of the total members with right to vote;
iv) For a strength of 1,000 to 5,000 members, the quorum shall be 33% of the total members with right to vote;
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v) For a strength of above 5,000 members, the quorum shall be 30% of the total members with right to vote;
vi) In the case of representative general body, 50% of the total representatives with right to vote shall form the quorum.
(2) No general meeting shall be held or proceeded with the transaction of business unless there is a quorum as specified above.
(3) The quorum for the Board meeting shall be the majority of the total members of the Board.
(4) It shall be the duty of the Chair-person of the Co-operative Society to call the meetings of the Board so that at least one meeting of the Board is held in every three months. If the Chair-person fails to discharge that duty with the result that no Board meeting is held within such period of three months or within one month following such period, he shall with effect from the date of expiration of one month aforesaid ceases to be the Chairperson and his seat shall be deemed to be vacant.
Provided that where the chair person of a cooperative society has failed to call the meeting of the board and ceases to be the chair person, the vice chair person shall report the matter to election authority/body for conducting election of the chair person belonging to the same class of the former chair person, who has not lost in the current election, if the term of office of the board is less than half of its original term. If the vice-chairperson also fails to call the board the Registrar shall address the Election authority appointed by the Government to conduct elections to the board.
(5) The Chairperson has to call a Board meeting within 15 days of receipt of the requisition in writing to this effect from at least 1/10th of the members of the Co-operative Society or on the requisition of the Federation or Registrar or the financing bank to which the said Co-operative Society is affiliated and any such requisition shall contain the proposed agenda and the reasons why the meeting is felt necessary.
The requisition referred to in this proviso shall be delivered in person or by Registered Post to the registered address of the Co-operative Society.
(6) If within half an hour from the time appointed for the meeting of the Board the quorum 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.
(7) If at any time during the meeting sufficient number of members are not present to form the quorum the Chairperson or the member presiding over the meeting on his own, or on his attention being drawn to this fact, shall adjourn the meeting.
52 (8) Where the meeting is adjourned, the adjourned meeting shall be held either on the same day or on such date, time and place as may be decided by the Chairperson or the member presiding over the meeting but within 7 days from the date of adjourned meeting.
(9) No business shall be transacted at any adjourned meeting other than the business on the agenda slated for the original meeting which is adjourned.
(10) Members present at the adjourned meeting shall be the quorum for such meeting.
SECTION 38: MEETINGS
The byelaws of a Co-operative Society shall specify the frequency of and manner in which board and annual general body meetings shall be held, such however, that not less than four board meetings and one general body meeting shall be required to be held in a year. No general meeting or Board meeting of a Co-operative Society shall be held except at the premises where its office is located or any other public place at the headquarters of such Co-operative Society or within the area of its operations.
GENERAL BODY MEETING:
(1) Subject to the provisions of this Act and the byelaws the ultimate authority of a Co-operative Society shall vest in its General Body.
(2) The annual General Body of every Co-operative Society shall be convened by its board within a period of six months of the close of the financial year to transact business specified in sub-section (4) of this section by giving not less than fourteen clear days notice in writing.
(3) If the General Body meeting is not convened in accordance with the provisions sub-section (1) the members of the Board shall cease to hold office and it shall be competent for the Registrar to address the election authority to conduct elections.
(4) Where a Co-operative Society so desires its byelaws may provide for representative General Body drawn from the members to be constituted in such a manner and with such functions as specified in the byelaws. Any reference in this Act to the General Body shall apply to the representative General Body where it exists. The representative General Body may exercise all or any of the powers of the General Body except the power to conduct elections of the members of the Board and to alter any of its own powers in the byelaws relating to its constitution or powers. The representative General Body of a Co-operative Society shall consist of;-
(i) The delegate of each of the Co-operative Societies, if any affiliated;
(ii) One representative for every group of members grouped on territorial or other basis; and
(iii) The members of the Board of the Co-operative Society;
Provided a Co-operative Society may, where the area of its operations extends to one or more revenue mandals or its membership exceeds 2,000, provide in its byelaws for the constitution of a representative General Body dividing its members into different groups on a territorial or other
53 basis and specifying the number or proportion of the members of the representative General Body who may be elected to represent each such group –
(a) By all the members of the Co-operative Society; or (b) By only that particular group of members of the Co-operative Society to which such representative belongs.
Provided further that the total members of representative general body shall not exceeded 200 in Co-operative Societies having a membership of 10,000 and less, and 400 in any other case. Where the representative general body consists of representatives elected by groups, the representatives shall convene respective group meetings and inform them about the decisions taken by the representative general body as a whole every time after meeting within a week. (4) Subject to the other provisions of this Act, and of the byelaws the following matters shall be dealt with by the general body.
(1) Action taken on resolutions of the previous General Body meeting;
(2) Operate without any restrictions imposed on area of operations and membership and choose any line of economic activity as desired by the members;
(3) Election of Directors of the Board, and their removal.
(4) Election of political personalities as directors if they are active members;
(5) Transfer of assets and liabilities in whole or in part to any other Co-operative Society;
(6) Address election authority to fill up vacancies;
(7) Consideration of the annual report presented by the Board;
(8) Appointment and removal of statutory auditors and internal auditors;
(9) Consideration of the auditor’s report and audited statement of accounts;
(10) Consideration of audit compliance report;
(11) Report on action taken on inquiry report under section (88), if any;
(12) Disposal of net profit;
(13) Review of deviations from approved budget and operational deficit, if any;
(14) Review of attendance of Board of Directors and members in Board and
General Body meetings respectively to ascertain disqualifications, if any;
(15) Review of remuneration paid to Directors;
54 (16) Review of use of services by the Directors;
(17) Review of investment of funds made by the Board;
(18) Review of the proceedings of the sub-committee meetings;
(19) Review of overdue loans of members and particularly of the Board of Directors and their relatives and action taken for recovery;
(20) Approval of the long-term perspective plan and the annual operational plan;
(21) Decide on the organization structure and staffing including recruitment policies, service conditions and remuneration, on proposals presented by the Board;
(22) Initiate measures for joint ventures, partnerships, subsidiaries and strategic alliances with co-operative societies and other corporates;
(23) Approval of the annual budget;
(24) Creation of specific reserves and other funds;
(25) review of actual utilization of reserve and other funds;
(26) Review on membership of the Co-operative Society in other Co-operative Societies;
(27) Partnership with other co-operative societies;
(28) Review of annual report and accounts of subsidiary organization if any;
(29) Review of annual report and accounts of any organization collaborated with;
(30) Review of list of employees recruited who are relatives of Directors or of the Chief Executive if any;
(31) Amendment of byelaws;
(32) Formulation of code of conduct for the directors and officers and employees;
(33) Consideration of the appeal on the grounds reported for termination of a member;
(34) Dissolution of the Co-operative Society;
(35) Consideration of liquidator’s report;
(36) Decision on de-layering when the Co-operative Society’s association with the structure is found not cost-effective;
(37) Decision on consolidation of business through merger with other Co-operative societies which are successful;
(38) Ensuring at all times that the interests of members are protected;
55
(39) Introduction of new technologies and Management Information System to ensure cost competitiveness;
(40) Decision on periods regarding preservation of records and volumes
(41) Decision on bad debts considered irrecoverable including their write off with the permission of the financing bank or the federal Co-operative Society and also Registrar.
(42) Power to review and issue binding directions to the Board on matters of policy;
(43) Utilization of Co-operative Education Fund;
(44) Action taken on directions from RBI, NABARD, Registrar and financing Bank;
(45) Any power or responsibility which has not been specifically entrusted to any of authorities shall be dealt with by the General Body;
(46) Such other functions specified in the byelaws;
SPECIAL GENERAL MEETING:
(1) The Board of a Co-operative Society may at any time call a special General meeting by giving not less than seven days clear notice in writing. The board shall convene a special general meeting within thirty days of receipt of a requisition in writing to this effect from at least 1/10th of members of the Co-operative Society or on the requisition of the Federation or Registrar as provided in the byelaws and any such requisition shall contain the proposed agenda and the reasons why the meeting is felt necessary.
(2) If a special General Meeting of a Co-operative Society is not called in accordance with the requisition referred to sub-section (1) the Registrar or any person authorized 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 Board in accordance with the provisions of the Act and the Registrar may order that the expenditure incurred in calling such meeting shall be paid out of the funds of the Co-operative Society or by such person or persons who in his opinion was or were responsible for the refusal or failure to convene the special General Meeting.
(3) If at any meeting of a Co-operative Society called by the Registrar himself otherwise than in pursuance of a requisition to the Co-operative Society, there is no quorum the meeting shall stand adjourned to such other date or time as the Registrar may determine. If at the adjourned meeting also, there is no quorum the members present shall constitute the quorum.
(4) If at the general meeting of the Co-operative Society called by Registrar in pursuance of the requisition under clause (2) there is no quorum the requisition shall lapse.
56 SECTION 39: MINUTES OF PROCEEDINGS OF GENERAL MEETINGS AND OF BOARD AND OTHER MEETINGS
(1) Every general meeting or the meeting of the Board shall be presided over by the Chairperson of the Co-operative Society, in his absence the Vice-Chairperson thereof and in the absence of both the Chairperson and Vice-Chairperson by a member chosen by the meeting to preside over the occasion. If the Chairperson has been continuously absent from the headquarters for more than fifteen days or is incapacitated for more than fifteen days his powers and functions during his absence or incapacity shall devolve on the Vice-Chairperson. If both the Chairman and Vice-Chairman are incapacitated or otherwise absent, the Chief Executive shall inform the Registrar forthwith and the Registrar shall address election authority or body constituted by the government to conduct elections.
(2) Every Co-operative Society shall record in the minutes book, the minutes of all proceedings of every general meeting and of every meeting of its board of directors.
(3) The minute book shall be kept at the registered office of the Co-operative Society and shall be open during business hours for the inspection of any member of that Co-operative Society. The proceedings shall be kept ready at the conclusion of the meeting concerned and entries thereof in the book kept for the purpose with their pages consecutively numbered.
(4) In no case the minutes of the proceedings of a meeting shall be attached to such minutes book by pasting or otherwise.
(5) The minutes of each meeting shall contain the fair and correct summary of the proceedings there at.
(6) All appointments of officers made at any of the meetings aforesaid shall be included in the minutes of the meeting.
(7) Each resolution of the minutes book shall be initialed by the chairperson or the person who presided and signed and the last page of the record of proceeding of each meeting in such book shall be dated and signed by the person who presided over the meeting and all the members of the Board who attended the meeting.
(8) The minutes so signed shall be an evidence of the correct proceedings of that meeting.
(9) The minutes of the Board / General Body meeting shall be sent to every member who has attended the meeting by post/publishing it on the notice board of the Co-operative Society or its branches within 30 days of conclusion of the meeting.
57 SECTION 40: VOTE OF MEMBERS
(1) Every Co-operative Society shall provide in its byelaws that voting shall be by secret ballot.
(2) An active of member a Co-operative Society only shall have one vote in the affairs of the Co-operative Society after a period of first twelve months on his admission as a member in the Co-operative Society
(3) A member shall exercise his vote in person and not by proxy. He may exercise his vote at a meeting through electronic form
(4) In respect a Federal Co-operative Society a member shall have one additional vote for every 5.00 lakh units transacted through the Federation in the previous financial year the explanation for a unit being specified in the byelaws.
(5) A delegate representing more than one member institution shall exercise the number of votes equal to the number of institutions he represents.
Provided that an active member who is an employee of such Co-operative Society shall not be entitled to vote:
(a) At the election of a member of the board of such Co-operative Society; (b) In any general meeting convened for framing the byelaws of such Co-operative Society or any amendments thereto;
(c) To the extent that political personalities are themselves active members they would be entitled to be on the board and to vote in the affairs of the society, if elected;
(d) In the case of an equality of votes the Chairperson shall have a casting vote;
(e) Where any of the authorities or a Co-operative Society referred to in clauses (c) to (g) of sub-section (1) of section (34) is a member of a Co-operative Society, each person nominated by such authority or such or such Co-operative Society, to the board in accordance with the provisions contained in this Act shall have one vote;
(f) No member of a Co-operative Society belonging to such class of Co-operative Societies and who failed to transact such minimum business as specified in the byelaws taking into consideration the nature of business transacted or the services or facilities made available by the Co-operative Society, shall have the right to stand as a candidate or to vote in any election to the Co-operative Society;
(g) A member of a Co-operative Society subject to the other provisions in this section shall be eligible to exercise the right to vote only if he:
(h) Contribute a minimum share capital of Rs.300/-;
58 2.(i) Is not in default in the payment of any amount due in cash or kind to the Co-operative Society for a period of more than (3) months; in the case of individual members and in the case of member Co-operative Society which has failed to pay upto 75% of the total dues as on the due date.
EXPLANATION: A member shall cease to be treated as defaulter if he pays the sum for non-payment of which such member became defaulter—
(a) In the case of an election on or before the date fixed under the election regulations for deciding objections against the provisional voters list; (b) In any other case one day before the commencement of the meeting;
3.(i) is not a delegate of a Co-operative Society which is under proceedings for winding up;
Provided that ineligibility to vote does not amount to ineligibility to attend and participate in the meeting.
Provided further a list of eligible members with right to vote and those without right to vote shall be prepared and displayed on the Notice Board of a Co-operative Society and its branches prior to holding of any general meeting or holding of elections in the manner laid down in the byelaws by the Chief Executive officer of the Co-operative Society.
Provided also in any meeting of the general body or the board of a Co-operative Society, another Co-operative Society is to be represented such cooperative society shall be represented in such meeting only through the Chairperson or the Chief Executive or a member of the board or general member of said Co-operative Society if so authorized by the board. Where there is no board the Co-operative Society shall be represented by a member of the General body nominated by the administrator till a new elected board is constituted.
SECTION 41: MEMBERS NOT TO EXERCISE RIGHTS TILL DUE PAYMENTS MADE
No member of a Co-operative Society shall exercise the rights of a member unless he has made the full payment to the Co-operative Society in respect of all its dues and availed such minimum level of services and has acquired such interest as may be specified in the byelaws.
SECTION 42: RIGHTS OF MEMBERS
Every member of a Co-operative Society shall, inter-alia, have following rights in his Co-operative Society subject to provisions of the Act and its Bye-laws;-
(1) To vote at the General Body Meeting; (2) To contest elections to the Board of Directors, subject to eligibility as per the Act and the Bye-laws;
59 (3) To know the affairs of the Co-operative Society and to seek information under the provisions of Right to Information Act, 2005; (4) To inspect books of accounts and other books relating to his transactions with the Co-operative Society and its auditor’s report and other papers during business hours at the seat of the Co-operative Society; (5) To transfer his shares and interests to any other person who is admitted as member of the Co-operative Society; (6) To refer the disputes between him and other members or between him and the Co-operative Society to the Registrar for settlement of such dispute; (7) To voluntarily withdraw from membership; (8) To patronage and obtain services offered by the Co-operative Society when available at similar conditions as in open market; (9) To receive patronage dividend / interest on capital;
SECTION 43: REDEMPTION OF SHARES (1) Shares held in a Co-operative Society by any of the authorities referred to in section (34) shall be redeemable in accordance with the byelaws of such Co-operative Society and in cases where the byelaws do not contain any provision in this regard in such manner as may be agreed upon between the Co-operative Society and such authority.
(2) The redemption of the shares in sub-section (1) shall be on the face value of the shares.
SECTION 44: TRANSFER OF SHARE OR INTEREST
(1) The transfer of a share or interest in the capital of a Co-operative Society shall be subject to such conditions and restrictions as to the maximum holding as are specified in section (28).
(2) (i) A member shall not transfer any share held by him or his interest unless the member has held such share or interest for not less than one financial year; and
(ii) The transfer is made to a member of the Co-operative Society;
(iii) No member of a financing bank or a federal Co-operative Society shall transfer its share or interest in such bank or Co-operative Society to an individual member, or his heir or legal representative.
(3) On the death of a member, a Co-operative Society may transfer the share or interest of the deceased member to the person nominated by the deceased member in accordance with the byelaws made in this behalf or, if there is no person nominated then to the legal heir of the deceased member and in case of more than one legal heirs, to the one in whose favour the remaining legal heirs have agreed for such transfer.
60 Provided that if the value of the share / interest doesn’t exceed Rs.1 lakh the transfer of interest may be made based on the certificate of family membership issued by revenue authorities without insisting for a legal heir certificate.
(4) A Co-operative Society shall, unless within 6 months of the death of the member prevented by an order of a competent court, pay to such nominee, heir or legal representative, all other monies due to the deceased member from the society.
(5) All transfers and payments made by a 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.
SECTION 45: LIABILITIES OF PAST MEMBER AND ESTATE OF DECEASED MEMBER
(1) Subject to the provision of sub-section (2) the liability of a past member or of the estate of a deceased member of a Co-operative 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 deceased member, on the date of his death,shall continue for a period of two years from such date. (2) Notwithstanding any thing contained in sub-section (1), where a Co-operative Society is ordered to be wound up, the liability of a past member who ceased to be a member or of the estate of a deceased member who died within two years immediately preceding the date of the order of winding up shall continue until the entire liquidation proceedings are completed, but such liability shall extend only to the debts of the society as they existed on the date of cessation of membership or death, as the case may be.
SECTION 46: TERMINATION OF MEMBERSHIP
(1) The Board of Directors may, by a resolution passed by a majority of the total number of members of the board having the right to vote or not less than two third of the members of the Board present and voting whichever is less, terminate the membership of a non-user member in the Co-operative Society in terms of section (34)(10)(b) or of a member for acts of omissions which are detrimental to the proper working of the Co-operative Society, provided that the membership shall not be so terminated without giving him a reasonable opportunity of making representation in this regard.
(2) Where membership of a person has been terminated by the board of directors an appeal shall lie to the general body within fifteen days of receipt of the termination order and a decision on the appeal shall be taken by the earliest next general body.
(3) No person whose membership has been terminated shall be eligible for re-admission as a member of the Co-operative Society for a period as may be specified in the resolution but not exceeding five years from the date of such termination.
61 (4) Where the person is aggrieved by the decision or order of the general body, he may approach the Co-operative Tribunal.
(5) Termination from membership may involve forfeiture of the shares held by the member.
EXPLANATION:- Acts of omission which are detrimental to proper working of a Co-operative Society are:
(a) Intentionally doing any act likely to injure the credit of the Co-operative Society or bringing it into disrepute;
(b) Willfully deceiving the Co-operative Society;
(c) Acting adversely to the objects of the Co-operative Society;
SECTION 47: WITHDRAWAL OF MEMBERSHIP
(1) A member may at any time withdraw his membership in a Co-operative Society in accordance with the procedure specified in the byelaws and subject to the other provisions of the Act.
(2) Withdrawal from membership will require such member to fulfill such obligations as were undertaken / assumed as a member under the provisions of the Act and byelaws.
SECTION 48: CESSATION OF MEMBERSHIP
(1) A person shall cease to be a member on death or incurring such disqualification as may be specified in the byelaws.
(2) Every Co-operative Society shall inform, in the event of the death of member, the nominee of the member, and in every other instance, the member, about the cessation of membership for the settlement of accounts and consequences of non-compliance thereon.
SECTION 49: RESTRICTION ON SERVICES TO NON-MEMBERS
(1) A Co-operative Society’s services shall ordinarily be available only to members unless otherwise provided in the byelaws.
(2) No Co-operative Society shall sanction a loan to any person other than a member on the security of its own shares or on security of any person who is not a member.
Provided that with the approval of the general body, a Co-operative Society may sanction loans to or accept deposits from another Co-operative Society of its classification.
(3) Notwithstanding any thing contained in the foregoing sub-section, a Co-operative Society may sanction loan to a depositor on the security of his deposit admitting him as member.
62 SECTION 50: BOARD OF DIRECTORS
(1i) Not withstanding anything contained in any law made by the State the election of the board shall be conducted before the expiry of the term of the board so as to ensure that the newly elected members of the board assume office immediately on the expiry of the office of the members of the outgoing board.
(2) The superintendence direction and control of the preparation of electoral rolls for and conduct of all elections to a Cooperative society shall vest in such an authority or body appointed by the Government which shall be a separate wing in the office of the Commissioner for Cooperation and Registrar of Cooperative Societies headed by an officer not below the rank of an Additional Registrar of Cooperative Societies for whom supporting staff shall be drawn from the departments of Government.
Provided that the procedure and guidelines for the conduct of such elections shall be spelt out in the rules as a schedule.
(3) There shall be Board of Directors for every Co-operative Society constituted of active members in the cooperative society and entrusted with the direction and control of the management of the affairs of the Co-operative Society in accordance with the provisions of the Act and the byelaws.
(4) The Board of every cooperative society shall consists of such number of directors the maximum number of which shall not exceed Twenty One.
Provided there shall be reservation of one seat for the Scheduled Caste or Scheduled Tribes and two seats for women on board of every cooperative society other than those exclusively formed for Scheduled Caste and Scheduled Tribes consisting of individuals as members and having members from such class or category of persons, besides following reservation policy of the state government for other categories.
Provided further that the board may fill a casual vacancy on the board by nomination out of the same class of members in respect of which the casual vacancy has arisen if the term of office of the board is less than half its original term and if such member has not lost in the current election.
(5) The term of office of elected members of the board and its office bearers shall be five years from the date of election and term of office bearers shall be co-terminus with the term of the Board.
Provided that the term of the first promoters Board shall not exceed one year from the date of the registration of the Co-operative Society or the period required by the Election Authority to conduct elections which ever is earlier.
Provided further that the board shall co-opt experts having experience in the field of banking, management, finance or specialization in any other field related to the objects and activities undertaken by the Cooperative societies as members of the board of such society.
63 Provided also that the number of such co-opted members shall not exceed two in addition to twenty one directors specified in the class IV of this section.
Provided further that such co-opted members shall not have the right to vote in any election of the cooperative society in their capacity as such members or to be eligible to be elected as office bearers of the board.
Provided also that the functional directors of a cooperative society shall also be members of the board and such members shall be excluded for the purpose of counting of total number of directors which shall not exceed twenty one.
Provided also that to the extent that political personalities are active members they would be eligible to be chosen as members of the board by the general body of the society.
(6) The Chief Executive shall be an Ex-officio member of the board. The byelaws of every cooperative society shall lay down fit and proper criteria of eligibility for being chosen and to continue as chief executive and board of directors.
Provided also that only elected or nominated members of the board shall be elected as chairman or vice-chairman or president or vice-president of the board.
(7) A member of the board or office bearer of any cooperative society shall cease to be such member or office bearer if ceases to be a member of general body of that cooperative society.
(8) The board of any cooperative society shall be collectively responsible to the general body of the cooperative society.
SICK COOPERATIVE SOCIETY
(9) If the Registrar at any time is of the opinion that a cooperative society has become sick, he may by order declare such cooperative society as a sick cooperative society.
(10) Where a cooperative society is declared sick, the state Government on the recommendation of the Registrar/Cooperative advisory council may request election authority to constitute an interim board for a maximum period of 5 years consisting of experts in the field of cooperative management, finance, Accountancy, and in other areas relating to the cooperative society for the purpose of preparing and implementing a scheme for rehabilitation or revival of such cooperative society.
(11) The board of directors of such cooperative society after constitution of the interim board shall not function and discharge its functions as such,
Provided that the board of directors shall cease to exist on the completion of its term. (12) The Registrar if at any time during which the interim board has been constituted is of the opinion that the cooperative society has become viable, he may get election authority to dissolve such interim board and thereafter the board of directors existing before constitution of interim board shall function as per provisions of this Act.
64 EXPLANATION: For the purpose of the section “sick cooperative society” means a cooperative society registered under this Act which has at the end of any financial year accumulated losses equal to or exceeding total of its paid up capital, free reserves and surpluses and has also suffered cash loses in such financial year and financial year immediately preceding such financial year. (13) RESIGNATION OF A MEMBER OF THE BOARD:
a) A member of the board of a cooperative society may resign his membership of the board by sending his resignation to the board and such resignation shall be placed before the next meeting of the board by the chair-person.
b) The board shall decide whether or not to accept the resignation of the member of the board and the decision of the board shall be communicated by the chair-person to the concerned member within seven days of the decision of the board.
c) If within thirty days from the date of receipt of the resignation letter, no decision is communicated to the member, it shall be deemed that the board has accepted his resignation and he shall cease to be remember of the board from the date of the board meeting and his seat shall be deemed to be vacant.
Provided in the case of chair person intending to resign his post, he has to send his resignation letter to the vice-chairperson by registered post or hand it over in person under due acknowledgement and the vice-chairman shall call the next board meeting to decide the matter.
SECTION 51: DISQUALIFICATION FOR MEMBERSHIP OF THE BOARD
(1) No person shall be eligible for being chosen as and for being a member of the Board if he
(a) Is such a near relative of such paid employee of the Co-operative Society or its financing bank;
(b) Is in default in the payment of any amount due in cash or kind to the Co-operative Society or any other Co-operative Society for such period as may be stated in the byelaws or is a delegate of a Co-operative Society which is defunct or is in default as per byelaws;
(c) Is a person against whom any amount due under a decree, decision, award or order is pending recovery under this Act;
(d) Acquires any interest in any subsisting contract made with or work being done for the Co-operative Society except as otherwise stated in the byelaws;
(e) Is of unsound mind and stands so declared by competent Court, a deaf, mute or a leper;
(f) Is appearing as legal practitioner on behalf of or against the Co-operative Society;
65 (g) Is carrying on business of such kind which is a business in conflict with the objects or interest of the Co-operative Society;
(h) Has been sentenced to imprisonment for an offence under the Protection of Civil Rights Act, 1955;
(i) Is an employee of the State Government or Central Government or of any Institution receiving assistance from the State or Central Government or an employee of an undertaking owned and controlled by them;
Provided this clause shall not apply for being a member of the Board of a Co-operative Society formed by and for the benefit of the above class of employees.
(j) Is convicted by a criminal Court for an offence involving moral delinquency;
Provided that this disqualification shall subsist for five years from the date of conviction or where he is undergoing sentence, for a period of five years after the date of expiration thereof. k). any delegate of a Co-operative Society sitting on the Board of any other Co-operative Society shall cease to be a delegate, if---
(i) His delegation is withdrawn;
(ii) The Board which elected him as the delegate has been superseded;
(iii) The Co-operative Society of which he is the delegate is defunct or commits default in the payment of any amount in cash and kind to such other Co-operative Society for the period said in the byelaws’ or
(iv) The affairs of the Co-operative Society of which he is the delegate are wound up;
(2) A person having more than two children shall be ineligible for election or for continuing as member of the Board.
Provided that the birth within one year from the date of commencement of this Act of an additional child shall not be a disqualification.
Provided further that a person who had more than two children shall not be disqualified so long as the number of children he had on the date of commencement of this Act does not increase.
(3) A member of State Legislature/Council or a member of either House of Parliament or Chairperson of either local bodies or Panchyat Raj Institutions shall be eligible to be elected as a Board of Director of a Co-operative Society, but he shall cease to be the member of either State Legislature/Council or either Houses of Parliament or Chairman of local bodies or Panchayat Raj Institutions so, unless within fifteen days from the date of his becoming a member of the Board of a cooperative society resigns his position as director in the Cooperative Society If a person is elected as a member of the Board of a Co-operative Society and is subsequently elected to any
66 one of the offices stated above, he shall cease to be a member of the Board unless within fifteen days he resigns the offices to which he is subsequently elected.
(4) No person shall be at the same time be a Board of Director of more than two Co-operative Societies classified as Apex Societies or Central Societies or of the Board of more than an Apex Society or one Central Society. If on the date of his election to a Board, he is a member of Boards of two Co-operative Societies as specified in clause (a) and if his election is to the Board of any Apex Society or Central Society on the date aforesaid, shall be void.
Nothing in this Section shall apply to an Officer of the Government who is nominated by Government or Registrar as a member of the Board.
SECTION 52: CESSATION OF MEMBERSHIP OF THE BOARD
(1) A member of the Board shall cease to hold office forthwith as such for residue or his term of office and he shall also be ineligible for being chosen as or for being a member of the Board through election or co-option for the subsequent two terms if –
(a) On an inquiry under this Act, he is found guilty of misuse of property of the Co-operative Society for its personal gain;
(b) He is found responsible for making any appointment to any post in the Co-operative Society in contravention of the relevant service Rules and regulations;
(2) A member of the Board found responsible for wilfully or knowingly sanctioning benami loans or against whom an order of surcharge is issued shall cease to hold office and shall also be ineligible to be elected as a member of Board for a period of two terms from the date of cessation. The member’s seat shall be deemed to be vacant and action taken by the authority to conduct Elections to fill up the seat when intimated by the Registrar.
(3) Where a Co-operative Society incurs loss in any financial year as a result of misuse or misapplication of share capital, the Chairperson and the Chief Executive of such Co-operative Society shall cease to hold office as such and their places shall be deemed as vacant. Senior most member of the rest of the Board shall report the matter to the authority to conduct Elections to fill up the vacancies.
(4) Where the Board fails to prepare and submit or cause to be prepared and submitted within the period specified in this Act of the annual accounts of the Co-operative Society to the Registrar / Chief Auditor or authorized person to audit, the members of the Board shall cease to hold such office on the expiration of period aforesaid and their seats will deemed to be vacant and the Registrar shall take action to get the accounts prepared by the federal Co-operative Society and addressed the authority appointed to conduct Elections.
(5) Where the Board of a Co-operative Society fails to place the Inquiry Report under Section (88) or Inspection Report under Section (89) or Section (90) or Audit report under Section (83) or Special Audit Report under Section (87) along with the findings of the Registrar
67 and action taken report on serious irregularities if any which need immediate corrective action before the next General Body held after the receipt of the report by the Co-operative Society, the members of the Board shall cease to hold such office and their seats will be deemed vacant and the Registrar shall take follow up action on the serious irregularities, if any and also address the authority appointed to conduct the Elections to constitute the Board.
(6) Where the Board fails to initiate action for prosecution of any member or servant of a Co-operative Society who may have incurred criminal liability under the provisions of this Act or any other law for the time being in force the Board shall cease to hold such office and their seats will be deemed vacant and the Registrar shall take action for the prosecution of the guilty and address the authority appointed to conduct Elections to constitute the Board.
EXPLANATION:- Benami loan means, a loan sanctioned on an application with forged signature and forged documents and also includes a loan sanctioned but not disbursed to the person to whom it is sanctioned and in respect of which no demand is issued for repayment.
SECTION 53: CESSATION OF MEMBERSHIP OF THE BOARD AND REINSTATEMENT
(1) Where a member of the Board absents himself from three consecutive meetings he shall cease to be a member of the Board. He may, however be reinstated by the Board for valid reasons as per the procedure in the byelaws but such reinstatement shall not be made more than once during the term of the Board.
(2) Where a member of the Board ceases to be such member by reason of his incurring disqualification under clause (b) of sub-section (1) of section (51) or where a delegate of a Co-operative Society ceases to be such delegate by reason of his incurring disqualification under item (ii) of the proviso to sub-section (i) of section (51)(j) he shall not be entitled for being chosen again as a member of the Board on the removal of the said disqualification.
(3) In addition to the instances specified above, a person shall be ineligible for being chosen as a director for a term, if he/she
(a) Has at any time lost the right to vote as a member as specified in the byelaws;
(b) Loses the right to continue as member as specified in section 34 (10) and the byelaws;
(c) Incurs any other disqualification specified in the byelaws. (4) A person shall also cease to be a director if he/she incurs any of the disqualifications specified in sub-section (3) and/or
(a) Absents himself/ herself from three consecutive board meetings;
(b) Absents himself/ herself from any general body meeting and such absence does not receive consent from the general body;
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(c) Has not undergone a set of prescribed training programmes within six months of being elected;
(d) Is penalized under this Act;
(e) Fails to make a declaration assuming joint and several responsibility for the decisions of the Board during his term in Form No.A 5.
(5) In addition to the criteria specified above in the byelaws, all the directors of the board shall incur disqualification for a period of five years for being chosen as directors and shall be ineligible to continue as directors of any Co-operative Society, if during their term as directors of Co-operative Society--
(a) They did not address election authority for conducting of elections within the time specified in byelaws and before the expiry of their term; or
(b) They did not conduct their annual general body meeting within six months of closure of the Co-operative Society’s accounting year or requisitioned meeting of the general body within the time specified in the Act; or
(c) They did not place the audited accounts along with the reports of the auditors before the general body within six months of annual closure of accounts; or
(d) They failed to make contribution to the education fund referred to in clause 2 of section 29 or cooperative rehabilitation and reconstruction fund established under section 147(1) as per the provisions of this Act. Or
(e) They failed to file statutory returns within the specified time under section 82 of this Act. It shall be the duty of the Board of every Co-operative Society including a Mutually Aided Co-operative Society to ensure that no person incurring any disqualification or ceases to be a member or a Director continues to be a member or a Director and exercises his rights as such. As soon as the fact that a member or a Director is subject to any disqualification or cessation whether it was incurred prior to or subsequent to his being such member or a Director, which shall be informed to the Chairperson in writing by the Chief Executive within three days of the incurring of disqualification, or cessation, the Chairperson shall call the Board meeting to consider the matter within twenty days. A copy of the agenda of such meeting shall be served on the member/director who has incurred disqualification or cessation, either personally or by Regd. Post with Ack. Due. Where the resolution for removal of the person concerned from membership or membership of the Board, as the case may be ,has been passed for the reasons of such disqualifications, a copy of such resolution shall also be sent to the person concerned by Regd. Post with Ack. Due and there upon he shall be deemed to have ceased to be a member or member of the Board as the case may be. The Office held by such member shall be deemed vacant and he shall not be allowed to attend any meeting of the Board. If that person feels aggrieved he may appeal to the Co-operative Tribunal and the decision of the Co-operative Tribunal is final.
(6) With the exception of the first three years after the registration of a Co-operative Society, in order to be eligible for being chosen as a director of the board, a member
69 (a) Shall have been a voting member of the Co-operative Society for at least two years immediately preceding the year of election; (b) Shall have attended the two general body meetings of the Co-operative Society immediately preceding the elections.
SECTION 54: NOMINEE OF STATE GOVERNMENT ON THE BOARD
(1) Where the State Government has subscribed to the share capital of a Cooperative Society the State Government or any person authorised by it shall have the right to nominate on the Board such number of persons as it’s members on the following basis namely—
(a) Where the total amount of share capital held by the State Government is less than twenty six percent of the total share capital of the Cooperative Society one member of the Board; (b) Where the total amount of share capital held by the State Government is twenty six percent or more but less than fifty one percent of the total share capital of the Cooperative Society two members of the Board; (c) Where the total amount of share capital held by the State Government is fifty one percent or more of the share capital of the Cooperative Society three members of the Board. Provided that number of such nominated persons shall not exceed 1/3rd of the total number of members of the Board.
Provided further that where the State Government have guaranteed the repayment of principal and payment of interest on debentures issued by the Co-operative Society or have guaranteed the repayment of principal and payment of interest on loans and advances to the Cooperative Society or has given any assistance by way of grant or otherwise to the Cooperative Society, the State Government in this behalf or any person authorized by it shall have the right to nominate a person on the Board of such a Cooperative Society. A person nominated under this section shall hold office during the pleasure of the Government by which he has been so nominated. Provided that the Government nominee shall not have voting right in election or in the matter if no confidence motion.
(2) Where the Government have assisted a Co-operative Society as per sub-section (1) the agenda for the Board meeting of the Co-operative Society shall among others contain the following subjects with detailed notes for discussion in the said meeting—
(a) Cash flow incoming and outgoing; (b) New posts created; (c) Changes in the structure and byelaws of the Co-operative Society and effects thereof; (d) Sanction of new scales of pay;
70 (e) State of accounts and their finalization for audit; (f) Stage of completion of audit; (g) Project decisions; (h) Implementation of project decisions taken earlier; (i) Implementation of directions of Registrar / Reserve Bank of India /National Bank for Agriculture and Rural Development (NABARD); (j) Payment of Government revenues under fundamental Rule 127 / Foreign Service costs, audit fees and dividend on Government’s share capital; (k) Relationship between its employees and Co-operative Society; (l) Any other problem discussed in the Board requiring the attention of the Registrar/Government;
(m) Note of dissent if any, given by the nominee;
(n) Confidential note on the above aspects of working of the Co-operative Society;
(3) The nominees of Government who attended the meeting shall within fifteen days from the date of the meeting bring to the notice of the government through the Registrar a report on the working of the Co-operative Society on the above subjects discussed and decisions thereon.
SECTION 55: DISCLOSURE OF INTERESTS BY DIRECTOR
(1) Every Director of a Co-operative Society who is in anyway, whether directly or indirectly concerned or interested in a contract or arrangement or proposed contract or arrangement, entered into or to be entered into, by or on behalf of the Co-operative Society shall disclose the nature of his concern or interest and also the interests of his relatives in the affairs of the Co-operative Society at a meeting of the Board of Directors.
EXPLANATION:
For the purpose of this clause the term relative with reference to an individual means the spouse, brother, sister, and all lineal ascendants and descendants of such individual related to him either by marriage or adoption.
(2) If the concern or interest so disclosed is in conflict with the interest or concern of the Co-operative Society, he shall be deemed to have been disqualified forthwith and his seat shall be deemed to have fallen vacant.
SECTION 56: INTERESTED DIRECTOR NOT TO BE PRESENT IN BOARD’S PROCEEDINGS
71 No director of a Co-operative Society shall, as a Director, be present in the discussion of, or vote in any contract or arrangement entered into, or to be entered into, by or on behalf of the Co-operative Society if he/she or his/her relatives are in anyway, whether directly or indirectly, concerned or interested in the contract or arrangement.
SECTION 57: POWERS AND FUNCTIONS OF THE BOARD OF DIRECTORS
(1) The Board shall, in accordance with the byelaws, be the authority to
(a) Formulate policy, plans and periodic goals for the conduct of business and take major
decisions thereof;
(b) Admit and terminate membership;
(c) To provide for women participation through family membership with one vote only;
(d) Constitute an Executive Committee and sub-committees like Audit and Inspection Committee, Ethics Committee, Planning and Development Committee of the Board which shall perform such functions as are assigned in the byelaws;
(e) Elect the chair-person and other office bearers;
(f) Remove from office the chairperson and other office bearers;
(g) Appoint and remove the Chief Executive;
(h) Fix staffing pattern and staff strength and appoint staff as per fit and proper criteria;
(i) Cause the preparation of business management manuals;
(j) Frame policies concerning
(i) Business development for enhancing member participation and capital of the Co-operative Society
(ii) Grooming of talented employees for leadership positions;
(iii) Engaging of suitable expertise on contractual basis to meet the requirements of the Co-operative Society;
(iv) Utilising training facilities provided by A.P. State Co-operative Union, National Council for Coop. Training (NCCT), regional Institutes of Coop. Management, Institutes of Coop. Management and Agricultural Coop. Staff Training Institute by laying down HRD policy in the byelaws such that 50% of the Board members will undergo training for a minimum period of one week within six months in the first year of their assumption of office and remaining 50% of the members of the Board during the second year of their term;
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(v) Allocate 2% of annual budget of the Co-operative Society for training and member education and skill upgradation of Board of Directors, members and employees to be shared between the Co-operative Society and A.P. State Co-operative Union on 50:50 basis.
(vi) Arrange for member awareness and education programme on a continuing basis with the help of A.P. State Co-operative Union;
(vii) Devise financial instruments such as bonds, debentures, special shares etc., keeping in view the regulatory regime for augmenting capital;
(viii) Arrange for redemption of Government share capital at the earliest;
(ix) Co-opt subject matter specialists to the Board in business related areas of the Co-operative Society;
(x) Prescribe qualifications and fit and proper criteria for the post of Chief Executive in the byelaws as per the guidelines of RBI/ NABARD;
(xi) Ensure satisfactory services to eligible members;
(xii) Prescribe qualifications, recruitment, procedures, career advancement plans, service conditions and mandatory training requirements, compensation and terminal benefits and disciplinary procedures and relevant competent authorities thereof’
Lay down procedures for;--
(xiii) Mode of custody of funds;
(xiv) Manner of keeping accounts;
(xv) Mobilization, utilization and investment of various funds;
(xvi) On monitoring and management information systems
including statutory returns to be filed;
(xvii) Such other subjects and matters necessary for the
effective performance of the Co-operative Society;
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(k) To arrange for the preparation and submission of annual statements of finance and accounts of the Co-operative Society to Registrar / Chief Auditor or person authorized to audit within three months of the close of the financial year to facilitate timely audit and to place the annual report, annual financial statements, plan and budget for the approval of the general body;
(l) To consider audit and compliance reports and place these before the general body;
(m) to place report for review of membership in other Co-operative Societies by the general body;
(n) to appoint Co-operative Information Officer and designate the competent officer in the Co-operative Society as Appellate Authority to provide information to the members about the affairs and management of the Co-operative Society;
(o) To undertake such other functions as delegated by the general body;
(p) three months of the close of the financial year to facilitate timely audit.
(2) The Chairperson shall be elected by the Board of Directors from among the elected members. The Chair-person shall--
(a) Preside over the meetings of the board and the general body;
(b) Have a second vote in the event of equality of votes on any
matter being decided upon by the board except in matter of
elections;
(c) Exercise such other powers as delegated by the board specified
in the policies framed or resolutions adopted by the board;
(a) have power to delegate his functions to the Vice-Chairperson during his absence.
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Section 58: Staff and Chief Executive
(1) All staff of the Co-operative Society including the Chief Executive shall be recruited, appointed, removed and guided in accordance with such personnel policies and service conditions as framed by the board and approved by the general body. They shall be fully accountable to the Co-operative Society.
(2) Every Director and employee of a Co-operative Society while exercising his powers and discharging his duties shall ;-
(a) act honestly and in good faith and in the best interest of the Co-operative Society; and (b) Exercise such due care and diligence and skill as a reasonably prudent person would exercise in
similar circumstances; (c) a Director or employee who is guilty of misappropriation, breach of trust or any other omission or
commission resulting in loss to the Co-operative Society as a result thereof shall be personally liable to make good that loss without prejudice to such criminal action to which he is liable under the Law. (3) The Chief Executive shall perform such functions as specified in the byelaws and policies and shall
(a) Be accountable to the board;
(b) Have general control over the day-to-day operations of the Co-operative Society;
(c) Be the person to sue or be sued on behalf of the Co-operative Society;
(d) On behalf of the Co-operative Society, have powers to endorse, sign, negotiate cheques and other negotiable instruments and operate the bank accounts of the Co-operative Society and /or with such other person as the board may desire;
(e) Be responsible as custodian of all records and documents of the Co-operative Society for causing correct, up to-date maintenance and authenticated accounts related to the Co-operative Society and for their production when called for in connection with audit, special audit, inspection, inquiry or election;
(f) Be responsible for staff recruitment, discipline, performance and development;
(g) On behalf of the Co-operative Society, be the person to enter into agreements or contracts;
(h) Carry on the authorized and normal business of the Co-operative Society;
(i) Present the draft annual report and financial statements for the approval of the board, within fortyfive days of closure of the financial year;
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(j) Convene in consultation with the chairperson, the board and general body meetings in accordance with the byelaws and record the proceedings thereof;
(k) Assist the board in the formulation of policies and plans;
(l) Furnish to the board information necessary for monitoring the performance of the Co-operative Society;
(m) Arrange to provide services or facilities including sanction of loans and advances to the members subject to availability of funds, after proper appraisal, and offer specific recommendation to the Board;
(n) Initiate all steps that are necessary including legal, for ensuring prompt recovery of all the loans sanctioned both under his discretion and of the Board;
(o) Perform any other function as specified in the byelaws or as decided by a resolution of the board and general body.
(4) An officer of the Government shall not either during the course of his/her service with the Government or for a period of two years thereafter, serve in any capacity with any Co-operative Society, unless such services are required by the Society or relates to academic assignments.
SECTION 59: REMOVAL OF CHIEF EXECUTIVE OFFICER/
PROFESSIONAL DIRECTOR
Where the Chief Executive Officer /Professional Director(s) are not appointed as per the fit and proper criteria specified for such appointment by the Reserve Bank/ NABARD, the Registrar in consultation with them shall be competent to direct the Board to remove them after giving him/them an opportunity of making representation and the Board of such Co-operative Society shall take action to fill up the vacancies duly following the fit and proper criteria laid down. In case the Board fails to carry out the direction of the Registrar, it shall be deemed as an offence under Section (119)(b) of the Act.
SECTION 60: SUPERSESSION OF THE BOARD OF A
CO-OPERATIVE SOCIETY
(1) Not withstanding anything contained in any law for the time being in force no Board shall be superseded or kept under suspension for a period exceeding six months.
Provided that the board may be superseded or kept under suspension in case-
i) Of its persistence default or
ii) Of negligence in the performance of its duties or
76 iii) Or the board has committed any act prejudicial to the interests of the cooperative society or its members: or
iv There is a stale mate in the constitution or functions of the board or
v) The authority or body as provided by this act has failed to conduct elections in accordance with the provisions of this act:
Provided further that the board of any such cooperative society shall not be superseded or kept under suspension where there is no government share holding or financial assistance or any guarantee by the government
Provided also that in case of a cooperative society carrying on the business of banking the provisions of Banking Regulation Act, 1949 shall also apply
provided also that in case of a cooperative society, other than a multi state cooperative society carrying on business of banking the provisions of this clause shall have the effect as if for the words “Six months” the words “One year” has been substituted
provided also that no board shall be superseded unless an opportunity is given to state its defence if any and its objections are considered, if received ,and after its financing bank or its federal society is consulted before orders superseding the board are issued in writing and either a person “herein referred to as administrator or a board of two or more persons” are appointed to manage the affairs of the cooperative society for such period not exceeding six months as may be specified in the order. Such orders shall take effect from the dates specified therein unless stayed by the government. Where such orders are reversed by the government, the administrator/the appointed board shall forthwith handover the management of the cooperative society to the board which was superseded.
Provided further that in the case of a Co-operative Society, carrying on the business of banking the provisions of Section (125)(1)(iii) of Chapter XV shall apply for the purpose of supersession of the Board.
Provided also that supersession of the Board of a PACS shall be under the circumstances stated in Section (127)(13)(b) besides those in this section.
Provided also a member of the Board of a PACS which has been superseded due to a reason of section (127)(13)(a) and (b) shall not be entitled to contest again for a period of five years after supersession and at the time of filing nomination, he has to declare that he was not on the board of PACS which was superseded.
Provided also a member of the Board of Urban Co-operative Bank which has been superseded shall not be entitled to contest again for a seat on the Board of an Urban Co-operative Bank for a period of five years, after the end of period of supersession. Such a person contesting for a seat
77 on the Board of an Urban Co-operative Bank shall solemnly declare at the time of filing his nomination that he was not on the board of any Urban Co-operative Bank which was superseded.
(2) The Registrar may fix the remuneration for the administrator as he may think fit and the remuneration shall be paid out of the funds of the cooperative society.
(3) The administrator/board shall subject to the control of the 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 Co-operative Society in the conduct of day-today administration including admission of new persons with the prior permission of the Registrar as members for receiving services and not take policy decisions save with the explicit approval of the Registrar and General Body and take all such actions as may be required in the interest of the Co-operative Society.
(4) Save as otherwise provided in sub-section (5) the administrator/board, shall before the expiry of the term of his or its office, shall arrange for the constitution of a new Board by addressing the authority appointed by the government to conduct elections in accordance with the byelaws of Co-operative Society.
(5) If, at any time during the period, the administrator/board is in office, the Registrar considers it necessary or expedient so to do, he may by order in writing giving reasons therefor, direct the administrator/board to arrange for the conduct of elections, by addressing the authority appointed by government for conduct of all elections to a cooperative society . After constitution of the board the administrator/outgoing board shall immediately handover the management of the cooperative society to the newly elected body.
SECTION 61: APPOINTMENT OF PERSON-INCHARGE IN CERTAIN CASES
Where the term of Office of the board of any cooperative society has expired, and a new Board was not constituted in accordance with the provisions of this Act or byelaws by the election authority of the cooperative society, or the new board constituted fails to enter or is prevented from entering upon office on the expiration of the term of office of the earlier Board, the Registrar of his own motion or on an application of any member of the cooperative society and in the case of a new Board which has failed to enter or prevented from entering upon office after giving the members of the said board an opportunity of making their representation by order appoint a person or persons incharge for a specified period not exceeding six months to manage the affairs of the cooperative society pending the constitution of a new Board by the authority appointed by the government to conduct elections.
The provisions of sub-section (60)(2) to (5) so far as may be shall apply in relation to the appointment of Person or Persons-Incharge as they apply in relation to the appointment of administrator/board appointed section (60)(1).
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SECTION 62: DELIVERY OF POSSESSION OF RECORDS AND PROPERTIES OF A CO-OPERATIVE SOCIETY
Where an administrator/board is appointed under Section 60(1) or a Person-Incharge / Persons-Incharge are appointed under Section (60) or where the Co-operative Society is ordered to be wound up and a liquidator is appointed under section (100) and such reconstituted board, special officer or liquidator is resisted in or prevented from obtaining possession of the books, accounts, documents, securities, cash and other properties movable or immovable of the Cooperative society (hereinafter in this section referred to as the records and properties of the Co-operative Society) by the board which has been superseded or reconstituted or by the Cooperative society which has been ordered to be wound up or by the person who is not entitled to be in possession of the records and properties of the Cooperative Society, the reconstituted board, Administrator or liquidator may apply to any metropolitan Magistrate or a judicial magistrate of the first class in whose jurisdiction the office of the Co-operative Society or the records and properties of the Co-operative Society is or are situated for delivery of possession of the records and properties of the cooperative society.
(2) Where the records and properties of any Cooperative society are in possession of a person not entitled to be in possession thereof for any reason or where the Registrar is satisfied on a report or otherwise that the records and properties of the cooperative society are likely to be tampered with or destroyed or the funds and properties of the cooperative society are likely to be misappropriated or misapplied, he or any person authorized by him in this behalf may apply to the Metropolitan Magistrate or Judicial Magistrate of the first class in whose jurisdiction the office of the cooperative society or the records and properties of that cooperative society is or are situated for delivery of possession of the records and properties of the cooperative society.
(3) Every application under sub-clauses (1) and (2) above shall be accompanied by a copy of the order under sections (60)(1), or as the case may be, under section (61) or under section (100).
(4) On receipt of an application under sub-section (1) or (2), the Metropolitan Magistrate or the Judicial Magistrate of the first class, as the case may be, shall by a warrant authorize any Police Officer not below the rank of Sub-Inspector to enter and search any place where the records and properties of the cooperative society are kept or are believed to be kept and to seize such records and properties and the records and properties so seized shall be handed over to
(a) in case the application is made by the reconstituted Board or Administrator or liquidator as the case may be; to such board or administrator or liquidator or
(b) in case the application is made by the Registrar or any person authorized by him, to the Registrar or to such authorized person.
79 Provided that the records and properties so handed over to the Registrar to any person authorized by him shall be retained by the Registrar or such authorized person only for so long as may be necessary for their examination and for the purpose of inquiry, if any;
Provided further that the records and properties shall not be retained for more than three months at a time except with the permission of the next higher authority.
(5) All searches or seizures made under this section shall be carried out in accordance with the provisions of the code of Criminal Procedure, 1973 (Central Act 2 of 1974) relating to searches or seizures made under the authority of a warrant issued by a Magistrate.
SECTION 63: NO-CONFIDENCE MOTION AGAINST THE BOARD OF A CO-OPERATIVE SOCIETY
(1) Where a no-confidence motion proposal against the Board of a Co-operative Society or any of its office-bearers signed by not less than one tenth of the members of the Co-operative Society eligible to vote is handed over in person to the Registrar, the Registrar shall call upon the Board of the Co-operative Society to hold a special general body meeting within thirty days of the requisition and seek vote of confidence.
(2) A special general body meeting shall be presided over by an Officer of the financing bank or the federal Co-operative Society as the case may be authorized by the Registrar. The Officer so authorized under sub-section (2) above shall preside over the special general body meeting and shall report the results of the proceedings to the Registrar the same day of the meeting in writing. If the motion is carried out the Board / the office-bearer shall be deemed to have ceased to hold office and their seats shall deemed to be vacant.
(3) Where the entire Board ceases to hold office the Registrar shall forthwith appoint a person-incharge for a period of three months and address the authority or the body appointed by the government to conduct elections to cooperative society
(4) No notice of a motion under this section shall be made within one year of assumption of office of the Board.
(5) If in the proceeding of vote of confidence, office-bearers/board are disqualified for want of expression of confidence the Election Authority on a report from the Registrar to this effect shall hold elections to constitute the board.
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SECTION 64: ELECTION AUTHORITY OR BODY FOR CO-
OPERATIVES
1) The State Government shall appoint an authority or body not below the rank of an Additional Registrar of Cooperative Societies and shall vest in such authority the superintendence, direction and control of the preparation of the electoral rolls and for the conduct of all elections to a cooperative society, which shall be a separate wing in the office of the Commissioner for Cooperation for which supporting staff shall be drawn from the department of cooperation/government.
2) The guidelines and procedure for the conduct of such elections shall be spelt out in the Act it self.
3) The election authority shall be responsible for the conduct of elections in the case of Apex societies and the district collectors in respect of other societies.
4) Any dispute concerning elections in a cooperative society shall be filed within thirty days of the declaration of the result before the cooperative tribunal established under this act and such dispute shall be disposed of within a period of four months from the date of filing of the dispute.
SECTION 65: ROLE OF ELECTION AUTHORITY
(1) The Board of every Co-operative Society shall send a written request to the Election Authority to conduct election of its Board six months before the expiry of the period of the existing board.
(2) On receipt of the request under sub-section (1) the Authority shall ensure that the election is conducted before the expiry of the term of the existing board.
(3) It shall be the duty of the Chief Executive Officer of every Co-operative Society to ensure that all the information, books and records, which the Authority may require for the purpose of election, are updated and made available in time to the Authority or a person authorized by it for the purpose.
(4) The board of the Co-operative Society shall also ensure that the Co-operative Society provides all the assistance to the Authority as may be required by it for conduct of the elections..
(5) The Election Authority shall announce the schedule of elections from time to time. And also frame guidelines and procedure for the conduct of elections and get them approved by the government and notify.
81 (6) The process of election of a Co-operative Society once started shall not be stopped or postponed for any reason, save for a natural calamity or break down of law and order.
SECTION 66: ELECTION OFFICER
(1) Subject to the guidelines and procedure notified by the Election authority election officers shall be appointed by the separate election wing in the office of the Commissioner for Cooperation and Registrar of Cooperative Societies, and district collectors to conduct all elections to a cooperative society.
Provided that no member or employee of the concerned Co-operative Society and no retired employee of Co-operative Department shall be appointed as an Election Officer.
CHAPTER - VII
CERTAIN ESSENTIAL PRIVILEGES TO CO-OPERATIVE SOCIETIES
SECTION 67: FIRST CHARGE
Notwithstanding anything in any law for time being in force, but subject to any claim of the Government in respect of land revenue, any debt or other amount due to a Co-operative Society by any member including a past or deceased member shall be a first charge upon such properties i.e., movable or immovable of the member as agreed to by the Co-operative Society and as the member may declare in the manner specified in the byelaws. No person shall transfer any property subject to such charge except with the previous permission in writing of the Co-operative Society which holds the charge and any transfer without such permission shall notwithstanding anything in any law for the time being in force, be void. Such charge shall be available even as against any amount recoverable by the Government as if it were an arrear of land revenue. The charge under this section shall not be available against the articles specified in section (60) of Civil Procedure Code
SECTION 68: SHARE OR INTEREST NOT LIABLE FOR ATTACHMENT
The share or interest of a member in the capital of a Co-operative Society or of an employee in the Provident fund established, if any, or the contribution made by a member or past member or from the estate of a deceased member or by any Officer or by a former officer or the Reserve fund of a Co-operative Society or the bad debts reserve of a Co-operative Society or the Provident fund of its employees invested if any, shall not be liable to attachment or sale, under any decree
82 or order of a Court, in respect of any debt or liability incurred by such member, and an official assignee or receiver or Officer under any law relating to the insolvency shall not be entitled to or have any claim on such share, or contribution or interest or fund.
Provided a Co-operative Society shall have a charge on the share or contribution or interest in the capital and on the deposits of a member or past or deceased member 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 any of them and may set of any sum credited or payable to any of them in or towards payment of any such debt.
SECTION 69: REGISTER OF MEMBERS
Any register or list of members or shares kept by any Co-operative Society shall be prima-facie evidence of any of the following particulars entered therein:-
(a) the date on which the name of any person was entered in such register or list as a member;
(b) the date on which any such person ceased to be a member.
SECTION 70: ADMISSIBILITY OF COPY OF ENTRY AS EVIDENCE
(1) A copy of any entry in any book, register or list, regularly kept in the course of business and in the possession of a Co-operative Society shall if certified by the Chairperson or the Chief Executive or administrator or person in charge or liquidator bearing the seal of the Co-operative Society, 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 the same manner and to the same extent as the original entry is admissible.
(2) A Co-operative Society may grant copies of any document obtained and kept by it in the course of its business, or of any entries in such document excepting of the title deeds lodged with it, and any copy so granted shall, when certified by the Chairperson or the Chief Executive or Liquidator of the Co-operative Society bearing its seal, be admissible in evidence for any purpose in the same manner and to the same extent as the original documents, or the entries therein, as the case may be.
(3) The charges to be levied for the supply of such certified copies shall be as provided in the byelaws of the Co-operative Society.
(4) No officer of a Co-operative Society and no officer in whose office the books of a Co-operative Society are deposited after liquidation shall, in any legal proceedings to which the Co-operative Society or the liquidator is not a party, shall be compelled to produce any of the Co-operative Society’s books or documents the contents of which can be proved under the section, or
83 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.
SECTION 71: EXEMPTION FROM COMPULSORY REGISTRATION OF INSTRUMENTS
Nothing in clauses (b) and (c) of sub-section (1) of section 17 of the Registration Act, 1908 shall apply to—
(1) Any instrument relating to shares in a Co-operative Society notwithstanding that the assets of the Co-operative Society consist in whole or in part of immovable property; or
(2) any debenture issued by any such Co-operative 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 Co-operative 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
(3) an endorsement upon or transfer of any other debenture issued by any such Co-operative Society.
SECTION 72: DEDUCTION FROM SALARY TO MEET
SOCIETY’S CLAIM IN CERTAIN CASES
Notwithstanding anything contained in any law for the time being in force, a member of a Cooperative Society may execute an agreement in favour of the Cooperative Society providing that his employer shall be competent on a resolution and requisition in writing from the Cooperative Society to deduct from the salary or wages payable to him by the employer such amount as may be specified in the agreement and to pay the amount so deducted to the Society in satisfaction of any debt or other demand owing by the member to the Cooperative society.
(2) On the execution of such an agreement, the employer if so required by the Cooperative Society by requisition in writing and so long as such debt or demand or any part of it remains unpaid, make the deduction in accordance with the agreement and pay the amount so deducted to the Cooperative Society within fourteen days from the date of deduction.
(3) The employer shall maintain a register showing the date of deductions made and the date of remittance to the Cooperative Society for the purpose of audit.
(4) If such employer fails to comply with the provisions of this section, it shall be deemed as an offence under Section (119) of the Act.
84 (5) Nothing contained in this section shall apply to persons employed in Railways, as defined in Article 366 of the Constitution, mines and oil fields.
(6) Where a resolution and requisition in writing from any Co-operative Society registered or deemed to be registered in any reciprocating state, in respect of a member of that Cooperative Society who for the time being is employed in this state, is received by his employer, the requisition shall be acted upon as if it had been made by a Cooperative Society in this State.
Explanation:- For the purposes of this sub-section
(i) “Reciprocating state” means any state which the Government may by notification in the A.P. Gazette declare to be a reciprocating State.
(ii) The word “Employer” shall include an Officer disbursing salary or wages of a member.
SECTION 73: CHARGE ON THE IMMOVABLE PROPERTY
OF A MEMBER FOR THE LOANS BORROWED
(1) Notwithstanding anything in this Act or in any law for the time being in force, but subject to any claim of the Government in respect of land revenue and to any claim pertaining to a long-term loan whether prior in time or subsequent, any member owning any land or having interest in any land as a tenant, who applies to the Cooperative Society for a loan, shall make a declaration in form A (6) creating a charge in favour of the Cooperative Society on the land or interest specified in the declaration for the payment of the loan to be granted to him by the Co-operative Society in pursuance of the application and for all future advances, if any required by him, which the Co-operative Society may grant to him subject to such maximum as may be determined by the Co-operative Society, together with the interest as on such amount of the loan and advances.
(2) Such declaration may be varied or cancelled at any time by the member with the consent of the Cooperative Society.
(3) Subject to the provisions of sub-section (1) and to the claim of any person in whose favour a mortgage or a charge has been created before the date of registration made under sub-section (1), no land in respect of which such declaration has been made or any part of or any interest in such land shall be sold or otherwise transferred until the entire amount of the loan or advance taken by the member from the Cooperative Society together with interest thereon is paid to the Cooperative Society; and any transaction made in contravention of this sub-section shall be void.
Provided that if a part of the amount borrowed by a member is paid; the Co-operative Society, may on application from the member and with the approval of the financing bank release from the charge created under the declaration made under sub-section (1) such part of the land or interest in such land specified in the said declaration, as it may deem proper within thirty days, from the
85 date of receipt of application with due regard to the security of the balance of the amount remaining outstanding from the member.
Provided further that nothing in this sub-section shall apply in respect of a mortgage created in favour of a PACS for a long-term loan, subsequent to the date of registration of the declaration made under sub-section (1).
(4) The declaration made under sub-section (1) or any variation or cancellation thereof made under sub-section (2) shall be sent by Registered Post by the Cooperative Society to the Sub-Registrar having jurisdiction over the area in which the land is situated. He shall if it is in order, register such declaration of variation or cancellation within fifteen days and return it to the Co-operative and where it is not in order, he shall return it to the Co-operative Society without registering it. Where it is registered, it shall take effect from the time of its registration and where it is not registered, it shall be of no effect.
Explanation:- For the purpose of this section, the Co-operative Society means—
(i) any Cooperative Society, the majority of members of which are agriculturists and the primary object of which is to obtain credit for its members for any agricultural purpose;
(ii) any Cooperative Society or any class of Co-operative Societies specified in this behalf by the Government by a general or special order. (5) A register of declarations obtained by the Co-operative Society from the members shall be kept by the Society upto date for verification by any Officer authorized under the provisions of the Act. (6) Documentation for long-term loans: Notwithstanding any thing in the Indian Registration Act, 1908, it shall not be necessary for any Officer of the financing bank / Primary Agricultural Co-operative Society or of the Andhra Pradesh State Co-operative Bank Ltd., to appear in person or by any agent at any registration office in any proceedings connected with the registration of any instrument executed by him in his official capacity or to sign as provided in section (58) of that Act. (7) Where any instrument is so executed the Registering Officer to whom such instrument is presented for registration may, if he thinks fit refer to such officer for information in regard thereto and on being satisfied of execution thereof, shall register the instrument. (8) Notwithstanding any thing in the Indian Registration Act, 1908, it shall not be necessary to register mortgages executed in favour of financing bank / Primary Agricultural Co-operative Society/ Andhra Pradesh State Co-operative Bank Ltd., where the Bank / Primary Agricultural Co-operative Society concerned sends a copy of the instrument within fourteen days from the date of execution of the instrument by Registered Post or through a messenger, requiring registration to the registering officer
86 having jurisdiction who shall file such copy on the book maintained under section (51) of that Act.
SECTION 74: CHARGE AND SET OFF IN RESPECT OF SHARES OR INTEREST OF MEMBERS IN THE CAPITAL ETC. OF A CO-OPERATIVE SOCIETY
A Co-operative Society shall have a charge upon the share, or contribution or interest in the capital, deposits, dividend, bonus or profits payable to a member or a past member, or the estate of a deceased member in respect of any debt, or other amount due by him to the Cooperative Society and may set off any sum credited or payable to such member against payment of any such debt or other amount due.
Provided that no financing bank to which a Cooperative Society is affiliated shall have a charge upon or set off against any debt due from such Cooperative Society in respect of —
(i) any sum invested in the financing bank as reserve fund by the Cooperative Society if the bank is not the sole creditor of the Co-operative Society; or
(ii) any sum invested in it by the Cooperative Society as Provident Fund of its employees.
SECTION 75: RIGHT TO SET OFF WHERE A REGISTERED CO-OPERATIVE SOCIETY PURCHASES IMMOVABLE PROPERTY AT A SALE UNDER THE A.P. REVENUE RECOVERY ACT, 1864 FOR ANY AMOUNT DUE TO IT
Where under this Act, or any byelaws of a Cooperative Society any amount due to it from any person is recoverable as an arrear of land revenue and immovable property of such person is brought to sale under the provisions of the A.P. Revenue Recovery Act, 1864 and the Cooperative Society is the purchaser at such sale, the provisions of Section 36 of the said Act shall apply thereto subject to the modification that for the third and fourth clauses thereof the following clauses were substituted namely;-
Third:- The sum due to the purchaser shall be set off in whole or in part, against the purchase money and the reminder, if any of the purchase money shall be paid to the Collector or other Officer empowered by the Collector in that behalf within thirty days of the date of sale.
Fourth:- Where the purchaser refuses or fails to make the payment of the remainder, if any of the purchase money the amount of loss or expenses consequent on such refusal or failure shall be a charge on the property purchased and shall be recoverable from such purchaser in the same manner as arrears of land revenue. The amount so recovered shall be paid to the owner of the immovable property.
87 (2) Where a sale is conducted under section (109) or a byelaw formed under section 123(17)123 & (18) by the Registrar or any other person authorized by him, the provisions of sub-section (i) shall apply as if it were a sale for the recovery of arrear of land revenue.
SECTION 76: EXEMPTION FROM CERTAIN TAXES, DUTIES AND FEES
The Government if in their opinion, it is necessary in public interest so to do, may by notification in Andhra Pradesh Gazette and subject to such restrictions and conditions as may be specified in such notification reduce or exempt in respect of any class of Cooperative Societies.
(a) the taxes on professions, trades, callings and employments;
(b) the stamp duty with which under any law for the time being in force, instruments executed by or on behalf of a Cooperative Society or by an Officer or member and relating to the business of such instruments or decisions or orders of the Registrar or arbitrator, or liquidator under this Act are respectively chargeable; or
(c) any fee payable under the law relating to registration for the time being in force or Court fees;
(d) Land revenue
(e) Taxes on agricultural income; and
(f) Taxes on sale and purchase of goods
(g) From the provision of shops and establishment’s act
(h) From the provision of Minimum wages act
(i) Income tax SECTION 77: PERCENTAGE OF LOANS TO SMALL FARMERS (1) Subject to such directions as the Reserve Bank of India may give to Co-operative Banks in this behalf Primary Agricultural Credit Societies shall during a financial year disburse to small farmers, 50% of the total amount borrowed by them from the Co-operative financial institutions for granting loans to their members during a financial year, so, however that the amount to any such loans that may be granted to each of their members whether or not he is a small farmer shall not in the aggregate exceed such amount or the amounts Government may, from time to time by notification in the Andhra Pradesh Gazettee specify in relation to the various classes of members and having regard to purposes for which loans are required.
88 (2) Every Co-operative Society shall disburse loan amounts to any of its members exceeding Rs.1,000/- invariably by way of a cheque or a negotiable instrument such as a draft, pay order etc. SECTION 78: LIMIT ON INTEREST IN CERTAIN CASES (DAMDHUPHAT) Notwithstanding anything contained in any agreement or any law for the time being in force, a Co-operative Society including a Co-operative Bank shall not for any loan given by it to any member including a member-society for a period not exceeding 15 years whether the loan was given before or is given after the commencement of this Act recover in any manner whatsoever on account of interest a sum greater than the amount of the principal of the loan in the case of borrowers belonging to SC/ST/Categories small farmers coming under the definition given by the state government and share croppers
SECTION 79: EMPLOYEES’ PROVIDENT FUND
(1) A Co-operative Society having five or more employees may establish a contributory Provident Fund for the benefit of its employees to which shall be credited all the contributions made by them and the Co-operative Society in accordance with its byelaws.
(2) The Provident Fund so established shall not:--
(a) be used in the business of the Co-operative Society;
(b) form part of the assets of the Co-operative Society;
(c) be liable to attachment or be subject to any other process of any Court or other authority; or
(d) be subject to a charge or liable to be set off towards payment of any debt or outstanding demand owing to a Co-operative Society under section (75) of this Act.
(3) Notwithstanding any thing in this section a Provident Fund established by a Co-operative Society to which the Employees’ Provident Fund Act, 1952 is applicable shall be governed by that Act.
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SECTION 80: GRATUITY
(1) A Co-operative Society not being an establishment to which payment of Gratuity Act, 1972 (Central Act 39 of 1972) applies shall provide in its byelaws for the payment of gratuity to the employees at such rates and at such conditions as may be specified in the byelaws and such Co-operative Society may establish a Gratuity Fund or make other arrangements for this purpose.
(2) A Gratuity Fund, if any, established by a Co-operative Society under sub-section (1) shall be invested outside in a scheduled or regulated bank but shall not-
(a) be used in the business of the Co-operative Society; (b) form part of the assets of the Co-operative Society; (c) be liable to attachment or be subject to any other process
of any Court or other authority.
(d) subject to a charge or liable to be set off towards payment of any debt or any outstanding demand owing to a Cooperative society under Section 74 of this Act.
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CHAPTER – VIII
Management Information
SECTION 81: ACCOUNTS AND RECORDS TO BE MAINTAINED
(1) Every Co-operative Society shall keep at its registered office, the following records and account books and shall adopt Double Entry system of Book-keeping in the case of account books from the succeeding financial year commencing after the notification of this Act where the staff employed are trained in Common Accounting System.
(a) a copy of the Andhra Pradesh Co-operative Societies Act with amendments made from time to time;
(b) the minutes book; for recording the proceedings of the Board and of the general body meetings
(c) Registration certificate and a copy of the registered byelaws and of the amendments registered from time to time with date of amendment;
(d) a copy of the authenticated byelaws of the federal Co-operative Society of which it is a member and of each of its member Co-operative Societies in the case of a Federation;
(e) account of all sums of money received and expended by the Co-operative Society and their respective purposes; (Cash book/Day Book)
(f) Register of Applications for membership; with names of applicants, their addresses, Date of receipt of application, Date of admission or refusal
(g) Admission Register with names of members admitted, Dates their addresses, share amount paid; date of shares refunded, Nomination made
(h) Receipt book containing forms in duplicate one of each set to be issued for money received by the Co-operative Society and the other to serve as counter foil;
(j) Voucher file containing all vouchers for expenditure incurred by the Co-operative Society numbered serially and filed chronologically;
(k) Ledger of borrowings; (l) Ledger of deposits separately for each type of deposits; (m) in the case of Co‐operative Societies issuing loans:‐ (a) Loan ledgers for SAO loans (b) Loan ledgers for MT loans (c) Loan ledgers for LT loans
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(d) Loan ledgers for produce loans (e) Loan ledgers for gold loans
These loan ledgers should show the number and date
of disbursement of each loan, amount, purpose and date
of re-payment of principal and interest
(m) account of all purchases and sales of goods by the Co-operative Society;
(n) account of the assets and liabilities of the Co-operative Society;
(o) a register showing total membership and the member-wise use of various services;
(p) a list of members with voting rights and another list of members without voting rights for the current year updated within thirty days of closure of the financial year;
(q) copies of the Board policies;
(r) annual reports and audit reports;
(s) register of declarations made;
(t) fluid resources registers;
(u) general ledger;
(v) monthly register of receipts and disbursements / trial balances;
(w) other registers prescribed in the Departmental Accounts Manual and other registers mandatory under any other Act for the time being in force applicable to Co-operative Societies.
Provided in the case of Primary Agricultural Co-operative Credit Societies, books of accounts and records as prescribed by NABARD under the Common Accounting System shall be maintained.
Provided also that in the case of Banking institutions coming under the Banking Regulation Act, 1949 (as applied to Co-operative Societies), they shall maintain the registers and books of accounts prescribed by Reserve Bank of India/NABARD.
(2) The account books and records maintained by a society specified in column(2) of the table below shall be retained permanently or till the completion of the period specified in column (3) thereof till the date of completion of action on all the issues in the account books and records.
92 (1) (2) (3)
SNo. Account Books & records
1. Minute Books of Board and General Body meetings Permanent
2. Admission book relating to members Permanent
3. Nomination Register Permanent
4. Associate membership book Permanent
5. Share certificate book Permanent
6. Register showing list of members Permanent
7. Main day book and subsidiary day books Permanent
8. Ledgers of deposits and other borrowings Permanent
9. Loan Ledgers Permanent
10. Loan application register 20 Years
11. Investments registers Permanent
12. Service Registers of staff Permanent
13. Final audit report with Audit certificates Permanent
14. Register of affiliated cooperative societies Permanent
15. Inspection reports of affiliated cooperatives Permanent
16. Register showing the particulars of various accounts books, records maintained by the cooperative society every year
Permanent
All such other accounts and records required to be maintained under this act together with supporting vouchers shall be preserved upto 8 years.
(3) In the case of Co-operative Societies, having paid staff, the Chief Executive by whatever designation he is called and in case of all other
Co-operative Societies without paid staff, the Chair-person shall be responsible for the custody and for arranging for the maintenance of correct and upto date, and the authenticated books,
93 registers and accounts referred to in the section and shall be responsible for their production to Auditor / Inspecting Officer/Inquiry Officer / Election Officer.
(4) Where the account books are not kept up to date, the Registrar/Chief Auditor may authorize an Officer of the financing bank / federation to bring them written up to date and recover the expenses thereof from the Co-operative Society. In case of the financing bank / federation failing to do so, the Registrar may depute an Officer subordinate to him to write up the accounts and books up to date. In such cases, it shall be competent for the Registrar to determine the charges which the concerned Co-operative Society shall pay to the Government and direct its recovery from the funds of the Co-operative Society.
SECTION 82: FILING OF RETURNS
Every Co-operative Society shall file returns within six months of the close of the financial year to the Registrar of Co-operative Societies including the following matters, namely:-
(a) annual report of its activities;
(b) its audited statements of accounts
(c) plan for surplus disposal as approved by the general body of the
Co-operative Society;
(d) list of amendments to the byelaws of the Co-operative Society, if any;
(e) declaration regarding date of holding its general body meeting
and conduct of elections when due; and
(f) any other information required by the Registrar in pursuance of the provisions of this Act
(g) List of names of Directors, their addresses and their terms of Office
(h) A plan for recovery of deficit
(i) Complaince reports relating to audit, special audit, inquiry if any,
Provided that a copy of the Statutory and the annual returns submitted to the Registrar shall be placed before the earliest general body meeting.
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CHAPTER – IX
AUDIT, INQUIRY AND SURCHARGE
SECTION 83: A U D I T
(1) There shall be a separate wing for Audit headed by the Chief Auditor, who shall work under the general superintendence and the control of Registrar of Cooperative Societies.
(2) The state Government may by notification lay down accounting and auditing standards to be adopted by cooperative societies in the state.
Provided cooperative societies doing the banking business shall adopt accounting and auditing standards laid down by the Reserve Bank of India.
Provided further that until such accounting and auditing standards are laid down, the accounting and auditing standards specified by the Registrar/Chief auditor shall be deemed to be accounting and auditing standards for the Cooperatives.
The maintenance of accounts as per the provisions, according to this Act by the Cooperative Societies and the auditing of such accounts shall be audited by the Chief auditor or caused to be audited by a person authorized by him, by a general or special order at least once in each financial year.
A panel of auditors from the department or auditing firms shall be approved by the State Government or Chief Auditor.
The departmental auditors or the members of their firms, if registered shall be required to hold a Junior Diploma in Cooperation or Higher Diploma in Cooperative Management awarded by Cooperative Training Institutes in the State or have passed the Departmental tests in Cooperation, Banking, Booking Keeping, and Auditing conducted by the Central Cooperative Institute, Hyderabad and have worked in the field at least for five years supervising the Cooperative Societies and their accounts.
Members of Auditing Firms may be Chartered Accountants within the meaning of the Chartered Accountants Act 1949, who have passed the test in “Cooperation and Allied Laws”, conducted by the institutes of Cooperative management, and have registered themselves in the State and have consented to audit societies as per circular of the chief Auditor and Cooperative audit manual.
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The Accounts of every Cooperative Society Shall be audited within Six months of close of the financial year, to which such accounts relates.
The audit report of accounts of an apex Cooperative Society in the form of” Receipts and Disbursement statement”, “profit and loss account”, and “balance sheet” attested by the Board of Directors of the apex society and its Auditor shall be laid before Andhra Pradesh Assembly and Andhra Pradesh Council of Legislators by the Registrar or chief Auditor along with defects sheets.
(i) The scale of remuneration of the auditor with reference to the turnover and transactions to be audited shall be as per the guidelines of the Chief Auditor.
(ii) The audit shall cover an examination of debts, over due if any, the verification of cash
balance and securities, a valuation of assets and liabilities of the Co-operative Society including prudent management of affairs of the Co-operative Society in accordance with the provisions of this Act and byelaws.
(iii) The auditor after reporting the completion of audit, shall submit the audit report within Fifteen
days of date of completion, and the audit certificate shall be issued within One month of reporting the date of completion of audit.
SECTION 84: POWER TO SUMMON AND EXAMINE DOCUMENTS AND PERSONS ETC.
(1) The Registrar or the Chief Auditor or any person authorized by either of them to exercise any powers under this act shall all at reasonable times , have free access to the books, accounts, documents , records , securities , cash and other properties belonging to or in the custody of the Cooperative Society and may summon any person in possession of or responsible for the custody of any such books, accounts , documents , records, securities, cash and other properties to produce all or any of them at any place at the head quarters of the cooperative society or any branch thereof.
(2) Every person who is or has at any time been an Officer or employee of the Cooperative Society and every member and past member of the Cooperative Society shall furnish such information in regard to the transactions, affairs and working of the Cooperative Society as the Chief Auditor or the person authorized by him to audit may require.
(3) Every cooperative society shall for each financial year prepare and furnish within three months from the end of that year to the Chief Auditor a statement showing receipts and disbursements, or trail balance, profit and loss account and the balance sheet for the year and such other statements and returns as Chief Auditor or the person authorized by him may require . Where the Board of a Co-operative Society fails to prepare and submit or cause to be prepared and submitted the annual accounts of their Co-operative Society within the period aforesaid as
96 required in Section (52) 4 of this Act, the Board shall on the expiration of the period of three months stated in this sub-section cease to hold such office and their seats shall be deemed vacant. The Registrar shall call upon the federation / financing bank of which the cooperative society is a member, to get the financial statements prepared and recover the costs from the persons responsible for keeping them in arrears, simultaneously addressing the Authority or Body appointed by the Government to conduct elections and constitute a new Board.
(4) The Auditor, shall after examination of the books of accounts and records shall report:-
(a) Whether the Cooperative Society has maintained proper books of accounts and records as required by this act.
(b) Whether he has obtained all the information and explanation which to the best of his knowledge
and belief were necessary for the purposes of his audit.
(c) Whether the final statement of accounts prepared by the Co-operative Society are in agreement with the books of accounts and records maintained.
(d) Whether the said final statement of accounts gives true and fair view:-
(i) in the case of balance sheet, of the state of affairs of the Co-operative Society as at the end of the financial year;
(ii) in the case of income and expenditure account, of the surplus or deficit for the financial year.
(e) Whether report of the branch auditors, not audited by him, has been considered and how he has dealt with the same in preparing the final audit report of the Co-operative Society.
(5) The Auditor in his audit report on the examination of the final statement of accounts furnished by the cooperative society for the financial year state:
1. Whether a Cooperative society has maintained proper records showing the particulars including quantitative details and situation of fixed assets.
2. Whether the fixed assets have been periodically physically verified by the board of the Cooperative Society and the discrepancy if any is considered in the books.
3. Whether the loans and advances made by the Co-operative Societies on the basis of security have been properly secured and whether any of the terms and conditions are prejudicial to the interest of the Cooperative Society.
4. Whether any personal expenses have been charged to income and expenditure account. 5. Whether capital expenses have been charged to income and expenditure account. 6. Whether any expenditure incurred by the Cooperative Society is not in accordance with its
objects. 7. Whether the Cooperative society has utilized the financial assistance granted by the Government
for the purpose for which it is granted. 8. Whether there are adequate internal control procedures commensurate with the size of the Co-
operative society and nature of its business. 9. Whether any purchases and sales are made during the year from any relative of any director or
any company or any firm in which directors are interested. 10. Whether any man-power requirement is assessed and recruited as per requirement. .
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11. whether or not any of the directors of the board had at any time during the financial year under audit became ineligible to be directors under the Act.
12. Whether decisions on the disposal of surpluses or deficits was correctly implemented. 13. The basis on which each asset and liability recorded in the balance sheet was valued. 14. The surplus earned by the cooperative society in the financial year under audit by extending
service to non members as against members. 15. Deviations in actual expenses in the financial year under audit from the approved budget heads. 16. And estimate non-performing assets and bad debts. 17. Indicate Material impropriety or irregularity in the expenditure or realization of money due to the
cooperative society and 18. Whether biennial revaluation of mortgages offered as security for loans given by the cooperative
society is done by the board of directors and their report considered by the general body.
(6)The person authorized to conduct audit of a Cooperative Society, shall sign the auditor’s report and send copies of audit reports and communicate results of audit to the Co-operative Society , Chief Auditor and to the financing Bank or credit agency and if the cooperative society audited is affiliated to any other Cooperative society to such co-operative society.
(7)The person authorized to conduct the audit of a cooperative society shall have the right to receive all notices and every communication relating to annual general meeting of a Co-operative Society and to attend such meeting and to be heard there at in respect of any part of business, with which he is concerned as auditor.
SECTION 85: AUDIT OBJECTIONS WAIVER
(1) Any Co-operative Society aggrieved by any item held under objection in the audit may apply to the Chief Auditor for its deletion within one month of the receipt of the Audit Report.
(2) The Chief Auditor may on receipt of the application under clause (i) summon the production of documents if any, pertaining to the objection and examine the same. He may also examine any person including the Auditor and order for deletion or confirmation of the audit objection and on deletion the objection shall stand removed from the balance sheet of the Co-operative Society and on confirmation the amount held under objection shall stand and further action on it shall ensue.
SECTION 86: RE-AUDIT
(1) If it appears to the Registrar / Chief Auditor on an application by a Co-operative Society or otherwise that it is necessary or expedient to re-audit any accounts of a Co-operative Society, he may by order provide for such re-audit and the provisions of the Act applicable to the audit shall apply to such re-audit.
98 Provided that such re-audit shall be ordered only when there is a ‘primafacie’ case or fraud or misappropriation or embezzlement of funds not detected or properly examined by the Auditor during regular audit or misclassification of accounts or for any other valid reasons with a view to truly reflect the financial position of the Co-operative Society.
(2) Notwithstanding anything contained in this Act, the Registrar/Chief Auditor shall have power after recording reasons to re-examine or verify the audited accounts of any Co-operative Society pertaining to any year and incorporate the lapses observed during such re-examination or re-verification in the next Audit Report and Audit Certificate issued.
SECTION 87: SPECIAL AUDIT
Where the state Government or the Registrar is of the opinion:-
a) That the affairs of any cooperative society are not being managed in accordance with self-help and mutual aid and cooperative principles or with sound business principles or that any cooperative society is being managed in a manner likely to cause serious injury or damage to the interests of its business or
That the financial solvency of any cooperative society is in danger or
That any Cooperative society having share capital from either the state or central Government or dealing with funds received from the Government or is accepting public deposits is violating the conditionalties imposed or
That where any housing society which has received land from Government is not functioning properly and violating the provisions of the Act and its byelaws and where 10% or more members with a right to vote or
That where depositors holding more than one percent of total deposits have applied for special audit, such society may be subjected to a special audit at any time by the Government or Registrar on such terms of reference as agreed to by the Registrar.
The special audit may be conducted by an auditor appointed from the panel approved by the Registrar for the audit of cooperative societies in section 83(2) of this Act.
The special auditor shall have the same powers and duties in relation to the special audit as an auditor of a cooperative society under section 84 of this Act.
He shall make his report to the State Government/Registrar.
Provided a special audit may be arranged by the Registrar in the case of A.P. State Co-operative Bank / Dist. Coop. Central Bank at the request of the Reserve Bank of India and special audit report arranged to be furnished to the Reserve Bank of India within the stipulated time.
Provided further a special audit may be arranged by the Registrar in the case of any Co-operative Society at the request of the federation or its creditor and when its financial solvency is threatened.
99 (2) The cost of the special audit under sub-section (1) shall be met by the person who demanded it.
Provided that where the special audit reveals serious mismanagement in the Co-operative Society such costs may be recovered from the Co-operative Society or the persons responsible for the mismanagement.
(3) Every special audit shall be completed and the report submitted to the Registrar within four months of the date of ordering it.
(4) The special audit reports shall contain a statement of, -
(a) every payment which appears to the audit to be contrary to the law;
(b) the amount of any deficiency, waste or loss which appears to have been caused by the gross negligence or misconduct of any person in the performance of his duties;
(c) the amount of any sum received which ought to have been accounted for but is not brought into account by any person; and
d) any material impropriety or irregularity which the special auditor may observe in the expenditure or in the recovery of money due;
(5) The Registrar shall, within a period of thirty days from the date of receipt of the special audit report communicate copies of the same to, -
(a) the applicant creditor; (b) the Co-operative Society concerned; directing the board of cooperative society to convene the
general body meeting and decide upon appropriate follow up action there of.(C) the Reserve Bank of India in the case of A.P. State Cooperative Bank/ D.C.C Bank. (6) The Registrar may take such action as he deems fit in accordance with the provisions of this Act or any other law for time being in force where the cooperative society fails to take action as required under Section 93 of the Act.
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SECTION 88: INQUIRY
(1) The Registrar may of his own motion after recording reasons, or on the application of a Co-operative Society to which the Co-operative Society concerned is affiliated, or of a creditor to whom the Co-operative Society is indebted, or of not less than 1/3rd of the members of the Board, or of not less than 1/10th of the total number of members of the Co-operative Society hold an inquiry or direct some person authorized by him by an order in this behalf to hold an enquiry into the constitution, working and financial condition of the cooperative society and on specific matters raised in the application and gross violation of the Acts applicable to the working of the cooperative society.
(2) The Registrar shall order an inquiry only after the receipt of a fee, from the applicant or applicants, deemed sufficient to meet the costs of the inquiry to be conducted.
(3) The inquiry shall be completed within a period of four months from the date of ordering the inquiry.
Provided the Registrar may, for reasons to be recorded in writing, extend the period by a further period not exceeding two months each time, subject to a maximum of four months.
(4) The enquiry officer shall have powers to summon any person who, he has reason to believe has knowledge of any of the affairs of the cooperative society to appear before him at any place at the head quarters of the cooperative society or any branch thereof or at any other place specified by the Registrar and may examine that person on oath. He may seize the books of accounts or documents belonging to or in the custody of the cooperative society if he considers such seizure is necessary to ensure safety of such books, accounts or documents and shall give the person from whose custody the books, accounts, or documents have been seized, a receipt for the same.
Provided that the books, accounts or documents so seized shall be retained by him only for so long as may be necessary
Provided further that the books, Accounts, or documents so seized shall not be retained for more than sixty days at a time except with the permission of the next higher authority.
(5) The Registrar shall, within a period of one month from the date of completion of inquiry, communicate the report of the inquiry along with his findings—
(a) to the Co-operative Society concerned;
(b) to the applicants and the person designated by the applicants to
receive such report;
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(c) to any member of a Co-operative Society, to any federation of which the Co-operative Society is a member, to any creditor on payment of fee specified by the Registrar.
(6) It shall be the responsibility of the Board to place the inquiry report before the General Body / Special general body convened for the purpose within one month of communication of the inquiry report for deciding upon follow up action by the Co-operative Society.
(7) The Registrar shall be competent to initiate action under the provisions of the Act on the findings of the inquiry report if the Co-operative Society fails to take action within three months of communication of his findings on the inquiry report even if the general body of the society passes a resolution negativing the fundings of the inquires.
SECTION 89: INSPECTION OF BOOKS OF ACCOUNTS
OF A CO-OPERATIVE SOCIETY
(1) The books of accounts and other books, auditor’s report and other papers of a Co-operative Society shall be open to inspection during business hours at the Registered address of the Co-operative Society free of charge
(i) by the members of the Co-operative Society pertaining to their
individual accounts;
(ii) by the Federation/ Financing Bank;
(iii) By Registrar or such Officer as may be authorised by the Registrar in this behalf:
Provided such inspection may be made without giving any previous notice to that Co-operative Society or any officer thereof.
Provided further that the Registrar or such officer authorized by him by a general or special order shall inspect every cooperative society in his administrative jurisdiction at least once in a half year and communicate the notes of inspection to the cooperative society concerned for taking action on the findings therein.
(2) It shall be the duty of every Director, other officer or employee of the Co-operative Society to produce to the person conducting inspection under sub-section (1) all such records of the Co-operative Society in his custody or control and to furnish him with any statement, information or explanation relating to the transactions/ affairs of such Co-operative Society as the said person may require of him within such time and the Headquarters of the Society or branch there of.
102 (3) It shall also be the duty of every Director or other officer or employee of the Co-operative Society to give to the person conducting inspection under this section all assistance in connection with the inspection which the Co-operative Society may be reasonably expected to give.
(4) The person conducting the inspection under this section, may during the course of inspection --
(i) Verify cash balance, and securities and assets with the society and obtain confirmations for liabilities
(ii) Make or cause to be made copies of documents and papers and relevant portions of accounts
, or
(iii) Place or cause to be placed any mark of identification thereon in
token of the inspection having been made.
(5) Not withstanding any thing contained in any other law for the time being in force or in any contract to the contrary, the Registrar or an Officer authorized by him to conduct inspection under this section shall have the same powers as are vested in a Civil Court under the Code of Civil Procedure, while trying a suit in respect of the following matters namely:
(i) the discovery and production of books of accounts and other documents at the Headquarters of the Society or branches there of and at such time as may be specified by him.
(ii) summoning and enforcing the attendance of persons and examining them on oath
(iii) inspection of any books, registers and other documents of the cooperative societies at the headquarters, branches there of.
(6) Where an inspection is made by the Registrar or by any person authorized by him, the inspection report shall be furnished to the cooperative society, within thirty days along with his findings for being placed before the general body meeting of the society for taking up follow up action.
(7) The Registrar shall be conapetent to initate action under the provisions of this Act even if the general body resolves negativing the findings of the Registrar and fails to take up action.
SECTION 90: INSPECTION OF A CO-OPERATIVE SOCIETY
AT THE INSTANCE OF A CREDITOR
(1) Registrar may of his own motion or on the application of a creditor of a Co-operative Society inspect or direct any person authorized by him by a general or special order in this behalf to inspect the books of accounts of a Co-operative Society.
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Such inspection shall be completed within a period of three months from the date of receipt of the orders of inspection by the Inspecting Officer.
Provided that the Registrar may, for reasons to be recorded in writing extend the period of three months for completion of the inspection by a further period not exceeding two months negativing the findings of the Registrar by a resolution of its general body.
Provided further that no such inspection shall be made or directed on the application of a creditor, unless the creditor:-
(a) Satisfies the Registrar that the debt is a sum then due and that he had
demanded payment thereof and has not received satisfaction within
a reasonable time; and
(a) deposits with the Registrar, such sum as security for the costs of the proposed inspection as the Registrar may require;
(2) The Registrar or any person authorized by him under sub-section (1) shall prepare a report of inspection which shall be communicated to the Board of a Co-operative Society along with the findings of the Registrar thereon. It shall be the responsibility of the Board / an appointed Board / Person-incharge / Administrator to place the inspection report before the General Body / Special General Body convened for the purpose within one month of the communication of the inspection report, for follow-up action by the Co-operative Society.
(3) The Registrar shall be competent to initiate action under the provisions of this Act if the Board fails to take action within three months.
SECTION 91: INSPECTION OF BOOKS BY FINANCING BANK
OR FEDERAL COOPERATIVE SOCIETY
A Financing Bank or a Federal Co-operative Society shall have the right to inspect the books of any Co-operative Society which is indebted to it. The inspection may be made either by an Officer of the Financing Bank or Federal Co-operative Society authorized by the Board of such Bank or such Federal Co-operative Society or by a member of its paid staff certified by the Registrar as competent to undertake such inspection. The Officer or member so authorized to conduct inspection shall at all reasonable times have free access to the books, accounts, documents, securities, cash and other properties belonging to or in the custody of the Co-operative Society and may also call for such information, statements and returns as may be necessary to ascertain the financial condition of the Co-operative Society and the safety of the sums lent to it by such Bank or Federal Co-operative Society. He shall complete the inspection within three months from the date of receipt of authorization by him. He shall prepare a report of inspection which shall be communicated to the Board of the Co-operative Society / Federal Co-operative Society together with the findings of the Registrar thereon. It is the responsibility of the
104 Board of the Co-operative Society / Federal Co-operative Society to place the inspection report along with the findings of the Registrar before the General Body / Special general body convened for the purpose to take follow up action by the Co-operative Society / Federal Co-operative Society. The Registrar shall be competent to take action under the provisions of this Act if the Board fails to take action in three months, negativing the findings of the Registrar by a resolution of its general body.
SECTION 92: SERVICE OF SUMMONS/NOTICES/REQUISITIONS
AND DIRECTIONS ON PARTIES
(1) Every summons under this Act shall be in writing and shall be authenticated by seal, if any, of the Officer by whom it is issued and shall be signed by such Officer or by any person authorized by him in writing in this behalf.
(2) The summons shall require the person summoned to appear before the said Officer on a stated day which shall be at least fifteen days later and the time and place shall also be specified therein.
(3) It may also be specified in the summons 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.
(4) 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.
(5) The service of summons under this Act on any person may be effected in any one of the following ways:-
(a) by giving or tendering it in person to the person concerned; or
(b) if such person is not found, by leaving it at his last known place of
abode or business or by giving and tendering it to some adult
member of his family; or
(b) by sending it by Registered Post Acknowledgement Due if the address of such person is known to the Registrar or by sending it to other
105 authorized person by Registered Post Ack. Due; or
(d) if none of the means aforesaid are available by fixing it in some
conspicuous part of his last known place of abode or business.
(6) Where the serving officer delivers or tenders a copy of the summons to the person summoned 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.
(7) The serving Officer shall in all cases in which the summons have been served under sub-Rule (6) make an endorsement on, or annex or caused to be endorsed or annexed on or to the original summons, a return stating the time and the manner in which the summons was served and the name, address of the person, if any, identifying the person served or witnessing the delivery or tendering of the summons.
(8) The sufficiency of proof or service of the summons shall be decided by the authority which issued the same.
(9) Where the person to be summoned is a Public Officer or the servant of a company or a firm or a local authority or an institution or any other person, the Officer issuing summons may if it appears that the summons may be conveniently so served send it by Registered Post with Acknowledgment Due for service on the party to be summoned to the Head of the office in which he is employed together with a copy of the summons to be retained by the person concerned.
(10) The summons under sub-section 5(a) may be served through an employee of the Co-operative Department.
SECTION 93: ACTION ON AUDIT SPECIAL AUDIT REPORT OR
INQUIRY REPORT
(1) On communication of an audit report under Sec.83 or a special audit report under section (87) or an inquiry report under section (88) or inspection report under section (89) to the Board of the Cooperative Society concerned the Registrar may, where the audit special or audit or inquiry or inspection report reveals mismanagement on the part of any or all of the office-bearers or Directors, or employees, without prejudice to any civil or criminal proceedings to which they may be liable, all upon the board.
(a) to convene the General Body meeting within twenty five days, to enable him to bring to the notice of the General Body, either directly or through his nominee, the findings of the audit or special audit or inquiry or inspection report and direct the Board to rectify the defects and to take necessary action against the office-bearers and Directors involved; and
106 (b) to place the employee(s) under suspension against whom prima-facie case of misappropriation of funds is reported;
(2) If the Board fails to carry out the directions issued by the Registrar under Sub-section (1) and submit compliance report within three months from the date of issue of directions, the Registrar may
(i) Initiate action under Section (95) for the recovery of the amount; and / or
(ii) take action for supersession of the Board under Section (60); and / or
(iii) Initiate action under the provisions of Chapter XIV of the Act.
SECTION 94: SUSPENSION OF OFFICER OR SERVANT OF SOCIETY
1) Where in the course of an audit under section (83) or an inquiry under Section (88) or an inspection under section (89) or Section (90) or (91), it is brought to the notice of the Registrar that a paid officer or servant of a society has committed or has been otherwise responsible for misappropriation, breach of trust or other offence, in relation to the society, the Registrar may, if in his opinion there is primafacie evidence against such paid officer or servant and the suspension of such paid officer or servant is necessary in the interest of the society, direct the committee pending the investigation and disposal of the matter, to place or caused to be placed, such paid officer or servant under suspension from such date, and for such period as may be specified by him, but not retrospectively.
2) on receipt of such direction, the committee shall, notwithstanding any provision to the contrary in the byelaws placed or caused to be placed, the paid officer or servant under suspension forewith.
3) The Registrar may direct the committee to extend from time to time the period of suspension and the paid officer or servant suspended shall not be reinstated except with the previous sanction of the Registrar.
SECTION 95: SURCHARGE
(1) Notwithstanding anything contained in any law for the time being in force wherein the course of an audit under Section (83) or special audit under Section (87) or an inquiry under Section (88) or inspection under Section (89), or the winding of a Co-operative Society under Sections (80), it appears that any person who is or was entrusted with the organization, affairs or management of the Co-operative Society or any past or present officer or servant of the Co-operative Society has misappropriated or fraudulently retained any money or other property or has been guilty of breach of trust in relation to the Co-operative Society or has caused any deficiency in the assets of the Co-operative Society by breach of trust or wilful negligence or has made any payment contrary to the provisions of this Act or the byelaws, the Registrar himself
107 may enquire or direct any person specially authorized by him by an order in writing in this behalf, of his own motion or on the application of the board of the Co-operative Society, liquidator or any creditor or contributor, to enquire into the conduct of such person regarding the extent to which the person who has taken part in the organisation or management or affairs of the Co-operative Society or in the case of any deceased person or enquire into the conduct of his representative who has inherited his estate or enquire into the conduct of past or present officer or employee of the Co-operative Society to the extent which they are liable or accountable for any loss or deficiency caused to the Co-operative Society by their omissions and commissions.
(2) On the completion of further enquiry into the conduct of the persons under sub-section (1) the Registrar or the person authorized as aforesaid shall issue a notice to the person or persons concerned furnishing him or them with particulars of acts of misapplication or retention or misfeasance or breach of trust and extent of his or their liability involved therein and calling upon him or them to put in statements in his or their defence within thirty days of the date of issue of the notice.
(3) On receipt of the statement referred to in sub-section (2), the Registrar or the person specially authorized if he is satisfied that there are reasonable grounds for holding the person or persons liable, shall frame charges.
(4) The person or persons concerned after the charges are framed are permitted to put in his or their written statements in defence and to indicate the documentary or oral evidence which he / they would like to produce. The Registrar or the person specially authorized may permit production of other documentary or oral evidence if considered necessary subsequently.
(5) The Registrar or the person specially authorized shall thereafter record the evidence led by the Inquiry Officer or Inspecting Officer or the Officer who conducted audit or special audit or the liquidator as the case may be and the Co-operative Society , and take on record the documents proved by them. At the time of taking evidence opportunity has to given to the charged persons (hereinafter called delinquents) to cross examine the witnesses.
(6) After taking down the evidence led by the inquiry officer or inspecting officer or of the officer who conducted audit or special audit or liquidator as the case may be the delinquents have to be asked to adduce their evidence oral or documentary and the evidence adduce by them and their witnesses have to be recorded and a date fixed for hearing both sides.
(7) On the day fixed for hearing under sub-section (6), the Registrar or the person specially authorized shall hear the arguments and may pass his final well reasoned speaking orders on the same day or any date fixed by him within fourteen days from the date on which the hearing is completed either ordering repayment or restoration of the money or property or any part thereof with interest at such rates as the Registrar or the person specially authorized aforesaid thinks just or to contribute such sum to the assets of the Co-operative Society by way of compensation in respect of the misappropriation, misapplication of funds, fraudulent retention, breach of trust, or the wilful negligence as the Registrar or the person authorized aforesaid thinks just:
108 Provided that no order shall be passed against any person(s) referred to in this sub-section unless the person(s) concerned have been given an opportunity of making his their representation.
(8) The Registrar or the person authorized as aforesaid shall furnish a copy of his order to the party(ies) concerned within ten days of the date on which he makes his final order. Any sum ordered under this section to be repaid to a Co-operative Society or recovered as a contribution to its assets may be recovered in the same manner as arrears of land revenue under the Andhra Pradesh Revenue Recovery Act, 1864 and the Registrar or the person authorized by him in this behalf shall exercise the powers of the Collector under this Act.
(8) This section shall apply notwithstanding that such person or officer or servant may have incurred criminal liability by his act.
(9) The Registrar or the person specially authorized shall ordinarily complete the surcharge proceedings within four months of framing charges against the alleged delinquent.
(10) In regard to recovery of any sum due for recovery ordered under this section, the Registrar of the district in which the cause of action arose on his own motion shall take any steps which he may deem suitable in the matter of such recovery without any application having been made to him in that behalf and it shall not be necessary to deposit any sum by way of costs. Recovery proceedings shall take place as detailed in the schedule on execution.
109
CHAPTER - X
Settlement of Disputes
SECTION 96: SETTLEMENT OF DISPUTES
(1) If any dispute touching the constitution, management or business of a Cooperative 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 Co-operative Society, its board or any officer, agent or employee of the Co-operative Society, or
(c) between the 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 Co-operative Society, not being the dispute regarding disciplinary action taken by the Co-operative Society; or
(d) between the Co-operative Society and any other Co-operative Society or between a Co-operative Society and liquidator of another Co-operative Society or between the liquidator of one Co-operative Society and the liquidator of another Co-operative Society,
Such dispute shall be referred to the Registrar for decision and no Court shall have jurisdiction to entertain any suit or other proceedings in respect of such dispute.
Explanation:- For the purposes of this section a dispute shall include:-
(i) a claim by Co-operative Society for any debt or other amount due to it from a member, or any employee, or the nominee, heir or legal representative of a deceased member, or an employee, whether such debt or other amount be admitted or not;
(ii) a claim by a surety against the principal debtor where the
Co-operative Society has recovered from the surety any amount in respect
of any debt or other amount due to it from the principal debtor as result
of the default of the principal debtor whether such debt or other amount
due to, be admitted due to, be admitted or not;
110 (iii) a claim by a Co-operative Society against the member, past member or
the nominee, heir or legal representative of a deceased member for the
delivery of possession to the Co-operative Society of land or other
immovable property resumed by it for breach of the conditions of
assignment or allotment of such land or other immovable property.
(2) If any question arises for the purpose of this section, whether any person is or was a member of the cooperative society or whether a dispute referred to the Registrar under this section is a dispute touching the constitution, management or the business of the Co-operative Society, such question shall be decided by the Registrar.
SECTION 97: ACTION TO BE TAKEN BY THE REGISTRAR
ON SUCH REFERENCE
(1) The Registrar shall on receipt of the reference of a dispute under section (96)
a. Elect to decide the dispute himself; or
b. transfer it for disposal to an officer subordinate to him who has been invested by the Government with the powers in that behalf or
c. refer it for disposal to an arbitrator;
d. Explanation:- For the purpose of this section the Registrar shall mean
(i) Additional Registrar of Co-operative Societies in respect of all disputes relating to Housing Co-operative Societies located in the districts of Hyderabad and Rangareddy, monetary disputes with claims exceeding Rs.5.00 crores.
(ii) Joint Registrar/District Co-operative Officer in all districts of the State in respect of all non-monetary disputes, monetary disputes with claims ranging from Rs.1.00 crore to Rs.5.00 crores and disputes coming under section (96)(1)(c).
(iii) Deputy Registrars in respect of all monetary disputes with claims ranging from Rs.50.00 lakhs to Rs.1.00 crore.
(iv) Assistant Registrars in respect of monetary disputes with claims below Rs.50.00 lakhs.
111 (2) The Registrar may by order for reasons to be recorded therein withdraw any reference transferred under clause (b) of sub-section (1) or referred under clause (c) of that sub-section and may elect to decide it himself or refer the same to another arbitrator for decision.
Explanation: For the removal of doubts, it is clarified that power to decide dispute under this section includes the power to pass interim orders.
(3) Where any dispute referred to the Registrar is withdrawn by him as aforesaid relates to immovable property, the Registrar or the Officer subordinate to him, authorized to dispose off the dispute or the arbitrator to whom it is referred or transferred may on the application of a party to the dispute direct that any person who is interested in such property whether such person be a member or not be included as a party to the dispute and any decision that may be passed on the reference by the Registrar or Officer subordinate to him authorized in this behalf or the arbitrator aforesaid as the case may be shall be binding on the party so included provided that he shall be liable only to the extent of such property.
(4) The Registrar or any other person to whom the dispute is referred for decision under this section may, pending decision on the dispute make such interlocutory orders as he may deem necessary in the interest of justice.
(5) Notwithstanding any thing contained in the Limitation Act, 1963 (XXXVI of 1963) but subject to the specific provisions made in this Act, the period of limitation in the case of a dispute referred for arbitration under this Act shall;--
(a) when the dispute relates to the recovery or any sum including interest
thereon due a Co-operative Society by a member thereof be six years
from the date on which the sum or installment thereof payable by the
member of the Co-operative Society concerned has fallen due;
(b) when the dispute is between a Co-operative Society or its Board of
Directors and any past Board of Directors, any past or present Director,
or past or present agent or past or present servant or the nominee heir
or legal representative of the deceased Director, deceased agent
or deceased servant of the Co-operative Society or a member or a past
member or the nominee heir or legal representative of a deceased
member and when the dispute relates to any act or omission on the part
of either party to the dispute be six years from the date on which the act
or omission with reference to which the dispute arose took place.
112
(c) when the dispute is in respect of any matter touching the Constitution,
management or business of a Co-operative Society which has been
ordered to be wound up under section (99) be three years from the date
of issue of the order;
(a) when the dispute is in respect of election of a Board of Directors or Office-bearers of the Co-operative Society, be one month from the
date of declaration of the result of the election;
(6) The period of limitation in the case of any other dispute except those mentioned above in sub-section (5) which is required to be referred for arbitration under section (96) of this Act shall be regulated by the provisions of the Limitation Act, 1963 (XXXVI of 1963) as if the dispute were suit and the Registrar a Court.
(7) The Registrar or his subordinate officer vested with the powers of the Registrar or the arbitrator deciding the dispute shall record a brief note of the evidence of the parties and witnesses who attended and upon the evidence so recorded, and after consideration of any documentary evidence produced by the parties, shall pass a decision in accordance with justice, equity and good conscience and such decision shall be given in writing. In the absence of any party duly summoned to attend, the dispute may be decided ex-parte.
(8) Any dispute referred to the Registrar under section (96) shall ordinarily be disposed off within a period of six months from the date of such reference.
(9) The proceedings of the arbitrator shall be governed as far as practicable by the provisions of Code of Civil Procedure, 1908 (Central Act V of 1908) and as detailed in the schedule on “Settlement of Disputes”.
SECTION 98: POWERS OF FINANCING BANK TO PROCEED AGAINST MEMBERS OF A CO-OPERATIVE SOCIETY FOR RECOVERY OF MONEYS DUE TO IT FROM SUCH CO-OPERATIVE SOCIETY
(1) If a Co-operative Society is unable to pay its debts to a financing bank by reason of its members committing default in the payment of the moneys due by them, the financing bank may direct the Board of such Co-operative Society to proceed against such members under Section (96) or, (109) or Section (108) as the case may be and if the Board fails to do so within a period of ninety days from the receipt of such direction, the financing bank itself may proceed against such members under Section (96) or (109) OR Section (108), in which case the provisions of this Act or the byelaws shall apply as if all references to the Co-operative Society or its Board in the said provisions were references to the financing bank.
113
(2) Where a financing Bank has obtained a decree or award against a Co-operative Society in respect of moneys due to it from the Co-operative Society, the financing bank may proceed to recover such moneys firstly from the assets of the Co-operative Society and secondly from the members to the extent of their debts due to the Co-operative Society.
114
CHAPTER - XI
Dissolution
SECTION 99: WINDING UP OF A CO-OPERATIVE SOCIETY
(1) If the Registrar after an inquiry has been held under section (88) or an inspection has been made under section (89 and 90) or on receipt of an application made by not less than 2/3rd of the members voluntarily seeking winding up of their Co-operative Society is of opinion that the Co-operative Society ought to be wound up, he may after giving the Co-operative Society an opportunity of making its representation within thirty days of receipt of notice, by order direct it to be wound up. (2) The Registrar may of his own motion and after giving the Co-operative Society an opportunity of making its representation within thirty days of receipt of notice make an order directing the winding up of a Co-operative Society-- (a) where it is a condition of the registration of the Co-operative Society that it shall consist of at least 10 members and the membership falls short of that number; or (b) where the Co-operative Society has not commenced working within two years from the registration or has ceased to work continuously for three years; or (c) where in the opinion of the Registrar, the Society is conducting its affairs in a manner detrimental to the interests of its members or the promotion of the objects for which it is registered; or (d) where the Cooperative society has fulfilled its core objects and all its members are served accordingly and has thus out lived its utility. SECTION 100: APPOINTMENT OF LIQUIDATOR
(1) Where the Registrar has made an order under section (99) for the winding up of a Co-operative Society, he may appoint a liquidator for that purpose and fix his remuneration.
(2) On the appointment of liquidator, the property, assets effects and actionable claims or liabilities of the Co-operative Society as on the date of appointment shall vest in or devolve on the liquidator. He shall take such steps as he may deem necessary or expedient to prevent loss or deterioration of or damage to such property, assets effects and actionable claims.
115 (3) Where an order of winding up of a Co-operative Society is set aside in appeal, the property, assets effects and actionable claims or the liabilities of Co-operative Society as on the date of such setting aside shall revest in or devolve on the Co-operative Society.
SECTION 101: DUTIES OF LIQUIDATOR
(1) On his/her appointment, a liquidator shall immediately give notice of his/her appointment;
(a) to each claimant and creditor known to the liquidator;
(b) immediately publish notice of his/her appointment in the A.P. Gazette once a week for two consecutive weeks and in a newspaper published or largely distributed in the place where the Co-operative Society has its registered office and take reasonable steps to give notice of the liquidation in the jurisdiction of the Co-operative Society where it carries on business;
(c) place in the notice mentioned in clause (a) and (b) a provision requiring any person;
(i) indebted to the Co-operative Society, to render an account
and pay to the liquidator at the time and place specified
any amount owing;
(ii) possessing property of the Co-operative Society, to deliver
it to the liquidator at the time and place specified; and
(iii) having a claim against the Co-operative Society, whether liquidated, unliquidated, future or contingent, to present particulars of the claim in writing to the liquidator not later than two months after the first publication of the notice;
(d) take into custody and control the property and assets of the Co-operative Society;
(e) open and maintain an account for the moneys of the Co-operative Society in Government Treasury/Dist. Coop. Central Bank;
(f) keep accounts of the moneys of the Co-operative Society received and paid out by him/her;
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(g) maintain separate lists of the members, creditors and other persons having claims against the Co-operative Society;
(h) take action for recovery of dues from members, past members or deceased members by filing arbitration references, and obtaining awards initiating Execution proceedings and passing contribution orders as outlined in the schedule on liquidation proceedings;
(i) where at any time he/she determines that the Co-operative Society is unable to pay or adequately provide for the discharge of its obligations, apply to the Registrar for directions; and
(j) deliver to the Registrar, at least once in every six months period or more often after his/her appointment as the Registrar may require, financial statements of the Co-operative Society under winding up in any form that the liquidator considers proper or that the Registrar may require.
(2) A liquidator shall pay the costs of liquidation out of the property of the Co-operative Society under winding up and shall pay or make adequate provision for all claims against such Co-operative Society.
(3) After paying or making adequate provision for all claims against the Co-operative Society under winding up, the liquidator shall convene a General Body meeting and present a summary of actions taken by him to settle all claims and after taking vote and the resolution of the General Body shall apply to the Registrar for approval of his/her final accounts and for permission to distribute in money or in kind the remaining property of the Co-operative Society in accordance with the byelaws and deposit the records of the society in such place as the Registrar may direct.
(4) Where the Registrar approves the final accounts rendered by a liquidator in pursuance of sub-section (3), he/she shall
a) issue directions with respect to the custody or disposal of the documents and records of the Co-operative Society; and
b) discharge the liquidator.
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SECTION 102: POWERS OF LIQUIDATOR
(1) The liquidator may
(a) retain lawyers, accountants, engineers, appraisers and other professional advisors;
(b) bring, defend or take part in any civil, criminal or administrative action or proceedings in the name and on behalf of the Co-operative Society under winding up;
(c) carry on the business of the Co-operative Society under winding up as required for an orderly liquidation;
(d) sell by public auction any property of the Co-operative Society under winding up;
(e) do all acts and execute any documents in the name and on behalf of the Co-operative Society under winding up
(f) borrow money on the security of the property of the Co-operative Society under winding up;
(g) settle or compromise any claims by or against the Co-operative Society under winding up; and
(h) do all other things that he/she considers necessary for the early liquidation of the Co-operative Society and distribution of its property and funds;
(i) pass contribution orders against members, or past members, or deceased members, their heirs or legal representatives to recoup the deficits of a Co-operative Society under winding up after giving an opportunity to them of being heard.
(2) Where a liquidator has reason to believe that any person has in his/her possession or under his/her control or has concealed, withheld or misappropriated any property of the Co-operative Society under winding up; he/she shall apply to the Registrar for taking action under Section (95) without prejudice to proceed against the person under the relevant provisions of the Indian Penal Code, 1860 (Central Act 45 of 1860).
(3) Where the examination mentioned in sub-section (2) discloses that a person has concealed, withheld or misappropriated property of the Co-operative Society under winding up, the Court may order that person to restore the property or pay compensation to the liquidator on behalf of the Co-operative Society under winding up.
(4) No liquidator or his/her relatives or any officer of the cooperative department shall purchase, directly or indirectly, any part of the stock-in-trade, debts or assets of the Co-operative Society under winding up.
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SECTION 103: RESTRICTION ON ALIENATION OF PROPERTY BY A MEMBER OF A CO-OPERATIVE SOCIETY UNDER WINDING UP
Where a Co-operative Society has been ordered to be wound up under section (99) no member shall alienate his property movable or immovable, from the date of the order of winding up and until after expiration of fifteen days from the date on which the order of winding up takes effect. Any alienation of the property made by a member in contravention of this section is voidable at the option of the liquidator.
Provided that the provisions of this section shall not apply to any member who furnishes adequate security to the satisfaction of the liquidator.
SECTION 104: CANCELLATION OF REGISTRATION OF A
CO-OPERATIVE SOCIETY
Where the affairs of a Co-operative Society have been completely wound up, after considering the final closing report of the liquidator under sub-section (3) of section (101), the Registrar shall by order in writing, cancel the registration of the Co-operative Society. The Co-operative Society shall cease to exist as a corporate body from the date of such order.
SECTION 105: RESTORATION OF A CO-OPERATIVE SOCIETY WOUND UP
Where in the opinion of the Registrar, a Co-operative Society which has been ordered to be wound up may be restored to a Board constituted in accordance with the provisions of the Act, he may at any time before the affairs of the Co-operative Society have been completely wound up cancel or withdraw the order of winding up and address the election Authority to constitute a Board in accordance with the provisions of the Act and handover the management of the affairs of the Co-operative Society to such Board. The property, assets effects and actionable claims or liabilities of the Co-operative Society as on the date of such cancellation or withdrawal shall re-vest in or devolve on the Co-operative Society.
SECTION 106: TERMINATION OF DISSOLUTION PROCEEDINGS
(1) The dissolution proceedings shall be closed within a period of five years from the date of the order of dissolution or such extended period by the Registrar till court cases if any, pending or disposed of. After the expiry of five years, or such extended period if the charged/mortgaged assets are adjudged defective in title involving disputes with either encumbrances or posing
119 problems of getting possession, or protracted litigation, on submission of a detailed action taken report relating to such property by the liquidator, the Registrar may direct disposal of such assets through Assets Re-construction Company regulated by the Reserve Bank of India, or recovering the same as if it were a money debt.
SECTION 107: DISPOSAL OF SURPLUS ASSETS
The surplus assets as shown in the final closing report of the liquidator of a Co-operative Society which has been wound up may either be divided by the Registrar among its members in proportion to the share capital held by each of such members or devoted to any objects provided in the byelaws of the Co-operative Society wound up, if they specify that such a surplus shall be utilized for the particular purpose or may be utilized for both the purposes. Where the surplus is not so divided among the members and the Co-operative Society wound up has no such byelaws, the surplus shall vest in the Registrar, who shall hold it in trust and shall transfer it to the Reserve Fund of a new Co-operative Society registered with a similar object and serving more or less an area whic the Co-operative Society wound up, to which the surplus belonged, was serving.
Provided that where no such Co-operative Society exists or registered within three years of the cancellation of the Co-operative Society whose surplus is vested in the Registrar, the Registrar may distribute the surplus in the manner he thinks best among any or all of the following:-
(a) An object of public utility and of local interest as may be recommended by the members in the general body meeting held by the liquidator for recording the final closing report;
(b) A Federal Co-operative Society with similar objects to which the cancelled Co-operative Society was eligible for affiliation or, where no such Federal Co-operative Society exists to the Andhra Pradesh State Co-operative Union for the schemes connected with the development of Co-operative movement or for any charitable purpose as defined in the Charitable Endowment Act, 1890 (Central Act 4 of 1890);
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CHAPTER - XII
Execution of Decrees, Decisions,
Awards and Orders
SECTION 108: EXECUTION ORDERS RELATING TO RECOVERY
OF AMOUNTS
Every decision or order made by the Registrar or any person authorized by him
(a) on a certificate signed by the Registrar or any person authorized by him in writing in this behalf, be deemed to be a decree of Civil Court and shall be executed in the same manner as if it were a decree of such Court and such decree shall be executed by the Registrar or any person authorized by him in writing in this behalf by attachment and sale or sale without attachment of any property of the person or a Co-operative Society against whom the decision or order has been made; or
(b) where the decision or order provides for the recovery of money, be executed according to law for the time being in force for the recovery of arrears of land revenue and for the purpose of such recovery, the Registrar shall have the powers of a Collector under A.P. Revenue Recovery Act, 1864. Provided that any application for the recovery of any sum shall be made within twelve years from the date fixed in the decision or order and if such no date is fixed, from the date of decision or order, as the case may be; or
(c) be executed by the Registrar or any person authorized by him in
writing in this behalf by attachment and sale or sale without
attachment of any property of the person or a Co-operative Society
against whom the decision or order has been made as per schedule
“on procedure in execution of decree, decision, award or contribution order”.
(d) where the decision or order provides for recovery on account of the default in contribution to the cooperative education fund refered to in clause 29(2) or cooperative rehabilitation and reconstruction fund established under section 147(1), the Registrar shall issue certificate of recovery and forward it to any other authority for execution according to the law for the time being in force for the recovery as arrears of land revenue.
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(1) Sale of properties subjected to charge:
Notwithstanding anything contained in this Act or in any other law for the time being in force and without prejudice to any other mode of recovery which is being taken or may be taken, the Registrar or any person subordinate to him and empowered by the Registrar in this behalf may on an application from a Co-operative Society for the purpose, recover any debt or outstanding demand due to the Co-operative Society by any member, or past or deceased member by sale of property or interest in property which is subject to a charge.
Provided no sale shall be ordered under this section unless the member, or past member or the nominee, heir or legal representative of the deceased member has been served, with a notice of the application to sell and has failed to pay the debt or outstanding demand within fifteen days from the date of such service.
(2) Execution of non-monetary orders:
Every order or decision of a non-monetary nature made under the provisions of section (96) section (115), (117) or section (118) shall be executed by the Civil Court having jurisdiction as if such order or decision is a decree of that Court on a certificate issued by the Registrar or any person authorized by him in this behalf.
(3) Delivery of possession: The Registrar of the District shall be deemed to be a Civil Court when exercising any power under this Act for the recovery of any amount by the attachment and sale or by the sale without attachment of any property. While passing orders on any application of lawful purchaser in the sale under this act, for delivery of possession of any property purchased in the sale and when the lawful purchaser is resisted or prevented by any person other than a defaulter claiming in good faith to be in possession of the property on his own account, he shall apply the provisions of rules (97) to (103) of order XXI of the first schedule to the code of civil procedure of 1908 (Central Act 5 of 1908) to give possession of the property sold to the lawful auction purchaser.
(4) At any sale of movable or immovable property held under provisions of this section, no Officer of the Co-operative Department or employee of the Co-operative Society shall either directly or indirectly bid for acquiring or attempt to acquire any interest in such property.
(5) Publication of information respecting members
who are overdue defaulters to Co-operative Societies:
If the financing bank is of opinion that it is necessary or expedient in public interest or for the purpose of securing the recovery of any debt or outstanding demand due to any Co-operative Society which is affiliated to the financing bank to publish the names of any members, past or deceased members from whom any debt or outstanding demand exceeding Rs.10,000/- is due to the Co-operative Society, the financing bank may cause to be published the names of such members at the cost of Co-operative Society concerned in such manner as it thinks fit.
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SECTION 109: POWER OF REGISTRAR TO ISSUE CERTIFICATE FOR RECOVERY OF SUMS DUE FROM MEMBERS OF A CO-OPERATIVE SOCIETY
(1) Notwithstanding anything contained in this Act or in any other law for the time being in force and without prejudice to any other mode of recovery which is being taken or may be taken under this Act, the Registrar may on his own motion or on the application made by a Co-operative Society / financing bank / federal Co-operative Society as the case may be for the recovery of arrears of any sum due to it from any of its members and after making such inquiry as he deems fit, issue a certificate for recovery of such arrears.
Provided that every application under this sub-section made by a Co-operative Society / financing Bank / federal Co-operative Society shall be accompanied by a statement of accounts in respect of arrears to be recovered from the member.
Provided further that no such certificate under this sub-section shall be issued unless the member concerned has been given an opportunity of making his representation.
(2) Where the Registrar is satisfied that a Co-operative Society has failed to take action under sub-section (1) in respect of any amount due as arrears, he may on his own motion and after making such inquiry as he deems fit issue a certificate for the recovery of the amount stated therein to be due as arrears and such a certificate shall be deemed to have been issued on an application made by the Co-operative Society concerned.
(3) A certificate issued by the Registrar under sub-section (1) or (2) shall be final and conclusive proof of the arrears stated to be due therein and the certificate shall be executed in the manner specified in section 108 (c) of this act.
(4) An Officer of the Co-operative Department not below the rank of Assistant Registrar of Co-operative Societies shall be authorized under this section as Sale Officer / Recovery Officer to collect the arrears.
SECTION 110: ATTACHMENT OF PROPERTY BEFORE
DECISION OR ORDER
If the Registrar is satisfied on application, report, inquiry or otherwise that any person with intent to delay or obstruct the enforcement of any decision or order that may be made against him under the provisions of this Act-
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(a) is about to dispose of the whole or any part of his property; or
(b) is about to remove the whole or any part of his property from the jurisdiction of the Registrar, the arbitrator or liquidator as the case may be, he may, unless adequate security is furnished, direct the attachment of the said property and such attachment shall have the same effect as if made by a competent Civil Court.
(c) a direction made for the attachment of any property under this section may be withdrawn by the Co-operative Tribunal/ Registrar when the party concerned furnishes the security required together with security for the cost of the attachment or when the Registrar decides that the party need not pay or restore any money or property or any part thereof with interest or contribute any sum to the assets of the Co-operative Society by way of compensation; or
(d) when the dispute referred under Section (96) of this Act has been decided against the party at whose instance the attachment was made;
(e) any attachment made under this section shall not affect the rights existing prior to the attachment, of persons not parties to the proceedings in connection to 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 the property under attachment in execution of such decree;
(f) where the property is under attachment by virtue of this section and a
decree is subsequently passed against the person whose property is
attached, it shall not be necessary to make an application for re-
attachment of the property for the purpose of sale of such property.
SECTION 111: RECOVERY OF AMOUNTS DUE TO GOVERNMENT
(1) Any amount due from a Co-operative Society from an Officer, former Officer or member or past or deceased member of a Co-operative Society as such to Government including any costs awarded to Government under this Act may on a certificate issued by the Registrar in this behalf be recovered by the Registrar or any other person authorized by him in this behalf or by the Collector in the same manner as arrears of Land Revenue.
(2) Any amount due from a Co-operative Society to Government and recoverable under sub-Section (i) may be recovered firstly from the property of the Co-operative Society; secondly in the case of a Co-operative Society, the liabilities of the members of which is limited, from the members; past members of the estates of deceased members, subject to the limit of their liability and thirdly in the case of other Cooperative Societies from the members, past members or the estates of deceased members.
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Provided that the liability of past members and the estates of deceased members shall in all cases be subject to the provisions of Section (45).
SECTION 112: POWER TO SUMMON WITNESSES AND
REQUISITION DOCUMENTS
(1) In exercise of the functions and powers conferred on him by or under this Act, the Registrar or any person authorized in this behalf by general or special order, the person while conducting audit under section (83) or special audit under section (87) or inquiry under section (88) or inspection under section (89) or Arbitrator hearing a dispute under section (96) or a liquidator appointed under section (100) or the Tribunal constituted under section (115) or the person hearing revision petition under section (117) and such other officers engaged in the relief of rural indebtedness or Officers of financing bank/PACS as the Government may by notification in A.P. Gazette empower in this behalf shall have the powers of Civil Court while trying a suit under the code of Civil Procedure, 1908 in respect of following matters namely--
1. summoning and enforcing the attendance of any person and examining him on oath or affirmation;
2. compelling the production of any book, account, record or other document, cash, security or other property;
3. issuing a commission for the examination of any witness;
4. receiving evidence on an affidavit;
(2) The Co-operative Tribunal, Registrar, the person authorized by him in this behalf by general or special order to conduct audit, special audit, inquiry or inspection or the arbitrator or the liquidator or the person hearing a revision petition, as the case may be, referred to in sub-section (1) may require any person present before it or him to furnish any information or to produce any document forthwith in his possession or power and shall also have power to take, or to authorize the taking of such copies of the document, or of any entries therein as it or he may consider necessary. Copies so taken shall, when certified as per the provisions of this Act, be admissible in evidence for any of the purpose in the same manner and to the same extent as the original document or the entries therein, as the case may be.
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SECTION 113: BAR OF JURISDICTION OF COURTS
(1) Save as otherwise expressly provided in this Act, no civil or revenue Court shall have any jurisdiction in respect of--
(a) the registration of a Co-operative Society or its byelaws or of an amendment of a byelaw;
(b) the removal of the Board;
(c) any dispute required under section (96) to be refer to the Registrar;
(d) any matter concerning the winding up of a Co-operative
Society; and all orders, refusals, decisions or awards
passed or directions issued or action taken in accordance
with this Act or byelaws made there under shall be final
subject to provision for appeal, revision and review and no
such order, refusal, decision, award, direction or action taken
shall be liable to be called in question in any Court or on any
ground whatsoever.
(2) While a Co-operative Society is being wound up, no suit or other legal proceedings relating to the business of such Co-operative Society shall be proceeded with or instituted against the liquidator as such or against the Co-operative Society or any member thereof on any matter touching the affairs of the Co-operative Society except by leave of the Registrar and subject to such terms and conditions as he may impose.
Provided that where the order of winding up is cancelled the provisions of sub-section shall cease to apply in relation to the Co-operative Society and member thereof but shall continue to apply to the person who acted as liquidator.
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CHAPTER - XIII
Section 114: Constitution of Co-operative Tribunals
(1) The Sate Government may, for the purposes of this Act, by notification in the official gazette constitute as many Co-operative Tribunals as may be necessary for such area or areas as may be specified in the notification.
(2) The Co-operative Tribunal shall consist of a Chairman and not more than two members and a Presenting Officer appointed by the Government.
(3) The Chairman shall be the person who is or has been a judicial officer not below the rank of a District Judge and a member shall be a person who holds or held a post not below the rank of Additional Registrar of Co-operative Societies and a Presenting Officer shall be not below the rank of a Special Category Deputy Registrar.
(4) The Presenting Officer has to receive on his behalf and on behalf of the State Government notices issued by the Co-operative Tribunal, to present the case/records pertaining to Government and its officers, to appear, act and plead on his behalf and on behalf of the State Government in all proceedings before the Co-operative Tribunal.
(5) The Government may from time to time likewise reconstitute any Co-operative Tribunal constituted under sub-section (1) or may abolish such Co-operative Tribunal.
(6) The quorum to constitute a meeting of a Co-operative Tribunal and the manner of taking decision there at and the procedure and conduct of its business shall be summary and shall be governed as far as practicable by the provisions of the code of Civil Procedure, 1908 (Central Act V of 1908).
(7) No Act or proceeding of any Co-operative Tribunal shall be deemed to be invalid by reason only of the existence of any vacancy among its members or any defect in the constitution or reconstitution thereof.
(8) A dispute relating to or in connection with any election to the office of the Chairperson of a primary society, a board, a member of a board shall be preferred to the Co-operative Tribunal having jurisdiction over the place where the main office of the Co-operative Society is situated within one month from the date of declaration of results of such election and such dispute shall be disposed of within a period of four months from the date of filing of the dispute.
(9) A dispute relating to the promoters of a Co-operative Society and Registrar or a Co-operative Society and Registrar shall be preferred to the Co-operative Tribunal having jurisdiction over the place where the main office of the Co-operative Society is situated and such dispute shall be disposed off within a period of four months from the date of filing of the dispute.
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(10) Contempt of Arbitrator and Co-operative Tribunal and Others
If any person commits any act or publishes any writing which is calculated to improperly influence the person deciding the dispute under Sec.96 of this Act or the cooperative tribunal established under Sec.114 of this Act, to bring any such authority or tribunal into disrepute or contempt or to lower its authority or to interfere with the lawful process of the said authorities, such person shall be deemed to be guilty of contempt of the said authorities.
In the case of contempt of itself the cooperative tribunal shall record the facts constituting such offence and make a report in that behalf to the High court.
In the case of contempt of the person deciding the dispute under section (96) of this act, that person shall record the facts constituting such contempt and make a report in that behalf to the cooperative tribunal and thereupon the tribunal may if it considers expedient to do so forward the report to the High Court.
When any intimation or report in respect of any contempt is received by the High Court the High court shall deal with such contempt as if contempt of itself and shall have and exercise in respect of it the same jurisdiction, powers and authority in accordance with the same procedure and practice as it has and exercises in respect of contempt of itself.
For the purpose of this section, the following acts by a person constitute contempt against authority deciding disputes/Co-operative Tribunal—
(a) omitting to produce or deliver up any document or to furnish
information being legally bound so to do when ordered;
(b) refusing to depose on oath or affirmation to state the truth
when required;
(c) refusing to state the truth and answer the question put to him
when demanded;
(d) intentionally offers any insult or causes any interruption at any
stage of judicial proceedings.
For the purpose of this section, inspection under section (89) and inquiry under section (88) and surcharge proceedings under section (95), attachment of property before judgement under section (110) and execution proceedings under section (108) shall be deemed to be judicial proceedings within the meaning of section (228) of the Indian Penal Code, 1860.
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SECTION 115: APPEALS
(1) Any person or Co-operative Society aggrieved by any decision passed or order made, in respect of:-
(i) registration of a Co-operative Society (section 8);
(ii) restriction on creation of charge (section 11);
(iii) de-registration of a Co-operative Society (section 12);
(iv) amendment of byelaw (section 16);
(v) promotion of subsidiary organization (section 20);
(vi) partnership of Co-operative Societies (section 21);
(vii) creation of new organization with others (section 22);
(viii) disqualification for membership (section 34);
(ix) disqualification for not convening Board meeting [section 37(4)]
(x) termination of membership (section 46)
(xi) disqualification of membership of the Board (section 51)
(xii) cessation of the membership of the Board (section 52);
(xiii) supersession of the Board (section 60);
(xiv) no-confidence motion against the office-bearers/Board (section 63);
(xv) issue of orders of surcharge (section 95);
(xvi) orders of Registrar on disputes referred for arbitration (section 97);
(xvii) orders of winding up of Co-operative Society (section 99);
(xviii) orders passed by liquidator (section 102);
(xix) execution proceedings relating to recovery of dues
of Co-operative Societies (section 108);
(xx) issue of certificate for recoveries of arrears due from member
to a Co-operative Society (section 109)
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(xxi) attachment of property before decision or order (section 110);
(xxii) order directing amalgamation or re-organisation of Co-operative Societies
(section 162)
(xxiii) Order of District cooperative officer to the cooperative society to admit an eligible person section 34 (10) (j)
Provided nothing in this sub-section shall apply to any order of withdrawal or transfer of a dispute under sub-section (2) of section (97).
(2) On a reference made by the Registrar of Co-operative Societies, the Co-operative Tribunal may call for and examine the record of any proceeding which is appealable to it for the purpose of satisfying itself as to the legality or propriety of any decision or order passed and where it appears to the Co-operative Tribunal that any such decision or order should be modified, annulled or reversed, Co-operative Tribunal may pass such order thereon as it may deem fit.
(3) Any appeal under sub-section (1) shall subject to the other provisions of this Act be preferred within sixty days from the date of communication to the appellant of the decision, refusal or order complained of, but Co-operative Tribunal may admit an appeal preferred after the said period of sixty days, if it is satisfied that the appellant has sufficient cause for not preferring the appeal within the said period.
(4) In disposing of an appeal under this section, the Co-operative Tribunal, may after giving the parties an opportunity of making their representations, pass such order thereon as it may deem fit.
(5) The decision or order of the Co-operative Tribunal on the appeal shall be final.
(6) The Co-operative Tribunal may pass such interlocutory order pending the decision on the appeal as it may deem fit.
(7) The Co-operative Tribunal may award costs in any proceedings before that authority to be paid either out of the funds of the Co-operative Society or by such party to the appeal as the Co-operative Tribunal may deem fit.
(8) The proceedings of the Tribunal shall be summary and shall be governed as far as practicable by the provisions of the code of Civil Procedure, 1908 (Central Act V of 1908).
(9) Appeals relating to disputes in regard to elections in Cooperative Societies and appeals against awards, orders, decisions given against members of a Cooperative Society shall not be funded by the concerned cooperative society unless ordered by the appellate authority to meet the costs from the funds of the Co-operative Society.
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SECTION 116: NO APPEAL IN CERTAIN CASES
Notwithstanding anything contained in this Act, where with the previous sanction in writing, 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 re-organisation is given effect to,
no appeal thereof shall lie against or be permissible, and the sanction or requisition of the Reserve Bank shall not be liable to be called in question.
SECTION 117: REVISION
(1) The Registrar may at any time, suo-moto or on an application made to him call for and examine the record of any Officer subordinate to him or acting on his authority and the Government may of their own motion or on an application made to them call for and examine the record of the Registrar in respect of any proceedings of special audit or audit by any officer subordinate to them or authorized by them not being a proceedings in respect of which an appeal to the Co-operative Tribunal is provided under section (115) to satisfy himself or themselves as to the regularity of such proceedings or the correctness, legality or propriety of any decision passed or order made therein; and if, in any case it appears to the Registrar or the Government that any such decision or order should be modified, annulled, or reversed or remitted for re-consideration, he or they may pass orders accordingly.
Provided that every application to the Registrar or the Government for the exercise of the powers under this section shall be preferred within ninety days from the date on which the proceedings, decision or order to which the application relates was communicated to the applicant.
(2) No order prejudicial to any person shall be passed under sub-sec. (1) unless such person has been given an opportunity of making his representation.
(3) The Registrar or the Government as the case may be, may suspend the decision or order pending the exercise of his or their power under sub-section (1) in respect thereof.
(4) The Registrar or the Government may award costs in proceedings under this section to be paid either out of the funds of the society or by such party to the application for the revision as the Registrar or the Government may deem fit.
Explanation:- For the purpose of this section, the expression “Registrar” means the Registrar of Coop. Societies for the State appointed as such under sub-section (1) of section (5).
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SECTION 118: REVIEW
(1) The appellant or the applicant for revision or the respondent may apply for the review of any order passed under section (115) or (117) on the basis of discovery of new and important facts which after the exercise of due diligence were not then within his knowledge or could not be produced by him when the order was made, or on the basis of some mistake or error apparent on the face of the record or for any other sufficient reason.
Provided that no application for review shall be preferred more than once in respect of the same order.
(2) Every application for review under sub-section (1) shall be preferred by any party to the authority which passed the order under section (115) or (117) within ninety days from the date of communication of the order passed under the aforesaid sections.
(3) The reviewing authority may pass such interlocutory orders pending the decision on the application for review as that authority may deem fit.
(4) The decision or order passed on the application in review shall be final.
(5) The reviewing authority may award costs in any proceedings for review to be paid either out of funds of the Co-operative Society or by such party to the application for review as it may deem fit.
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CHAPTER - XIV
Offences and Penalties
Section 119: Offences
It shall be an offence under this Act, if:-
a) A cooperative society or an officer or member thereof wilfully makes a false return or furnishes false information or any person wilfully not furnishes any information required from him by a person authorized in this behalf under the provisions of this Act:
b) Any person wilfully or without any reasonable excuse disobeys any summons, requisition, direction or lawfully written order issued under the provisions of this Act:
c) Any employer who without sufficient cause fails to pay to a cooperative society amount deducted by him from its employee within a period of fourteen days from the date on which such deduction is made:
d) Any officer or custodian who willfully fails to handover custody of books, accounts, documents, records, cash, security and other property belonging to a cooperative society of which he is an officer, or custodian to an authorized person and
e) Who ever before, during or after election of members of the board or office bearers adopts any corrupt practice.
f) Whoever furnishes false information to gain admission or to continue as a member of a cooperative society or to get elected to the board or as an officer of the cooperative society or to continue as a member of the board or as an officer of the cooperative society:
g) A person being a member of the board, office bearer, officer, or an employee of a cooperative society violates any of the provisions of this Act or the byelaws of the cooperative society:
h) A cooperative society fails to give a notice, send a return or document or fails to do or allows to be done any Act which a cooperative society is by this Act or under its byelaws required to give, send, do or allow to be done:
i) A cooperative society willfully neglects or refuses to do any Act for the purposes of this Act or does an act forbidden by this Act and its byelaws:
j) An officer an employee including the chief executive of a cooperative society dishonestly or fraudulently misappropriates or otherwise converts for his own use or intentionally causes loss to the property of the cooperative society entrusted to him or under his control as such officer or employee or allows any other person so to do:
k) An officer or an employee of a cooperative society is or proved to have been in possession of any property of the cooperative society reasonably suspected to have been stolen or unlawfully obtained:
l) Any officer or employee of the cooperative society abets any offence punishable under this Act whether or not that offence is committed in consequence of that abetment:
133 And if a person
(m) other than a Co-operative Society is carrying on trade or business under any name or title of which the word “Co-operative” or its equivalent in any Indian language forms part or a Co-operative Society registered under this Act fails to use the word “Co-operative” or its equivalent in any Indian language in all its transactions and working and deals;
(n) fails to give effect to any decision or order of Registrar or any Officer authorized by him / co-operative Tribunal or where an appeal against an order has been filed to the order passed by the appropriate appellate authority, such decision order not being a money decree;
(o) after ceasing to be a member or as a member of the Board, acts as a member or member of the Board, exercises the rights of a member or a member of the Board as the case may be, after being communicated of his disqualification or cessation as the case may be, by the Chief Executive of the Co-operative Society;
(p) collects share money for a Co-operative Society under formation and makes use of such funds for conducting trade or business in the name of the Co-operative Society to be registered;
(q) collects shares and fails to deposit in the financing bank within seven days of such collection;
(r) fails to initiate action against the defaulter members for the recovery of dues of the apex or any other financing institution, after the finality of the award or after recovery of such dues, fails to remit the recovered amount to the apex or financing institution.
(s) fraudulently destroys, mutilates or abets the destruction, mutilation of any books, papers or securities or abets such acts in any register, books of account or document belonging to the Co-operative Society;
(t) will fully fails to repay the debt due to his Co-operative Society in cash or in kind or by way of return of finished goods in spite of having financial ability to meet the obligation, in disregard of notices served on him demanding payment of debt or return of the finished goods.
Provided that where the Board of Directors, an Officer, employee or any person or any member of a Co-operative Society is guilty of misappropriation, fraud, breach of trust, cheating or any other act involving moral turpitude, resulting in a loss to the Co-operative Society or erosion of its working capital, he shall be punishable under the relevant provisions of the Indian Penal Code, 1860 (Central Act 45 of 1860). No civil remedy for an act of omission under this Act is suspended or affected by reason that the act or omission is an offence under this Act.
Provided further that the period of limitation for taking cognizance of the offences under this section shall be six (6) years from the date of the offence
(u) Any person or Cooperative Society emtravenes the provision s of this Act or byelaws.
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(v) An offence by a cooperative society shall be deemed to have been committed by each office of
cooperative society bound by the byelaws there of to fulfill the duties, where of the offence is a
brrach, or if there is no such office bearer then by each of the director unless the office bearer
or director proves to have attempted to prevent the commission of the offence.
Penalties
Any person who commits any of the offences specified in Section (119)(1) of the Act shall be liable for a fine of Rs.20,000/- for each of the offences committed, without prejudice to the civil or criminal liability that may arise on such person under any other law for the time being in force.
(2) The following shall constitute corrupt practices under this Act in relation to a cooperative society:
(i) Where any Officer of a Co-operative Society or an employee or a paid servant or any member of such Co-operative Society,--
(a) commits any irregularity in receipt or sanction of loans or in purchases or causes deficit in stocks; or
(b) accepts or obtains or agrees to accept or attempts to obtain from any person for himself or for any other person, any gratification whatever, other than legal remuneration as a motive or reward for doing or forbearing to do any official act or showing or forbearing to show, in the exercise of his official functions or duties, favour or disfavour to any person or rendering or attempting to render any service or dis-service to any person; or
(c) uses or allows the use of funds of the Co-operative Society otherwise than in accordance with the provisions of this Act or the byelaws of the Co-operative Society; or
(d) signs in the minutes books of Board meetings of the Co-operative Society without actually attending such meetings; or
(e) passes a meeting without proper quorum as valid, or
(f) Appoints persons in the service of the Co-operative Society against byelaws and service rules.
(ii) Explanation:-- For the purposes of this section,--
(a) ‘irregularity in receipt or sanction of loan’ includes
(b) receipt of loan by or sanction of loan to any person who does
not own or cultivate a land or the extent of land shown in the
application for loan, where owning or cultivating land is a
condition precedent for the sanction of loan; and
135 (c) fictious / benami loan;
(d) ‘irregularity in purchases’ includes purchases, made with the
intention to gain wrongfully of,--
(i) sub-standard or adulterated goods;
(ii) goods by paying higher price;
(iii) goods in excess of requirement.
(e) in the case of a Co-operative Bank coming under Banking Regulation Act, 1949 manipulating business through third parties like agents or brokers by whatever name they are called; Explanation:-
Definition of ‘Benami loan’ is given under Section 52.
(3) Every person guilty of a corrupt practice shall be punishable with imprisonment for a term which may extend upto one year or with fine, which may extend to rupees five thousand or with both.
SECTION 120: PRESUMPTION AS TO COMMISSION OF OFFENCES IN CERTAIN CASES:-
(1) In the trial of offences by the Court it shall be presumed until the contrary is proved that any member, officer or employee of a Co-operative Society:
(a) who draws the amounts from the financing institutions and fails to properly disburse or account for it, has misappropriated the amounts;
(b) who is responsible for the custody of books and properties or who is in actual possession thereof, fails to produce the same on requisition by the Registrar or any person authorized by him, has wilfully withheld the same;
(c) who makes any false entries or manipulates or alters the account books of the Co-operative Society, has wilfully committed the said act in order to cause loss or damage to the Co-operative Society;
(i) who misuses the properties of the Co-operative Society in contravention of the provisions of the Act and the rules made there under or the byelaws of the Co-operative Society has done so, for his personal benefit;
(ii) who executes any documents or enters into an agreement for sale or purchase of the land, plots in contravention of the provisions of the registered byelaws of the Co-operative Society, has done so,for his personal benefit and in order to cause loss to the members of the Co-operative Society.
136 (2) Any member, officer or employee of a Co-operative Society who issues any receipt shall be deemed to have issued the same in the name of the Co-operative Society and shall be responsible to account for the same.
(3) Notwithstanding the criminal liability the member, officer or employee of a Co-operative Society shall be responsible to make good the loss caused to the Co-operative Society by committing such offences and the same shall be recovered as arrears of land revenue by the Registrar or the person authorized by him from the person responsible for causing such loss or his legal heirs or any person who has acquired the properties from such person or with the assistance of such person and for the purposes of such recovery the Registrar shall have the powers of a Collector under A.P. Revenue Recovery Act, 1864.
SECTION 121: PRESUMPTION AS TO STATEMENTS
Where any person, member, officer or employee of a Co-operative Society has made a statement during audit under section (83) or special audit under Section (87) or inquiry under Section (88) or inspection under Section (89) or (90) or surcharge under Section (95) and the statement is recorded by the Registrar or the person authorized by the Registrar in exercise of the powers conferred on them under this Act, the Court shall presume that the statement was so recorded by the Registrar or the person authorized by him as a statement within the meaning of the Indian Evidence Act, 1872.
SECTION 122: AUTHORITY TO TAKE COGNIZANCE
(1) No Court inferior to that of a Magistrate of First class or a Metropolitan Magistrate shall try any offence under this Act, when an application is made by the Registrar or by a person authorized by him by general or special order or an office-bearer or Director or any member of the Co-operative Society and pass such order as it deems fit.
Provided that if, in the opinion of the Court any application filed before it is primafacie frivolous or vexatious, it shall reject the same without further inquiry.
(2) Every offence under this Act shall, for the purpose of the code of Criminal Procedure, 1973 (Central Act 2 of 1974) be deemed to be cognizable.
(3) No prosecution shall be instituted under this Act without the previous sanction of the Registrar and if the sanction is delayed beyond four months from the date of detection of the guilt, it shall be deemed that the sanction is accorded.
(4) Every person convicted of corrupt practice under section (119)(2) of this Act shall be disqualified permanently to be an Office-bearer or an employee or a paid servant of any Co-operative Society.
(a) ‘Board’ means the Board of Directors of the Andhra Pradesh State Co-operative Bank Ltd., and includes a financing ban or any person authorized by it.
(b) … (c) ‘Financing Bank/Primary Agricultural Co-operative Society’ means a Co-
operative Society registered as such or deemed to be registered under this Act, (Act XLIV of 1961).
(d) ‘Trustee’ means the Trustee referred to in Section 86.
SECTION 123(1): APPLICATION OF CHAPTER TO FINANCING BANK/ PRIMARY AGRICULTURAL CO-OPERATIVE SOCIETY
The provisions of this Chapter shall apply to the Financing Bank/Primary Agricultural Co-operative Society advancing loans for the purposes herein enumerated that is to say—
(i) land improvement and productive purposes;
(ii) the erection, rebuilding or repairing of houses for agricultural purposes;
(iii) the purchase or acquisition of title to agricultural lands by tenants; or
(iv) the liquidation of debts of agriculturists under the relevant law for the time being in force;
(v) the acquisition, construction, rebuilding or repairing of rural dwelling
houses.
Explanation:- Land improvement or productive purpose means any work, construction or activity which adds to the productivity of the land, in particular includes the following, that is to say—
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(a) construction and repair of wells (including the tube wells), tanks and other works for the storages, supply or distribution of water for the purpose of agriculture, or for the use of men and cattle employed in agriculture;
(b) Renewal or reconstruction of any of the foregoing works, or alterations therein, or additions thereto;
(c) Preparation of land for irrigation; (d) Drainage, reclamation from rivers or other waters, or protection from floods
or from erosion or other damage by water, of land used for agricultural purposes; or waste land which is cultivable;
(e) Bunding and similar improvements; (f) Reclamation, clearance and enclosure or permanent improvement of land for
agricultural purposes; (g) Horticulture; (h) Purchase of oil-engines, pumping sets and electrical motors for any of the
purposes mentioned herein; (i) Purchase of tractors or other agricultural machinery;
(j) Increase of the productive capacity of land by addition to it of special variety
of soil;
(k) Construction of permanent farm houses, cattle sheds and sheds for processing
of agricultural produce at any stage;
(l) Purchase of machinery for crushing sugarcane, manufacturing gur or
khandasari or sugar;
(m) Such other purposes as the Government may specify from time to time, by
notification in the Andhra Pradesh Gazette;
SECTION 123 (2): APPOINTMENT OF TRUSTEES AND HIS POWERS AND FUNCTIONS
(1) The Registrar, or where the Government appoint any other person in this behalf, such person, shall be the Trustee for the purpose of securing the fulfillment of the obligation of the Andhra Pradesh State Co-operative Bank Limited to the holders of debentures issued by the Board.
(2) The powers and functions of the trustee shall be governed by the provisions of this Act and by the instrument of trust executed between the Andhra Pradesh State Co-operative Bank
139 Limited and the Trustee as modified, from time to time, by mutual agreement between the Board and the Trustee.
SECTION 123 (3): TRUSTEE TO BE A CORPORATION SOLE
The trustee shall be a corporation sole by the name of the Trustee for the debentures, and as such shall have perpetual succession and a common seal and in his corporate name shall sue and be sued.
SECTION 123 (4): ISSUE OF DEBENTURES BY THE BOARD
(1) With the previous sanction of the trustee, and the Government and subject to such terms and conditions as the Government may impose, the Board may, from time to time, issue debentures of such denominations for such periods as it may deem expedient, on the security of the mortgages held or mortgages partly held and partly to be acquired and other assets transferred or deemed to have been transferred under the provisions of Section 123(10), by the Primary Agricultural Co-operative Societies to the financing bank and by the financing bank to Andhra Pradesh State Co-operative Bank Limited shall be and other properties of such Bank.
(2) Such debentures may contain a term fixing a period not exceeding ten years from the date of issue during which they shall be irredeemable, reserving to the Board the right to call in at any time any of the debentures in advance of the date fixed for redemption, after giving to the debenture-holder concerned not less than three months’ notice in writing.
(3) The total amount due on the debentures already issued and outstanding together with that proposed to be issued shall not exceed the aggregate of—
(a) the amounts due on the mortgages and the value of the other assets transferred or deemed to have been transferred under the provisions of Section 94 to the Andhra Pradesh State Co-operative Bank Ltd., and subsisting at such time;
(b) the accumulations in the sinking funds;
(c) the cash on hand and balances with banks and the book value or market value of securities under general funds, whichever is less.
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SECTION 123 (5): CHARGES OF DEBENTURE-HOLDERS ON CERTAIN PROPERTIES
The holders of the debentures shall have a floating charge on--
(a) all such mortgages and assets as are referred to in clause (a) of sub-section (3) of Section 123(4).
(b) the amount paid under such mortgages and remaining in the hands of the Board of the Trustee; and (c) the other properties of the Andhra Pradesh State Co-operative Bank
Limited.
SECTION 123 (6): GUARANTEE BY GOVERNMENT OF PRINCIPAL OF, AND INTEREST ON DEBENTURES
(1) The principal of, and interest on, the debentures issued under the Andhra Pradesh (Andhra Area) Co-operative Land Mortgage Banks Act, 1934 and those issued under Sec. 88 shall, in respect of such maximum amount as may be fixed by the Government and subject to such conditions as they may think fit to impose, carry the guarantee of the Government.
(2) The Government may, subject to the provisions of any Act in that regard, increase the maximum amount of any guarantee under sub-section (1).
(3) The Government may, after consulting the Board and the Trustee,--
(a) by notification in the Andhra Pradesh Gazette; and
(b) by notice of not less than fourteen days in such of the important newspapers in
the State and of other States in India as a Government may select in this behalf,
Withdraw any guarantee given by them or restrict the maximum amount thereof or modify the conditions, subject to which it was given with effect from a specified date, not being earlier than six months from the date of the publication of the notification referred to in clause (a):
Provided that the withdrawal, restriction or modification of any guarantee under this sub-section, shall not in any way affect the guarantee carried by any debentures issued under the Andhra Pradesh (Andhra Area) Co-operative Land Mortgage Banks Act, 1934 or under this Act prior to the date on which such withdrawal, restriction or modification, takes effect.
141 (4) Every notification and notice referred to in sub-section (3), shall where the maximum amount of the guarantee is to be restricted, or the conditions subject to which the guarantee was given are to be modified, set forth precisely the scope and effect to the restriction or modification, as the case may be.
SECTION 123 (7): OTHER GUARANTEE BY GOVERNMENT
Where a Andhra Pradesh State Co-operative Bank Ltd., or Financing Bank/Primary Agricultural Co-operative Society has given a loan to a member for the development of any land in excess of the amount of the loan to which such member would be entitled on the basis of the value of the land as determined in accordance with the principles of valuation approved by the Government, the Government may guarantee for a specified amount the repayment of the loan to the extent of the excess.
SECTION 123 (8): PRIORITY MORTGAGE OVER CERTAIN CLAIMS
A mortgage created in favour of Financing Bank/Primary Agricultural Co-operative Society shall have priority over any claim of the Government arising from a loan under the Land Improvement Loans Act, 1883 granted subsequent to the creation of the mortgage.
SECTION 123 (9): RIGHT OF FINANCING BANK/PRIMARY AGRICULTURAL CO-OP. SOCIETY OR OF THE ANDHRA PRADESH STAT CO-OPERATIVE BANK LTD., TO PURCHASE MORTGAGED PROPERTY
(1) Notwithstanding anything in any other law for the time being in force, it shall be lawful for Financing Bank/Primary Agricultural Co-operative Society or the Andhra Pradesh State Co-operative Bank Ltd., to purchase any mortgaged property sold under this Chapter, and the property so purchased shall be disposed of by such bank by sale with such period as may be fixed by the Trustee.
(2) Nothing in the Andhra Pradesh Land Reforms (Ceiling on Agricultural Holdings) Act, 1973 fixing a maximum limit of agricultural holding shall apply to the acquisition of land by Financing Bank/Primary Agricultural Co-operative Society or the Andhra Pradesh State Co-operative Bank Ltd., under sub-section (1).
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SECTION 123 (10): MORTGAGES CREATED IN FAVOUR OF FINANCING BANK/PRIMARY AGRICULTURAL CO-OPERATIVE SOCIETY TO STAND VESTED IN ANDHRA PRADESH STATE CO-OPERATIVE BANK LIMITED
The mortgages created in favour of, and all other assets transferred to, Financing Bank/ Primary Agricultural Co-operative Society by the members thereof shall, with effect from the date of such creation or transfer, be deemed to have been transferred by such Financing Bank/ Primary Agricultural Co-operative Society to the Andhra Pradesh State Co-operative Bank Limited and shall vest in the Trustee.
SECTION 123 (11): POWER OF FINANCING BANK/PRIMARY AGRICULTURALCO-OPERATIVE SOCIETY TO RECEIVE MONEYS AND GRANT DISCHARGES
Notwithstanding that a mortgage created in favour of Financing Bank/Primary Agricultural Co-operative Society has been transferred, or is deemed under the provisions of Section 94 to have been transferred to the Andhra Pradesh State Co-operative Bank Limited.
(a) all money due under the mortgage shall, in the absence of any specific direction to the contrary issued by the Board or Trustee and communicated to the mortgagor, be payable to the Financing Bank/Primary Agricultural Co-operative Society and such payment shall be as valid as if the mortgage has not been so transferred; and
(b) the Financing Bank/Primary Agricultural Co-operative Society shall, in the absence of any specific direction to the contrary issued the Board of Trustees and communicated to the Financing Bank/Primary Agricultural Co-operative Society be entitled to sue on the mortgage or take any other proceeding for the recovery of the moneys due under the mortgage.
SECTION 123 (12): RIGHT OF FINANCING BANK/PRIMARY AGRICULTURAL CO-OP. SOCIETY TO PAY PRIOR DEBTS OF MORTGAGOR
(1) Where a mortgage is created in favour of Financing Bank/Primary Agricultural Co-operative Society for payment of prior of the debts of the mortgagor; the bank may,
143 notwithstanding anything in the Transfer of Property Act, 1882, by notice in writing, require any person to whom any such debt is due, to receive payment of such debt or part thereof from the bank as its registered office within such period as may be specified in the notice.
(2) Where any such person fails to receive such notice or such payment, such debt or part thereof, as the case may be, shall cease to carry interest from the expiration of the period specified in the notice:
Provided that where there is a dispute as regards the amount of any such debt, the person whom such debt is due shall be bound to receive payment of the amount offered by the Financing Bank/Primary Agricultural Co-operative Society towards the debt but such receipt shall not prejudice the right, if any, of such person, to recover the balance claimed by him.
SECTION 123 (13): POWER OF FINANCING BANK/PRIMARY AGRICULTURAL CO-OP. SOCIETY TO ADVANCE LOANS AND TO HOLD LANDS
Subject to the provisions of this Act and in accordance with the schedules made thereunder, it shall be competent for Financing Bank/Primary Agricultural Co-operative Society to advance loans for the purposes referred to in Section 123(1) and to hold lands the possession of which is transferred to it under the provisions of this Chapter.
SECTION 123 (14): MODE OF DEALING WITH APPLICATIONS FOR LOANS
(1) When an application for a loan is made for any of the purposes mentioned in Section 123(1), a public notice shall be given of the application in such manner as may be prescribed calling upon all persons interested to make their objections to the loan if any before the date specified therein. The person by whom such public notice shall be given and the manner in which the objections shall be disposed of by him, shall be such as may be specified.
(2) The specified person shall consider every objection made under sub-section (1) and pass an order in writing either upholding or overruling it. When the objection is overruled, he shall recommend the application to the Financing Bank/Primary Agricultural Co-operative Society for its consideration:
Provided that, when the question raised by an objection is in the opinion of such person once of such a nature that it cannot be satisfactorily decided except by a Civil Court, he shall postpone the proceedings on the application until the question has been so decided.
(3) A notice under sub-section (1), published in the manner prescribed, shall, for the purpose of this Act be deemed to be proper notice to all persons having or claiming interest in the land to be improved, or offered as security for the loan.
144 (4) Where an application is recommended under sub-section (2), the Financing Bank/ Primary Agricultural Co-operative Society shall, in accordance with the rules made in this behalf, consider such application for the purposes of making the loan.
SECTION 123 (15): ORDER GRANTING LOAN CONCLUSIVE OF CERTAIN MATTERS
A written order by the Financing Bank/Primary Agricultural Co-operative Society, or persons or Boards authorized by this Act or under the byelaws of the bank to make loans for all or any of the purposes specified in Section 123(1) granting, either before or after the commencement of this Act, a loan to or with the consent of a person mentioned therein, for the purpose of carrying out the work specified therein, for the benefit of the land or for the productive purpose specified therein, shall, for the purposes of this Act be conclusive of the following matters, namely:-
(a) that the work described or the purpose for which the loan is granted, is an improvement or productive purpose, as the case may be, with the meaning of Section 123(1).
(b) that the person had at the date of the order a right to make such an improvement, or incur expenditure for productive purpose as the case may be; and
(c) that the improvement is one benefitting the land specified and productive
purpose concerns the land offered as security, or an any part thereof as may be relevant.
SECTION 123 (16): RECOVERY OF LOANS BY FINANCING BANK/ PRIMARY AGRICULTURAL CO-OPERATIVE SOCIETY
Any loan granted by Financing Bank/Primary Agricultural Co-operative Society, including any interest chargeable thereon, and costs, if any, incurred in connection therewith, shall, when they become due, be recoverable by the Financing Bank/Primary Agricultural Co-operative Society.
SECTION 123 (17): RECOVERY OF LOANS ON CERTIFICATE BY REGISTRAR
(1) Notwithstanding anything in this Act, on an application made by Financing Bank/Primary Agricultural Co-operative Society for the recovery of arrears of any sum advanced by it to any of its members and on its furnishing a statement of accounts in respect of the arrears, the Registrar
145 may, after making such enquiries as he deems fit, grant a certificate for the recovery of the amount stated therein to be due as arrears.
(2) A certificate by the Registrar under sub-section (1) shall be final and conclusive as to the arrears due. The arrears stated to be due therein shall be recoverable by the Collector in the same manner as arrears of land revenue.
(3) It shall be lawful to the Collector to take any precautionary measure until the arrears due to the Financing Bank/Primary Agricultural Co-operative Society together with interest and any incidental charges incurred in the recovery of such arrears, are paid or security of such arrears is furnished to the satisfaction of the Registrar.
(4) It shall be competent for the Registrar or a person authorized by him to direct conditional attachment of the property of the mortgagor until the arrears due to the Financing Bank/Primary Agricultural Co-operative Society together with interest and any incidental charges incurred in the recovery of such arrears, are paid or security for payment of such arrears is furnished to the satisfaction of the Registrar and the provisions of Section 110 shall apply mutatis mutandis to conditional attachment of any property made or to be made under this section.
SECTION 123 (18): COLLECTOR TO MAKE RECOVERIES DURING A CERTAIN PERIOD
(1) During such period as the Government, may by general or special order notify in the Andhra Pradesh Gazette, it shall be competent for the Collector, on application being made to him in that behalf by Financing Bank/Primary Agricultural Co-operative Society to recover sums due to the bank, including for cost of such recovery.
(2) Any sum due to Financing Bank/Primary Agricultural Co-operative Society shall be recoverable by the Collector, or any officer specially authorized by the Collector, in his behalf, in all or any of the following methods, namely:--
(a) from the borrower – as if they were arrears of land revenue due by him;
(b) out of the land for the benefit of which the loan has been granted as they were arrears of land revenue due in respect of that land;
(c) from a surety, if any, as if they were arrears of land revenue due by him; (d) out of the property comprised in the collateral security, if any according to the
procedure for the realization of land revenue by the sale of immovable property other than the land on which the revenue is due.
146 SECTION 123 (19): DISTRAINT AND SALE
If any instalment payable under a mortgage (created) in favour of Financing Bank/ Primary Agricultural Co-operative Society or any part of such instalment has remained unpaid for more than one month from the date on which it fell due, the board, may in addition to any other remedy available to the Bank apply to the Registrar or such other person on whom the power of the Registrar to recover any amount due by attachment and sale of property has been conferred by the Government under Section 5(2)a for the recovery of such instalment or part thereof by distraint and sale of the produce of the mortgaged land including the standing crops thereon and any other movable property of the defaulter. On receipt of such application, the Registrar or such other person may notwithstanding anything in the Transfer of Property Act, 1882, direct distraint and sale of such produce and if necessary, also of such other movable property of the defaulter:
Provided that such implements of husbandry and such cattle of the defaulter as may in the opinion of the Registrar or such other person, be necessary to enable the defaulter to earn his livelihood as an agriculturist shall not be liable for such distraint and sale;
Provided further that no such distraint shall made after the expiration of twenty four months from the date on which the instalment fell due.
(2) The value of the property distrained shall be, as far as may be, equal to the amount due and the expenses of the distraint and the costs of the sale.
SECTION 123 (20): POWER OF SALE WHEN TO BE EXERCISED
Notwithstanding anything in the transfer of Property Act, 1882, the Board of the Financing Bank or any person authorized by the Primary Agricultural Co-operative Society in this behalf shall, in case of default of payment of mortgage money due, have power, in addition to any other remedy available to the bank, to bring the mortgaged property to sale without the intervention of the Court.
(2) No such power shall be exercised unless and until,--
(a) the Board has previously authorized the exercise of the powers conferred by sub- section (1) after considering the representations, if any, of the mortgagor;
(b) registered notice requiring payment of such mortgage money or part has been served upon—
(i) the mortgagor; (ii) any person who has any interest in or charge upon the property mortgaged
or in or upon the right to redeem the same; (iii)any surety for the payment of mortgage debt or any part thereof; and (iv) any creditor of the mortgagor who has in a suit for the administration of
his estate obtained a decree for sale of the mortgaged property; and (c) default has been made in payment of such mortgage money due for three
months after such service.
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SECTION 123 (21): POWERS OF FINANCING BANK/PRIMARY AGRICULTURAL CO-OPERATIVE SOCIETY WHERE MORTGAGED ROPERTY IS DESTROYED OR SECURITY BECOMES INSUFFICIENT
Where any property mortgaged to Financing Bank/Primary Agricultural Co-operative Society is wholly or partially destroyed or the security is rendered insufficient and the mortgagor, having been given an opportunity by the Board of the Financing Bank/Primary Agricultural Co-operative Society of providing further security enough to make the whole security sufficient or of repaying such portion of the loan as may be determined by the Board, has failed to provide such security or to repay such portion of the loan, the whole of the loan shall be deemed to fall due at once and the Board shall be entitled to take action against the mortgagor under Section 123(19) or Section (123)20 for the recovery thereof.
Explanation:- For the purposes of this section, security is deemed to be insufficient unless the value of the mortgaged property exceeds the amount for the time being due on the mortgage by such proportion as may be specified in the byelaws of the Financing Bank/Primary Agricultural Co-operative Society.
SECTION 123 (22): POWER OF BOARD OR TRUSTEE TO DISTRAINT AND SELL ALL PROPERTY
(1) The Board or the Trustee may direct the Board of Financing Bank/Primary Agricultural Co-operative Society to take action against a defaulter under Section 123(19), Section 123(20) or Section 123(21) and if the Board neglects or fails to do so, the Board or the Trustee may take such action.
(2) (a) Where such action is taken by the Board, the provisions of this Chapter and of any regulations made in this behalf shall apply as if all references to the Financing Bank/Primary Agricultural Co-operative Society and to its committee in the said provisions were references to the Andhra Pradesh State Co-operative Bank Limited and the Board respectively.
(b) Where such action is taken by the Trustee the provisions of this Chapter and of any regulations made in this behalf shall apply as if all references to the Financing Bank/Primary Agricultural Co-operative Society or to its Board in the said provisions were references to the Trustee.
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SECTION 123 (23): TITLE OF PURCHASER NOT TO BE QUESTIONED ON GROUND OF IRREGULARITY, ETC.
Whereas any property is sold in the exercise or purported exercise of a power of a sale under Section 104, the title of the purchaser shall not be questioned on the ground that—
(a) the circumstances required for authorizing the sale had not arisen; or
(b) due notice of the sale was not given; or (c) the power of sale was otherwise improperly or irregularly exercised; but any
person who has suffered any damage by an unauthorized, improper or irregular exercise of any such power is entitled to have a remedy in damages against the Financing Bank/ Primary Agricultural Co-operative Society.
SECTION 123 (24): MORTGAGE NOT TO BE QUESTIONED
ON INSOLVENCY OF MORTGAGOR
Notwithstanding anything in any law relating to insolvency, a mortgage created in favour of Financing Bank/Primary Agricultural Co-operative Society, shall not be called in question on the ground that it was created in good faith for valuable consideration or on the ground that it was created in order to give the Financing Bank/Primary Agricultural Co-operative Society, a preference over the other creditors of the mortgagor.
SECTION 123 (25): APPOINTMENT OF RECEIVER AND HIS POWERS
(1) The Board may, on the application of Financing Bank/Primary Agricultural Co-operative Society and under circumstances in which the power of sale conferred by Section 123(20) may be exercised, appoint in writing a receiver of the produce and income of the mortgaged property or any part thereof and such receiver shall be entitled either to take possession of the property or collect its produce and income, as the case may be, to retain out of any money realized by him, his expenses of management including his remuneration, if any, fixed by the Board and to apply the balance in accordance with provisions of sub-section (8) of Section 69-A of the Transfer of Property Act, 1882.
(2) The Board may, for sufficient cause, remove such receiver on an application made by the mortgagor and fill a vacancy in the office of the receiver.
(3) Nothing in this section shall empower the Board to appoint a receiver where the mortgaged property is already in the possession of a receiver appointed by a competent Court.
149 SECTION 123 (26): MORTGAGOR’S POWER TO LEASE
Notwithstanding anything in the Transfer of Property Act, 1882, or any other law for the time being in force, a mortgagor shall not grant a lease of the mortgaged property for a period exceeding six years and any lease granted in contravention thereof shall be void.
SECTION 123 (27): REGISTRATION OF DOCUMENTS EXECUTED ON BEHALF OF FINANCING BANK/PRIMARY AGRICULTURAL CO-OPERATIVE SOCIETY OR OF THE SOCIETY OR OF THE ANDHRA PRADESH STATE CO-OP. BANK LIMITED
(1) Notwithstanding anything in the Indian Registration Act, 1908, it shall not be necessary for any officer of Financing Bank/Primary Agricultural Co-operative Society or of the Andhra Pradesh State Co-operative Bank Limited to appear in person or by agent at any registration office in any proceedings connected with the registration of any instrument executed by him in his official capacity or to sign as provided in Section 58 of that Act.
(2) Where any instrument is so executed, the registering officer to whom such instrument is presented for registration may, if he thinks fit, refer to such officer for information in regard thereto, and on being satisfied of the execution thereof shall register the instrument.
(3) Notwithstanding anything in the Indian Registration Act, 1908, it shall not be necessary to register mortgages executed in favour of Financing Bank/Primary Agricultural Co-operative Society or of the Andhra Pradesh State Co-operative Bank Limited, where the bank concerned sends, within such time and in such manner as may be specified, a copy of the instrument, requiring registration to the registering officer having jurisdiction who shall file such copy in the book maintained under Section 51 of that Act.
Section 123 (28): Delegation of certain powers by Board
The Board may, if it thinks fit, delegate all or any of its powers under Sections 123(20), 123(22) and 123(25) to an Executive Committee consisting of two or more of its members, constituted by it.
SECTION 123 (29): SECTIONS 102, 103 AND 104 OF THE TRANSFER OF PROPERTY ACT, 1882, TO APPLY TO NOTICES UNDER THIS CHAPTER
The provisions of Sections 102 and 103 of the Transfer of Property Act, 1882, and of any rule made by the High Court under Section 104, of that Act for carrying out the purposes of the said sections, shall apply so far as may be, in respect of all notices to be served under this Chapter.
150 SECTION 123 (30): MORTGAGES EXECUTED BY MANAGER
OF JOINT HINDU FAMILY
(1) A mortgage executed in favour of Financing Bank/Primary Agricultural Co-operative Society either before or after commencement of this Act, by the manager of a Joint Hindu Family, shall notwithstanding any law to the contrary, be binding on the members thereof, whether majors or minors, if the loan secured by the mortgage was granted for the purchase of any land or the improvement of any agricultural land or for the improved cultivation of such land.
(2) Where such mortgage is called in question on the ground that it was created by the manager of a Joint Hindu Family, for a purpose not binding on the members thereof, whether majors or minors, the burden of providing the same shall, notwithstanding any law to the contrary, be on the party raising it.
SECTION 123 (31): POWER OF THE BOARD TO SUPERVISE
AND MAKE REGULATION
Subject to the provisions of this Act, the Board shall have such power of supervision over the Financing Bank/Primary Agricultural Co-operative Society including powers of appointment, transfer and disciplinary action, in respect of the employees of the Financing Bank/Primary Agricultural Co-operative Society and may, with the previous approval of the Registrar, make such regulation as may be necessary for carrying out all or any of the purposes of this Chapter.
151
CHAPTER - XV
Special provisions relating to eligible Co-operative Banks and Urban Banks
SECTION 124: DEFINITIONS:-
In this chapter—
(a) “The said Act” means the Deposit Insurance Corporation Act, 1961 (Central Act 47 of 1961);
(b) “eligible Co-operative Bank” means a Co-operative Bank as defined in clause (gg) of Section (2) of the said Act;
(c) “Corporation” means the Deposit Insurance Corporation established under Section 3 of the said Act;
(d) all other expressions used in this Chapter but not defined shall have the meaning respectively assigned to them in the said Act.
SECTION 125: SPECIAL PROVISIONS APPLICABLE TO ELIGIBLE CO-OPERATIVE BANKS
(1) In particular Without prejudice to the generality of the powers under the provisions of this Act applicable to cooperative societies under this Act the following provisions shall apply to an eligible Co-operative Bank exclusively, namely:-
(i) an order for the winding up, or an order sanctioning a scheme of compromise or arrangement or of amalgamation or reconstruction, of the bank may be made under the provisions of this Act only with the previous sanction in writing of the Reserve Bank;
(ii) an order of the winding up of the bank shall be made under the provisions of this Act, if so required by the Reserve Bank in the circumstances referred to in Section 13-D of the said Act;
(iii) if so required by the Reserve Bank in public interest or for preventing the affairs of the bank being conducted in a manner detrimental to the interests of the depositors or for securing the proper management of the bank an order shall be made under the provisions of this Act for the supersession of the Board of the Bank or other managing body (by whatever name called) of the bank and the appointment of a special officer therefor for such periods not exceeding one year in the aggregate as may, from time to time, be specified by the Reserve Bank;
(iv) an order for the winding up of the bank or an order sanctioning a scheme of compromise or arrangement or of amalgamation or reconstruction or an order for the supersession of the Board or other managing body (by whatever name called) of the bank and the appointment of a special
152 officer there for made with the previous sanction in writing or on the requisition of the Reserve bank shall not be liable to be called in question in any manner; and
(v) the liquidator or the insured bank or the transferee bank, as the case may be, shall be under an obligation to repay the corporation in the circumstances to the extent and in the manner referred to in Section 21 of the said Act.
(2) Without prejudice to the generality of the provisions in this Act applicable to all types of Co-operative Societies and eligible Co-operative Banks registered or deemed to be registered under this Act, the provisions in this sub-section shall in addition apply to all Co-operative Urban Banks.
Definitions:-
In this sub-section:
(a) “Act” means Unified A.P. Co-operative Societies Act, 2010.
(b) “BR Act” means the Banking Regulation Act, 1949 (as applicable to Co-operative Societies) (Central Act 10 of 1949).
(c) “Reserve Bank” means the Reserve Bank of India constituted under the Reserve Bank of India Act, 1934 (Central Act 2 of 1934).
(d) “Banking Regulation Rules” means the Banking Regulation (Co-operative Societies) Rules, 1966.
(e) “Registrar” means the Registrar of Co-operative Societies appointed under Section 5(1) of the Act and includes any other person in the cadre of Joint Registrar or above on whom all or any of the powers of the Registrar under this Act are conferred.
(f) “Directions” means the directions or instructions issued by the Reserve Bank of India from time to time on the Banking functions of Co-operative Urban Banks.
(g) “Order” means the orders or instructions issued by the Registrar of Co-operative Societies from time to time by virtue of powers vested in him under the Act.
(h) “Bank” means a Co-operative Urban Bank registered or deemed to have been registered under this Act.
(i) “Bank with limited liability” means, a Co-operative Urban Bank in which the liability of its members for the debts of the Bank, in the event of its being wound up, is limited by its byelaws.
(i) to the amount paid on the shares held by each of them, or
(ii) to such amount as they may have to contribute to the assets of the Bank to the extent of shares held by them.
(j) “Board” means the Board of Directors of a Co-operative Urban Bank.
(k) “Member” means a member of a bank which includes a nominal or associate member.
153 All the expressions used in this sub-section but not defined shall have the same meaning assigned to them in the Unified A.P. Co-operative Societies Act, 2012 or Banking Regulation Act and Rules, 1966 framed there under as the case may be.
(3) (a) Bank which may be registered
An Urban Co-operative Society which has its main object to provide banking services to its members and others in accordance with the Co-operative principles may be registered as a primary Co-operative Bank under this Act, subject to its adhering to the entry point norms stipulated by Reserve Bank of India from time to time and it shall start accepting public deposits only after obtaining license from the Reserve Bank of India under the Banking Regulation Act, 1949 (as applicable to Co-operative Societies) (Central Act 10 of 1949).
Explanation:- “Urban Bank” means a Co-operative Bank located in a notified municipal area whose primary object is to provide banking services to non-agriculturists and 4/5th of total lendings of which shall be for non-agricultural purposes.
(b) Registration: The registration of a Bank and issue of Registration Certificate shall be in accordance with Section (8) of the Act.
Provided that the application for setting up a Co-operative Urban Bank is approved by the Reserve Bank and the antecedents of the promoters are thoroughly scrutinized with reference to intelligence reports of police department before registration of a Bank.
(4) Members their Rights and Liabilities: The eligibility and admission of members, disqualification, expulsion, rights and liabilities of members shall be in accordance with Sections (34), (42) and (45).
Provided that members holding and operating Savings Bank Account or Current Account or any kind of deposit account or any kind of loan account shall be deemed to have contributed minimum thrift amount as stipulated under the Act.
(5) Board of Directors of a Co-operative Urban Bank: The Board of the Directors of the Co-operative Bank shall be constituted in accordance with Section (50) of the Act.
Provided that in respect of a bank with less than Rs.25.00 crores deposits there shall not be more than 12 Board of Directors out of which 9 shall be elected from the category of Share-holder non-depositors, 3 shall be elected from the category of Share Holder Depositors and 3 shall be co-opted from the category of professionals with experience from the fields of Co-operation, Finance, Bank and Audit. The co-opted directors shall be excluded for the purpose of counting the total number of directors which is 12.
Provided further that the banks with more than Rs.25.00 crores deposits shall have not more than 15 member Board of directors of whom 10 shall be elected by the share-holder non-depositors, 5 shall be elected from the category of Share-holder Depositors and 3 shall be co-opted from the category of professionals with experience from the fields of Co-operation Finance, Banking and Audit who will be excluded for the purpose of counting the total number of directors which is 15.
154 Provided that all the Directors to be elected are to be the members of the Bank. Further to be eligible to be elected as Director from the category of share-holder depositors, a member should have invested a minimum deposit of Rs.50,000/- (Rupees Fifty Thousand only) at least for a period of one year.
Provided further that the Board shall constitute the following committees:
(a) Audit Committee consisting of a minimum of 3 Directors under the Chairmanship of a Professional Director.
(b) Loan Committee with a minimum of 5 Directors out of whom two shall be with professional background.
(c) Staff Committee consisting of a minimum of 3 Directors.
(d) ALM Committee shall consist of a minimum of 3 Directors with at least one professional from Finance/Banking background.
Provided that the Chairman and directors of the Audit Committee and the Loan Committee shall not be common.
Provided further that the total borrowings of the directors shall not exceed 2% of the total advances which exclude the loans against self deposits and securities. Violation of this stipulation on being pointed out in the inspection or audit shall attract automatic disqualification of the directors and their seats deemed to be vacant.
(6) Investment of Funds: A Bank shall notwithstanding anything contained in this Act by a resolution of Board, invest or deposit the funds which are not immediately required for the business of the Bank in the manner prescribed by the Reserve Bank from time to time.
(7) Mutual Assistance and Self Help Fund: A Bank in a co-operative year shall contribute 0.50 percent of the gross income to the Mutual Assistance and Self Help Fund. Such fund shall be utilized as soft loan to overcome temporary financial crisis like SLR, CRR shortages, adverse clearing balances etc. of member hanks.
Provided that the Fund shall be calculated on the basis of the annual provisional accounts and shall be paid within 30 days from the close of the provisional accounts. The auditors shall scrutinize the payment and certify the same in the Audit Report.
(8) Disposal of Net Profits: A Bank shall, out of its net profits in a cooperative year
(a) Transfer an amount not less than 25% to the Reserve Fund.
(b) Pay towards dividend to members on their paid-up share capital an amount not being more than 25%. The total pay out towards Dividend should not exceed 50 per cent of the net profit.
(c) The balance of amount may be utilized for all or any of the following purposes namely:
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(i) Constitution of or contribution to such special funds like Co-operative Education Fund, Dividend Equalisation Fund as may be specified in the byelaws.
(ii) Payment of performance linked incentive to employees of the Society or remuneration to a member for services rendered by him to the Co-operative Society of the extent and the manner specified in the byelaws.
(iii) Donation of moneys not exceeding 10% of net profits to be utilized within the area of operation of the Bank for any charitable purpose as defined in section 2 of the Charitable Endowments Act, 1890.
Provided that all the provisions according to provisioning norms prescribed by the Reserve Bank are charged to the profit and loss account of the Bank.
Provided further that a Bank, which is not in position to pay dividend shall not pay dividend or interest on share capital to its members.
(9) Funds other than Net Profits not to be divided among Members:
No part of the funds other than the net profits of a Bank shall be paid by way of dividend or bonus or otherwise distributed among its members.
Provided that a Chairman of the Bank subject to prior approval of Reserve Bank of India may be paid honorarium from the funds of the Bank at such rate as may be fixed by the General Body considering the net profit earned by the Bank during the preceding year.
(10) Chief Executive Officer: The Chief Executive Officer of a Bank with deposits less than Rs.25 crores shall be a graduate in Commerce / Management with a minimum of 10 years managerial experience in Banking. In case of other banks he shall be a graduate with more than 15 years of managerial experience in Banking preferably with CAIIB or such qualification as prescribed by the RBI under the fit and proper criteria.
Provided that the Chief Executive Officer of a Bank exceeding Rs.25 crores of deposits shall be appointed or continued with the approval of Reserve Bank of India.
(11) Staffing Pattern: A Bank, with the approval of General Body shall have power to fix the staffing pattern prescribing of qualifications, fixation of pay scales and other allowances for its employees subject to the guidelines issued by the Reserve Bank and Registrar.
Provided that the expenditure towards pay and allowances of the employees shall not exceed 2% of the working capital or 30% of the gross income in terms of actual in preceding year whichever is less.
Provided further that if it is found that the expenditure so incurred is in excess of the said norms cited in audit inspection of inquiry, the excess expenditure spent shall be recoverable from the members of the Board of Directors concerned under Section (95) of the Act. The Auditors shall scrutinize the expenditure and certify the same in the audit report.
156 (12) Audit: The Board of directors of Bank shall cause the audit of accounts of the Bank every year by a Departmental Auditor or by a Chartered Accountant selected from the panel of auditors approved by the Registrar / Chief Auditor. Provided that an auditor shall not be appointed for more than two consecutive years. The audit shall be completed within a period of six months from the close of the financial year. The Bank shall submit to Reserve Bank profit and loss account and balance sheet together with the Statutory Auditor’s Report as prescribed in section 29 of the Banking Regulation Act, 1949 (as applicable to Co-operative Societies from 1966) and publish in one of the local newspaper as prescribed in Rule 10 of the Banking Regulation (Co-operative Societies) Rules, 1966. The Bank shall also at the same time submit a copy of the profit and loss account and balance sheet together with Statutory Auditor’s Report to the Registrar. Such reports shall be placed before the next General Meeting of Bank including the defects sheet for taking action to rectify the defects pointed out and report action taken to Reserve Bank and the Registrar. The duly approved audited statement of accounts of the Bank shall be displayed on the bank’s notice Board. Unaudited provisional statement of accounts of the Bank shall be displayed on the bank’s notice Board for the members and other stakeholders to see.
(13) Recovery of loans by Co-operative Urban Bank
Any loan granted by Co-operative Urban Bank including any interest chargeable thereon and costs, if any, incurred in connection therewith, shall when they become due, be recoverable by the Co-operative Urban Bank.
(14) Recovery of loans on Certificate by Registrar
(1) Notwithstanding anything in this Act, on an application made by Co-operative Urban Bank for the recovery of arrears of any sum advanced by it to any of its members and on its furnishing a statement of accounts in respect of the arrears, the Registrar may, after making such enquiries as he deems fit, grant a certificate for the recovery of the amount stated therein to be due as arrears.
(2) A certificate by the Registrar under sub-section (1) shall be final and conclusive as to the arrears due. The arrears stated to be due therein shall be recoverable by the Registrar or officer authorized by him in the same manner as arrears of land revenue and the Registrar shall be deemed to be Collector for this purpose.
(3) It shall be lawful to the Registrar to take any precautionary measure until the arrears due to the Co-operative Urban Bank together with interest and any incidental charges incurred in the recovery of such arrears, are paid or security of such arrears is furnished to the satisfaction of the Registrar.
(4) It shall be competent for the Registrar or a person authorized by him to direct conditional attachment of the property of the borrower before judgement until the arrears due to the Co-operative Urban Bank together with interest and any incidental charges incurred in the recovery of such arrears, are paid or security for payment of such arrears is furnished to the satisfaction of the Registrar and the provisions of section (110) shall apply mutatis mutandis to conditional attachment of any property made or to be made under this section.
157 (15) Powers of sale when to be exercised
(a) Notwithstanding anything in the Transfer of Property Act, 1882, where a power of sale without the intervention of the court is expressly conferred on the Co-operative Urban Bank, by the mortgage deed, the Board of such bank or any person authorized by such Board in this behalf shall, in case of default of payment of mortgage money due, have power, in addition to any other remedy available to the bank, to bring the mortgaged property to sale without the intervention of the Court.
(b) No such power shall be exercised unless and until:
(i) the Board has previously authorized the exercise of the powers conferred by sub-section (a) after considering the representations, if any of the mortgagor;
(ii) registered notice requiring payment of such mortgage money or part has been served upon:
(a) the mortgagor;
(b) any person who has any interest in or charge upon the property mortgaged or in or upon the right to redeem the same;
(c) any surety for the payment of mortgage debt or any part thereof; and
(d) any creditor of the mortgagor who has in a suit for the administration of his estate obtained a decree for sale of the mortgaged property; and
(e) default has been made in payment of such mortgage money due for three months after such service.
(16) Powers of Co-operative Urban Bank where mortgaged property is destroyed or security becomes insufficient
Where any property mortgaged to Co-operative Urban Bank is wholly or partially destroyed or the security is rendered insufficient and the mortgagor, having been given an opportunity by the Board of the Co-operative Urban Bank for providing further security enough to make up for the deficiency in the value of such security or of repaying such portion of the loan as may be determined by the Board, has failed to provide such security or to repay such portion of the loan, the whole of the loan shall be deemed to have fallen due at once and the Board shall be entitled to take action against the mortgagor under sub-section (15) of Section (125) for the recovery thereof as per byelaws.
Explanation:- For the purposes of this section, security is deemed to be insufficient unless the value of the mortgaged property exceeds the amount for the time being due on the mortgage by such proportion as may be specified in the byelaws of the Co-operative Urban Bank.
158 (17) Title of purchaser not to be questioned . . on ground of irregularity
Whereas any property is sold in the exercise or purported exercise of a power of a sale under sub-section (15) of Section (125) the title of the purchaser shall not be questioned on the ground that:-
(a) the circumstances required for authorizing the sale had not arisen; or
(b) due notice of the sale was not given; or
(c) the power of sale was otherwise improperly or irregularly exercised that any person who has suffered any damage by an unauthorized, improper or irregular exercise of any such power is entitled to have a remedy in damages against the Co-operative Urban Bank.
(18) Mortgage not to be questioned on insolvency of Mortgagor
Notwithstanding anything in any law relating to insolvency, a mortgage executed in favour of Co-operative Urban Bank shall not be called in question on the ground that it was executed in good faith for valuable consideration or on the ground that it was executed in order to give the Co-operative Urban Bank, a preference over the other creditors of the mortgagor.
(19) Mortgagor’s power to lease
Notwithstanding anything in the Transfer of Property Act, 1882, or any other law for the time being in force, a mortgagor shall not grant a lease of the mortgaged property for a period exceeding six years and any lease granted in contravention thereof shall be void.
(20) Directions by Reserve Bank
In particular, and without prejudice to the generality of the powers of the Reserve Bank to give directions under the Banking Regulation Act, 1949, as applicable to Co-operative Banks, a Bank shall, in its functioning follow the guidelines issued as part of its regulatory functions, by the Reserve Bank of India from time to time, among others, in respect of the following matters, namely:-
(i) issues relating to interest rates, loan policies, investments, prudential exposure norms, forms of financial statements, reserve and liquidity requirements, appropriation of profits etc;
(ii) branch licensing, area of operation;
(iii) acquisition of assets incidental to carrying on banking functions;
(iv) policy regarding remission of debts;
(v) annual audit;
(iv) change of management and appointment of Chief Executive Officers;
(v) supersession of the Board and appointment of administrator; and
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(vi) winding up of the Bank or an order sanctioning a scheme of compromise or an arrangement or of amalgamation or re-construction;
Explanation: For the removal of doubts it is hereby declared that this section shall not in any way affect the exercise of the powers conferred on, or the performance of the functions entrusted to, the Registrar under this Act, as part of his functions, to be exercised by him independently as a monitoring authority over the functioning of the Banks.
(21) Formation and functions of State Federation
of Urban Co-operative Banks
(i) All the Banks in the State shall form a State Federation of Urban Co-operative Banks (hereinafter in this provision referred to as the Federation).
(ii) The General Body of the Federation shall consist of the Chairperson of all Banks in the State and in the absence of the Chairperson in respect of any Bank, the person for the time being exercising the powers and performing the functions of the Chairperson shall represent the Bank.
(iii) The Governing Council of the Federation shall consist of fifteen members elected by the Chairpersons of the Banks having their registered office in one District or in a group of Districts, as may be specified, so as to give equitable representation to the Banks on the Federation.
(iv) The Registrar shall nominate an officer not below the rank of an Additional Registrar to be an ex-officio member of the Governing Council and the Reserve Bank may, if it so chooses, also nominate one of its officers of suitable rank to be an ex-officio Member of the Governing Council. The ex-officio members nominated under this sub-section shall have the right to take part in the proceedings of the governing council with a right to vote.
(v) The affairs of the Federation shall be managed by the Governing Council. There shall be a Chairperson, a Vice-Chairperson and a Treasurer elected from among the members of the Governing Council. The Governing Council shall appoint a Secretary who shall be a person having the qualifications specified in section (125) (10) in respect of a Chief Executive Officer of a Bank having deposits exceeding Rs.25.00 crores. The Secretary shall be the Chief Executive of the Federation.
(vi) The term of office of the Governing Council shall be five years from the date of the first meeting of the Governing Council.
(vii) Every Bank shall in each year,-
(a) set apart a sum equivalent to 0.25 percent of its annual gross income in the last preceding year for conducting such educational and training programmes as it deems fit or as suggested by the Federation to the members of the General Body and the Directors of the Board and their Officers and staff with the assistance of A.P. State Co-operative Union’s Training Centres and Institute of
160 Co-operative Management; Rajendranagar for junior and intermediate category of personnel respectively.
(b) contribute a sum equivalent to 0.25 percent of its gross income of the last preceding year to the Federation for its administrative expenses and to perform its other functions; and
(c) contribute a sum equivalent to 0.50 percent of its gross income of the last preceding year to the Federation for constituting a Mutual Assistance and Self-help fund which shall be utilized as soft loan to any Member Bank to overcome its temporary financial problems.
(viii) The funds of the Federation shall consist of,-
(a) contributions received from the Banks under sub-section (21)(7) of section (125);
(b) such annual Membership fee from each Bank as may be specified in the byelaws;
(c) such grants, as may be given by the State Government or such sum
as may be given by the State Government for any specific purposes;
(d) any grants given by the Central Government or any organizations; or;
(e) any funds generated by extending its services to the Banks.
(ix) The Federation shall be an advisory and coordinating body, promoting cooperation and mutual help among its member Banks.
(x) The Secretary shall convene the meetings of the Governing Council with the approval of the Chairperson. The procedure at meetings and the quorum for the meetings, manner of taking decisions, recording of minutes etc. shall be in accordance with the byelaws framed by the Federation for the purpose in conformity with the provisions of this Act.
(xi) The provisions of this Act shall be in addition to, but not in derogation of the provisions of the Banking Regulation Act, 1949 (Central Act 10 of 1949) as made applicable to Co-operative Banks by Part-V thereof. Subject to the provisions of this section, the provisions of this chapter shall have effect notwithstanding anything inconsistent therewith contained in any other law.
161
CHAPTER - XVI
Special provisions applicable to Co-operative Credit Societies identified under Revival Package
SECTION 126: DEFINITIONS
In this chapter unless the context otherwise requires,-
(a) “Agricultural Co-operative Credit society” means the Andhra Pradesh State Co-operative Bank (APCOB), the District Co-operative Central Bank (DCCB) and the Primary Agricultural Co-operative Credit Society (PACS). A Primary Agricultural Co-operative Credit Society includes Farmers Service Co-operative Society (FSCS), Co-operative Rural Bank (CRD), Large Sized Co-operative Society (LSCS) or any other Co-operative Credit Society primarily dealing with agricultural credit at primarily level included under the Revival Package and other similar relief measures offered by the Government of India from time to time;
(b) “Scheduled Area” means such areas as the President may by order declare to be Scheduled Area (under Fifth Schedule to Article 244(1) of the Constitution of India).
(c) All other expressions used in this chapter but not defined shall have the same meaning respectively assigned to them in section (4) of the Act.
SECTION 127: SPECIAL PROVISIONS APPLICABLE TO AGRICULTURAL CO-OPERATIVE CREDIT SOCIETIES
In particular and without prejudice to the generality of the powers under the provisions of this Act applicable to the Cooperative societies the following provisions shall apply exclusively to the Co-operative Credit Societies, namely:-
(1) (a) An associate member who is an individual or a group depositor holding a minimum deposit of Rs.5,000/- (Rupees Five thousand only) in normal areas and Rs.2,500/- (Rupees Two thousand and five hundred only) in scheduled areas or a higher sum as may be prescribed in the byelaws of the Co-operative Credit Society for a continuous period of minimum two years preceding the date of notification of election in a Primary Agricultural Co-operative Credit Society shall have full voting rights.
(b) Every group borrower or a group depositor which is an associate member and availed a minimum loan of Rs.10,000/- (Rupees Ten thousand only) or higher amount of loan as may be specified for at least 6 (six) months preceding the date of notification of elections in a Primary Agricultural Co-operative Credit Society shall have full voting rights.
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(c) Every group borrower or a group depositor which is an associate member as described under section (127)(1)(a) shall be entitled to vote through one delegate nominated by the group.
(2) The Agricultural Co-operative Credit Society shall have autonomy in all financial and internal administrative matters, subject to the guidelines of Reserve Bank of India / National Bank for Agriculture and Rural Development in the following areas:-
(i) Interest rates on deposits and loans;
(ii) borrowing and investments;
(iii) loan policies and individual loan decisions;
(v) internal control systems, appointment of auditors and compensation for the audit.
(3) (a) The state Government’s equity in a Co-operative Credit Society shall not exceed 25% of the paid up share capital. The State Co-operative Credit Society may reduce the State equity further at its choice.
(b) There shall be only one Government nominee on the Managing Committee of the Andhra Pradesh State Co-operative Bank/ District Co-operative Central Bank as long as the equity of Government continues and there shall be no Government nominee on the managing committee of a Primary Agricultural Co-operative Credit Society.
Provided that the existing nominee(s) on the managing committee shall continue till the expiry of their current term. However, they shall not have any voting right in any election or in the motion of no confidence.
(4) A Co-operative Credit Society may affiliate or disaffiliate with a federal society at its choice.
(5) A Co-operative Credit Society shall have the freedom of entry and exist at any tier and there shall be no mandatory restrictions of geographical boundaries for its operation.
(6) A Co-operative Credit Society may invest or deposit its funds in any financial institution regulated by Reserve Bank of its choice with a minimum net worth and any other criteria as may be prescribed by NABARD from time to time and not necessarily in the federal society to which it is affiliated.
(7) A Co-operative Credit Society may obtain loans from any financial institution regulated by Reserve Bank and refinance from NABARD or any other refinancing agency directly or through any RBI regulated financial institution of its choice and not necessarily from the federal society to which it is affiliated.
163 (8) The Registrar shall frame guidelines for payment of dividend by a PACS in consultation with NABARD.
(9) There shall be no compulsion on contribution to any fund, other than those required for improving the net worth/ owned funds of a Co-operative Credit Society,
Provided it shall be mandatory to contribute to education fund as per section 29(2) of this Act to provide for cooperative education and training for its members.
(10) (a) A member of the Board representing an Agricultural Co-operative Credit Society on the Board of APCOB / DCCB shall be disqualified by the Registrar in the event of such Co-operative Society committing a default for a period exceeding one year on intimation of such default by the Chief Executive of the bank concerned.
(b) A member of the Board representing a Co-operative Society other than PACS on the Board of APCOB/DCCB shall be disqualified by the Registrar in the event of such Co-operative Society committing a default for a period exceeding 90 (ninety) days on intimation of such default by the Chief Executive of the bank concerned.
(11) A defaulting member shall not be eligible to be elected to the Board of a Co-operative Credit Society and a defaulting office-bearer of a PACS shall not continue on such Board for more than one year unless the default is cleared.
(12) The Registrar shall ensure that the regulatory prescriptions of the RBI in the case of APCOB/DCCB including their winding up or supersession of their Boards are implemented and the Liquidator / Special Officer, as the case may be, is appointed within one month of being so advised by Reserve Bank of India.
(13) (a) The supersession of the Board of APCOB/DCCB under section (60)
of the Act shall be done only in consultation with the Reserve Bank
of India.
(b) The supersession of the Board of a Primary Agricultural Co-operative
Society under section (60) of the Act shall be done only on the
following grounds:-
(i) If a Co-operative Society incurs losses for three consecutive years, or
(ii) if serious financial irregularities or frauds have been identified, or
(iii) if there are judicial directives to this effect, or
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(iv) if there is lack of quorum for three consecutive meetings, or
(v) if there is a failure in getting the audit conducted as per the Act, or
(vi) if there is a failure in conducting general body meeting as per the Act, or
(vii) if there is willful disobedience or failure to comply with any lawful direction/guidelines issued by the Registrar. (14) (a) The Election Authorities for Cooperatives shall conduct elections to the Co-operative Society before the expiry of the term of the existing Board and in case of supersession of Board, the he shall conduct elections invariably within six months from the date of supersession.
(b) A member of the Board of PACS which has been superseded due to a
reason mentioned in clause (13)(b)(i) and (ii) above shall not be entitled
to contest against for a period of five years after supersession.
(15) The byelaws of the Co-operative Credit Society shall be registered by the Registrar within 30 (thirty) days from the date of receipt of application.
Provided that if the Registrar is satisfied after giving an opportunities to the society to make its representatives that the proposed byelaw are contrary to the provisions of the Act, he shall reject the same duly recording his reasons thereon within 30 (thirty) days from the date of the receipt of application.
(16) The prudential norms including Capital to Risk Weighted Assets Ratio (CRAR) shall be prescribed by the Registrar for all the PACS in consultation with NABARD.
(17) The directors/Chief Executive Officers of APCOB and a DCCB who do not fulfil the fit and proper criteria stipulated by RBI shall be removed by the Registrar/Appointing Authority at the request of NABARD/RBI.
(18) There shall be co-option of professionals on the Board of the APCOB/DCCB with full rights, in case such professionals as stipulated by the RBI do not get elected to the Board. The candidate so co-opted shall not be a candidate defeated in the current election.
(19) The APCOB/DCCB shall cause audit of its accounts by a auditors or auditing firms selected from a panel approved by the State government or Registrar within six months of the close of the financial year to which such accounts relate.
(20) The Registrar shall arrange conduct of special Audit of APCOB/DCCB if requested by RBI and also arrange to furnish the report to the RBI within the time stipulated.
(21) The Registrar shall de-register a PACS which is using the word “Bank”, “Banking”, “Banker” or any other derivating of the words “Bank in its registered name.
165 (22) The existing provisions of the Act and guidelines shall continue to be in force till the guidelines/stipulations are issued by RBI/NABARD wherever required in the above provisions.
CHAPTER - XVII
Special provisions for
Co-operative Housing Societies
SECTION 128: APPLICATION OF THIS CHAPTER
In particular and without prejudice to the generality of the of the powers under provisions of this Act which are applicable to all types of Co-operative Societies under this Act, the provisions in this chapter exclusively apply to--
(a) All types of Co-operative Housing Societies registered or deemed to be registered at the commencement of the Act or under any Law relating to Co-operative Societies in the State and registration of which has not been cancelled before such commencement and all Co-operative Housing Societies registered under this Act;
(b) A.P. Co-operative Housing Societies Federation or any Co-operative Housing Societies Federation registered or deemed to be registered at the commencement of the Act.
SECTION 129: DEFINITIONS
(a) In this Chapter, unless the context otherwise requires—
(1) “Co-operative House Building Society” means a Co-operative Society based on the individual ownership system advancing long-term loans to members for purchase of sites and building of houses on sites purchased or already owned by them or acquired for them through the Co-operative Society for the establishment of a co-operative colony and the actual building of houses is left to the members themselves, ownership vesting with the members who pledge their sites to the Co-operative Society as security for the loans;
(2) “Co-operative House Construction Society” means a Co-operative Society formed on co-partnership tenancy system acquiring sites, constructs individual houses or apartments and rents them out to members with common facilities in case of apartments under the hire purchase system according to which a tenant member becomes the ultimate owner of the house along with a portion of the land in case of apartments after making a stipulated number of payments usually spread over a period of 5 to 20 years;
(viii) “Co-operative Township” means a Co-operative Society based on the individual ownership system or the tenancy system and which acquires land and prepares layout of the house sites for
166 establishment of a new colony, advances loans to members and also provides and maintains civic amenities;
(4) “Co-operative Housing Society” means a Co-operative Society belonging to any one of the above three types according to the context in which it occurs;
(5) “Apex Federation” means A.P. Co-operative Housing Societies Federation Ltd., or any co-operative housing societies federation registered to provide long-term loans for construction, development of infrastructure and bridge loan for purchase of land;
(6) “Allottee” means a member of a Co-operative Housing Society to whom a plot of land or a house or a flat in a building or in the project or a commercial plot held by it, is allotted by the Co-operative Society;
(6) “Dwelling unit” includes a house, flat and apartment for the purpose of dwelling;
(7) “National Housing Bank” means the National Housing Bank established under the Nation l Housing Bank Act, 1987
(53 of 1987);
(8) “Transfer Fee” means fee payable to transfer the membership of a member to another member in a Co-operative Housing Society as provided in the byelaws and a premium not exceeding 1% of the value of the plot, house or flat shown in the transfer document which shall be credited to the Reserve fund of that Co-operative Society;
Provided that no such premium shall be paid in the case of a transfer to a member of a family.
Words and expressions defined in this Act and used, but not defined, in this chapter, shall have the same meanings, assigned to them in this Act.
SECTION 130: CONDITIONS TO BE FULFILLED PRECEDENT TO
REGISTRATION OF A CO-OPERATIVE HOUSING SOCIETY
(1) Where a Co-operative Housing Society secures Government land, the conditions imposed by the Government, if any, shall be fulfilled and if such land is mis-utilised in violation of such conditions or is in surplus, it shall be competent for the Government to resume the land.
(2) The list of seniority of a member comprising of his name, his father’s and mother’s name, his date of birth and permanent account number of income tax, if any, shall be prepared strictly in accordance with his date of admission in the Co-operative Housing Society. The list so prepared shall be published on the notice Board of the Co-operative Housing Society at the end of every financial year and shall also be sent to the District Co-operative Officer concerned. The seniority list shall be updated every year before its publication as above.
(3) No Co-operative Housing Society shall admit as members (i) persons belonging to the same family or having close relationship to each other as defined in explanation (1) to Section 7
167 of this Act; (ii) realtors, brokers engaged in real estate business; firms dealing with real estate matters and persons closely related to them.
SECTION 131: RIGHTS AND PRIVILEGES OF MEMBERS ON
ALLOTMENT OF PLOT OR DWELLING UNIT
IN A CO-OPERATIVE HOUSING SOCIETY
(1) Every member of a Co-operative Housing Society, whether registered before or after the commencement of this Act, to whom plots of land or house or flat have been allotted, shall be issued certificate of allotment by his/her Co-operative Housing Society under its seal and signatures of the Chair-Person and the Chief Executive.
(2) Notwithstanding anything contained in the Transfer of Property Act, 1882 (4 of 1982), or the Registration Act, 1908 (16 of 1908), any allotment (including re-allotment) of a plot of land or house or flat of a Co-operative Housing Society to its member as per terms of allotment shall entitle such member to hold such plot of land or house or flat with such title or interest as provided for in the byelaws.
(3) A member of a Co-operative Housing Society shall not be entitled to any title or interest in any plot of land or house or flat of the society until he has made such payment as may be specified by the Co-operative Housing Society towards the cost of such plot of land or construction of such dwelling unit, as the case may be, to the Co-operative Housing Society.
(4) The right, title and interest in a plot of land or dwelling unit in a building of the Co-operative Housing Society (including the undivided interest in common areas and facilities) shall constitute a heritable and transferable immovable property within the meaning of any law for the time being in force.
Provided that notwithstanding anything contained in any other law for the time being in force, such land or building shall not be partitioned for any purpose whatsoever.
(5) Every member of a Co-operative Housing Society shall be entitled to an undivided interest in the common areas and facilities pertaining to the plot of land or dwelling unit allotted to him, which shall be described in the certificate of allotment as provided in sub-section (1).
(6) The work relating to the maintenance, repair and replacement of the common areas and facilities (including additions or improvements thereto) shall be carried out in accordance with the building rules of the concerned civic authorities, or other competent authority, as the case may be, and the costs thereof shall be apportioned amongst the members of the Co-operative Housing Society in such manner as may be determined and notified by the Board from time to time.
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SECTION 132: ALLOTMENT OF PLOTS, FLATS OR HOUSES
THROUGH DRAW OF LOTS
(1) Allotment of plots of land, flats, houses or other dwelling units shall be made in a meeting of the general body of a Co-operative Housing Society to the members strictly on the basis of seniority of their admission by draw of lots only in an open and transparent manner after due intimation and reasonable opportunity to participate and witness the draw in respect of such members whose enrolment as a member of a Co-operative Housing Society is found proper in accordance with the provisions of this Act and the byelaws of the Co-operative Housing Society and such a draw of lot shall be conducted under the supervision of an officer not below the rank of a Deputy Registrar of Co-operative Societies.
(2) If any draw of lot is held in violation of above provisions it shall be void and any financial loss on account of this shall be recovered as arrears of land revenue from persons who were responsible for it and such persons shall be declared ineligible from holding any office in the Co-operative Housing Society in future and shall also be liable to be subjected to the penal provisions under this chapter.
SECTION 133: PROVISION FOR NOMINATION
(1) Every member of a Co-operative Housing Society shall nominate a person or persons to whom in the event of his death his right and interest in such Co-operative Housing Society shall be transferred. Provided that such nomination is registered in a ‘Nomination Register’ with full details of the Member and nominee whose photograph/signature, so recorded and saved in physical and electronic form.
(2) A member of the Co-operative Housing Society shall have the right to change the nomination at any time.
(3) There shall not be more than one nomination subsisting at any time.
Provided that joint and more than one nominee within the blood relation shall be permissible.
SECTION 134: RESTRICTION ON TRANSFER OF SHARE
OR INTEREST OF A MEMBER
Subject to the provisions of this Act, in the case of a Co-operative Housing Society, no transfer of share or interest of a member or the occupancy right, except the transfer to his heir or a nominee, shall be effective unless--
(a) the previous permission of the Co-operative Housing Society has been
169 obtained for the transfer by paying the transfer fee;
(b) the dues of the Co-operative Housing Society are paid or transferred to the transferee with the consent of the Co-operative Housing Society;
(c) the transferor vacates and gives possession of the premises to the transferee;
SECTION 135: REGISTRATION OF MORTGAGE IN FAVOUR OF
CO-OPERATIVE HOUSING SOCIETY OR APEX
Notwithstanding anything contained in the Registration Act, 1908 (16 of 1908), it shall not be necessary to register mortgages, executed in favour of Co-operative Housing Society or apex society provided that the Co-operative Housing Society or apex society sends, within a period of fourteen days, a copy of the instrument whereby the property is mortgaged or a written declaration creating a charge on such property in the form and manner prescribed in its byelaws to the registering officer within whose jurisdiction the whole or part of the mortgaged property is situated and such registering officer files such copy or copies thereof, as the case may be, in Book No.1 prescribed under section (51) of the Registration Act, 1908 (16 of 1908).
SECTION 136: SETTLEMENT OF DISPUTES
(1) Notwithstanding anything contained in any law relating to rents or any other corresponding law for the time being in force in Andhra Pradesh, any dispute relating to the allotment, occupation or recovery of possession of any plot, dwelling unit or flat in any Co-operative Housing Society, the recovery of dues payable by a member of a Co-operative Housing Society shall be deemed to be a dispute within the meaning of Section (96) of this Act and shall be decided in accordance with the provisions of this Act, and no court shall have jurisdiction to entertain and decide any proceedings in respect of such disputes.
(2) Where any property mortgaged to the Co-operative Housing Society including the apex, as the case may be, is wholly or partially destroyed or for any reasons the security is rendered insufficient and the mortgagor having been given reasonable opportunity to repay such portion of loan as may be determined by the Co-operative Housing Society or the apex, as the case may be, has failed to provide such security to such portion of loans, the whole of the loan shall be deemed to fall due at once notwithstanding the original terms on which the loan was advanced, and the Co-operative Housing Society or the apex, as the case may be, shall be entitled to take action against the mortgagor for the recovery thereof.
SECTION 137: RECOVERY OF DUES AND FORECLOSURE
(1) Where a Co-operative Housing Society has raised loan from the apex or any other approved housing finance institution against the security of land and building and the possession of such building has been handed over to the loanee members, if any member fails to repay the loan installment for a continuous period of sixty days after the installment has become due, the
170 Co-operative Housing Society shall issue a notice for repayment of the defaulted amount along with the balance outstanding as recall of loan.
(2) If the member fails to repay the recalled amount of loan together with the interest, if any, within thirty days after the notice of calling up of the loan, the committee shall refer the case to the Registrar who may make further enquiries as deemed fit and issue a notice to the defaulter member providing him an opportunity to pay the defaulted amount within such time as he may deem fit subject to a maximum of ninety days and pass orders to that effect and in case the defaulter member still persists in default, the Registrar may issue a certificate for the recovery of defaulted amount along with interest and costs, if any, as arrears of land revenue.
Where an installment is not paid within 90 days of the due date it will be declared as Non Performing Asset (NPA) and shall be subjected to initiation of legal action for recovering the arrear installment by the Co-operative Housing Society or by the Apex Federation. Failure to initiate legal action shall entail fastening of liability against the defaulting Board / Special Officer / Person-in-charge Board as the case may be.
SECTION 138: EXPULSION OF MEMBER
(1) Notwithstanding anything contained in this Act, the General Body of a Co-operative Housing Society may, by a resolution, expel a member on any one or more of the following grounds, namely
(a) if he has been a persistent defaulter in respect of any dues of the Co-operative Housing Society and a decree has been obtained against him for the recovery of dues foreclosing the loan before expulsion; or
(b) if he has willfully deceived the Co-operative Housing Society by making any false statement or submitting any false document to obtain the membership of such Co-operative Housing Society; or
(c) if he has brought disrepute to the Co-operative Housing Society by indulging in vilification campaign against it or has done any other act detrimental to the interest and proper working of the Co-operative Housing Society; Provided that no such resolution shall be passed unless the member concerned has been given an opportunity of being heard on the grounds for his proposed expulsion.
Provided further that no member shall be expelled unless a resolution to that effect is passed by not less than two thirds of the members of the general body present and entitled to vote at the meeting.
(2) Any party aggrieved by the order of expulsion under this section may, within sixty days from the date of such order, appeal to the Tribunal.
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SECTION 139: HOUSING CO-OPERATIVE SOCIETIES WHICH HAVE ACHIEVED THEIR OBJECTIVES
In the case of a house building Co-operative Society existing for more than 15 years and has outlived its existence after allotment of all plots to its members or execution of the housing project whichever is earlier, the Registrar shall, after giving sixty days’ notice to the Board, initiate winding up proceedings and such Co-operative Housing Society shall be wound up.
Provided that in the case of a Co-operative Housing Society giving loans to members for securing a house / flat or plot of land or where court cases are pending or civic maintenance issues have to be attended, appropriate welfare body shall be formed to pursue action.
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CHAPTER XVIII
Special provisions applicable to Non-Agricultural
Co-operative Credit Societies other than Co-operative Urban Banks
SECTION 140: WORKING ASPECTS OF NON-AGRICULTURAL CREDIT SOCIETIES OTHER THAN CO-OPERATIVE URBAN BANKS
In particular and without prejudice to the generality of the powers under the provisions of this Act applicable to the cooperative societies, the following provisions shall apply to non-agricultural cooperative credit societies other than urban cooperative banks.
(A) For the purposes of this chapter, Non-Agricultural Credit Societies are divided into three classes:
(a) Limited liability Co-operative Societies with paid-up share capital and reserves of more than Rs.1.00 lakh and accepting public deposits;
(b) Employees Co-operative Credit Societies whose paid up share capital and reserves are not less than Rs.1.00 lakh, accepting public deposits;
(c) Self-help group Co-operative societies undertaking thrift and savings, doing agri business whose paid up share capital and reserves are more than Rs.1.00 lakh and accept public deposits and loans from funding agencies like “Sthree Nidhi”.
(B) These Co-operative Societies raise their funds by way of share capital, fixed deposits, savings and thrift, cash credit from financing agencies, admission fee. The tenure of fixed deposits shall not exceed five years. Acceptance of large deposits shall be discouraged. If large deposits are received they may be split up into small deposits with staggering maturity periods so that the recoveries from loans issued might be available to repay them.
(C) (1) The Co-operative Societies categorized in Sections (A) and (B) above shall obtain license from Reserve Bank of India to carry on Banking business undertaken by them and amend their byelaws accordingly within two months from the date on which this Act comes into force and subject themselves for regulation by the Reserve Bank of India.
(2) They shall maintain cash reserves to the extent of 6% of their demand and time liabilities and shall park them in their financing institutions regulated by Reserve Bank of India and maintain liquid funds to the extent of 25% of their demand and time liabilities. These societies shall submit three copies of their profit and loss account and balance sheet with Auditor’s Report to the RBI within six months from the close of the financial year.
173 (D) Such Co-operative Societies whose share capital and reserves are less than Rs.1.00 lakh but accept public deposits shall maintain fluid resources as per the standards fixed and shall maintain a register in the Form No.A12.
(E) The major portion of funds of these Co-operative Societies shall be derived from short-term deposits. Thrift deposits shall be encouraged among their members as they would attract small savings of the poor and middle classes and in the case of employees shall form not exceeding 25% of their substantive pay in each case. The terms offered for the deposits shall correspond to the money market conditions and guidelines of the Reserve Bank of India. No loans shall be granted on the security of thrift deposits.
(F) Every member shall subscribe to a thrift fund according to his income/salary every month which amount shall not be refunded either by adjustment or by cash so long as he continues as a member. At the end of the period of two years the accumulated amount may be converted into a fixed deposit and held to his credit till he ceases to be a member. Interest on such deposits may be paid in cash or by adjustment to the loans due by the member.
(G) Thrift deposits shall not be liable for attachment or sale under any decree or order of a Court in respect of any debt or liability incurred by the member.
(H) The maximum borrowing power of the Co-operative societies shall be eight times of the paid up share capital plus reserve fund.
(I) The principal business of these Co-operative societies shall be issue of loans for the following productive and consumption purposes.
(i) To secure assets which provide employment to the member/s. (ii) Education of member’s children. (iii) Consumption expenses during unemployment or illness.
(iv) Obligatory religious rites like marriages, other ceremonies.
(v) Agri business like buying Agricultural output, processing, marketing, farming and such other value addition services incidental thereto.
(vi) For putting up housing units and repairs to the existing houses with reference to the income and repaying capacity of the member, the total amount of such loans not exceeding 20% of total lendings in a year.
Loan shall be granted on the basis of repaying capacity of the borrower. Loans on mortgage of immoveable property of the borrower shall be backed up by encumbrance certificate obtained for a period of not less than twelve years prior to the date of application for loan. Loans may be given upto a period of three years but not exceeding five years in the aggregate. Loans given for five years shall not exceed 50% of the total loans given in a year. A second loan may be given to a member, if he/she repaid 1/3rd of the first loan taken.
(J) Short-term loans on the security of gold and silver jewel may be issued to members, as such jewels represent the savings of the members.
174 (K) Cash credit loans may be given to a member upto a limit decided by the General Body due regard being given to his status in life, securities offered or on the joint and several responsibility of the borrower and one or two other members of the same Co-operative Society standing surety for him or on the mortgage of unencumbered immovable property wholely belonging to the borrower not exceeding 50% of the estimated market value of such property or on the security on the fixed deposits, not being thrift deposits, Government securities, debentures of A.P. State Co-operative Bank to the extent not exceeding 80% of the value of such security offered, on continuity guarantee agreements.
(L) The individual maximum borrowing power of a member shall be decided by the General Body and shall include all types of loans and shall be related to the share-holding of the member and his repaying capacity which shall be reckoned as 1/3rd of his gross earnings.
(M) There shall be conducted an annual evaluation of immovable properties accepted as security for the loans granted by the Co-operative Societies and in case of any depreciation in the value of such securities, the borrowers shall be directed to furnish additional security or repay the loans to the necessary extent.
(N) These Co-operative Societies shall not permit withdrawal of share capital exceeding 10% of the aggregate share capital as it existed on the preceding 31st day of March in a year.
(O) Investment of funds in shares of their Federal Co-operative Societies shall not exceed 2% of their own funds of the Co-operative Society. The Co-operative Society shall not sanction loans on the security of its shares.
(P) There shall be a ceiling on sanction of unsecured loans decided by the General Body. No unsecured loans shall however, be sanctioned to the Directors of the Co-operative Society.
(Q) Proper management systems such as credit appraisal, credit dispensation and credit administration and monitoring shall be ensured in the working of the Co-operative Societies.
(R) The Co-operative Societies may undertake the activity of purchase and distribution of domestic articles and other essential food stuffs to their members and non-members alike on strictly cash and carry basis by framing suitable business regulations and fixing a reasonable limit approved by the General Body.
(S) When a Co-operative Society become unmanageable, it may set up its branches with a limited area of jurisdiction and a local Committee of its own elected from among the members living in the area covered by the branch shall be formed to run them.
(T) A minimum of share holding and deposits shall be specified to be eligible for election as Directors. To minimize election disputes, the jurisdiction of a Co-operative Society with large membership may be divided into several wards so that each ward may send a representative to the Board of Directors.
175 (U) A suitable Member education and Training programme shall be put in place by the Co-operative Societies for its members, office-bearers, Board of Directors and employees with the help of the Co-operative Training Centres run by A.P. State Co-operative Union and National Co-operative Union of India..
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CHAPTER - XIX
Special provisions applicable to
Co-operative Consumer Stores
SECTION 141:
(A) In particular without prejudice to the generality of the powers under the provisions in this Act applicable to all Co-operative Societies registered under this Act, this section shall apply to Consumer Co-operative Societies exclusively.
Definition:- A Primary Consumer Co-operative Stores is a Co-operative Society which engages itself in satisfying the domestic needs of its members by selling such of their requirements like food articles, clothing, medicines, consumer durables, replacing middlemen and diverting the profits resulting in such trade to the pockets of its members. The Consumer Co-operative Stores shall endeavour to obtain import licenses under Import Trade Regulations to import canned and powdered milk, infant foods and patent medicines.
Organization and Share capital:- A minimum share capital of Rs.30,000/- shall be collected besides deposits, and trade deposits from members against which goods may be supplied by debiting their value to the trade deposit on condition that the trade deposit will be replenished again to the original full extent. The share value may be kept at Rs.100/-.
Not more than one Consumer Co-operative Store shall ordinarily be registered in one locality. A single big Consumer Co-operative Store with a number of branches or depots with adequate resources has better chances of success and shall be thought of at the time of registration.
Other sources of funds:- The Consumer Co-operative Stores may approach financing institutions like District Co-operative Central Bank / National Co-operative Development Corporation for the following types of financial assistance.
(i) Share capital contribution
(ii) Margin money
(iii) Loan for purchase of Goods Carriers required NCDC
for home delivery of consumer goods to members
(iv) Loan for construction of godown
(v) Working capital loan … DCCB on Govt. guarantee
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(vi) Managerial subsidy for appointment of a Government subsidy Manager to revive dormant on tapering scale
Co-operative Consumer Store …
Membership:- Any person who is competent to contract and is residing within the area of operations of the Consumer Co-operative Stores shall be eligible for admission subject to other qualifications stated in this Act. The following institutions may also be admitted as associate members.
(i) Religious institutions like Mutts;
(ii) Educational institutions like schools, colleges, Technical institutions;
(iii) Medical institutions;
(iv) Social service organizations like Red Cross, Old Age homes;
(i) Hostels and canteens and institutions approved in the byelaws; (ii) Jails and certified schools;
State Government which has taken shares in the Consumer Stores shall have a right to nominate Directors to the Board as provided in Section (54) of this Act.
Maximum borrowing power:- The maximum borrowing power of a Consumer Co-operative Society is ordinarily fixed at 8 to 10 times the paid up share capital plus the Reserve Fund.
Consumer Co-operative Federations:- The Primary Consumer Co-operative Stores may federate into a District Co-operative Wholesale Stores at the district level and all the district Co-operative Wholesale Stores may federate into a state level Co-operative Consumers Societies Federation.
Board of Management:- The Board of management of a Consumer Co-operative Society shall be elected from among the members of the General Body and shall have a strength of fifteen (15) members.
Purchases & Sale price fixation Committees may be constituted from among the Board of Directors.
Purchases Committee shall ensure that purchases are made at production centres and reliable institutions against written warranty. Commodities may be purchased from Processing and Commodity Marketing Co-operative Societies. This Committee shall be responsible for the receipt of stocks, verification of its quantity and quality and also for conducting quarterly verification stocks in the main godown, with the branches and salesmen.
Sale Prices Fixation Committee shall collect market intelligence regarding prices of articles of merchandise to which it shall add margins, interest on capital, rent, cost of
178 management of stores, wages of salesmen and watchmen, depreciation value on stocks, stocks remaining unsold proportionately and arrive at the sale price which the consumer has to pay.
The system of sales in Consumer Co-operative Stores shall be characterized by four cardinal principles.
(i) Sales at current price
(ii) Sales for cash
(iii) Sales to members
(iv) Sales of pure and quality goods at correct weights and measures
Sales to non-members may be permitted by the General Body in emergent times like famine, floods, war etc. Credit sales if permitted in the byelaw shall not be for more than one month.
Employees:- Security deposits / fidelity guarantee bonds shall be obtained from the employees as fixed by the General Body. Employees shall be trained in salesmanship, shop-keeping and Accounting.
Consumer Co-operative Societies shall maintain the following account books and registers in addition to those mentioned in Section (82).
(1) Purchase Registers for each department and separate Stock ledgers for the main godowns of the stores for each department viz., Textiles, groceries and pharmacy.
(2) Register of standard forms showing the prices fixed for each type of
article attested by the Chief Executive of the Consumer Stores.
(3) Issues from main godown Register to various salesmen of the
departments in the stores.
(4) Salesman liability registers for retail stocks issued to them at selling
prices/Branch liability registers.
(5) At the end of each calendar month Register/Stock statements
showing physical verification of stocks done in the main godown
and also in each department/branch by Stock Verification Officers
designated by the Board from among the staff by rotation.
(6) Stock verification shall be entrusted to an official independent of
purchases/sales departments.
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(7) Utilisation of margin money
(8) Stock cover statements for cash credits availed from financing
agencies.
(9) Market rate Register
(10) Trade Deposit Registers (in the case of Employees Stores Societies)
(11) Suppliers personal ledger
(12) Sales Chitta
(B) (i) Every Co-operative Consumer Stores shall frame business regulations
and get them approved by the General Body and introduce an effective internal audit system and obtain monthly audit reports;
(ii) Stocks shall be arranged so as to facilitate easy verification;
(iii) As a rule, Double Compartment System of maintaining stocks
shall be followed by Consumer Co-operative Society, the main stock being kept in the main godown and retail stock with salesmen/branches;
(iii) Monthly stock taking shall be done in regard to bulk stock in the godown and retail stocks with the salesman/branches;
(iv) Deficits shall be arrived at on or before 10th of the succeeding month and recoveries shall be effected promptly.
(v) Consumer Cooperative Stores/societies shall issue pass-books to their members to record purchases made by them, duly attested by an authorized officer by the board;
(vi) All unsaleable stocks/empties shall be cleared either by tender or auction every month. (C) The following shall be reckoned as efficiency norms for Consumer Co-operative Stores.
Sales per Sq. ft.
i) Good performance .. for groceries Rs.4/- for others Rs.5/- or more as daily sales per sq. ft.
ii) Fair performance .Rs.2/- to Rs.4/- as daily sales per sq. ft.
iii) Unsatisfactory .. Less than Rs.2/- as daily s performance sales per sq. ft.
180 (D) Monday sales Rs.500/- per salesman in the food and groceries department and Rs.400/- per salesman in other departments.
(E) Inventory turnover:
The following stock turn rates shall be deemed acceptable.
i) Fruits and vetables ... 10 times per year
ii) Canned food and groceries.. 20 times per year
iii) Textiles ... 4 times per year
iv) Readymade garments ... 6 times a year
v) Other departments ... 3 to 6 times a year
(F) For the Consumer Cooperative Stores as a whole, the following inventory ratio may be adopted as norm.
i) Good performance ... 12 to 15 times of the capital employed in
the inventory
ii) Fair performance ...8 to 11 times of the capital employed in the inventory
iii) Unsatisfactory ...Less than 8 times of the
performance capital employed in the inventory
(G) Expenses ratio: A Consumer Cooperative Stores shall operate on an overall margin of 6% to 10%. Efficiency norms for various expenses may be as below:
i) Salaries, wages; fringe ... 3% of total sales Benefits and incentives
ii) Rent 1% of total sales iii) Other expenses ... 2% of total sales
181
CHAPTER - XX
Special provisions applicable to
Labour Contract Cooperative Societies
SECTION 142:
In particular and without prejudice to the generality of the powers under the provisions of this Act applicable to cooperative societies the following provisions shall apply to labour contract cooperative societies exclusively.
Definition: Labour Contract Cooperative Society means, a Cooperative Society registered under this Act which has as its principal object, the securing and providing of steady work and employment to its members skilled or otherwise ensuring reasonable wages for them for the work done and thereby promote their economic interests.
Area of operations: A Labour Contract Cooperative Society may be organized with a mandal as its area of operations. There shall be no objection to a society taking up work outside its area of operations. The area of operations shall be kept flexible according to mobility of labour and availability of work.
Membership & Share capital: Any skilled or unskilled labour above the age of eighteen who is competent to contract and not a contractor dealing in private contracts of his own, and resides within the area of operations of the society may be admitted as a member.
Any person below the age of eighteen but not below the age of twelve and belongs to the family of a member of the society, willing to be trained in the works being executed and assist such family, may be admitted as an Associate member. He shall have only such rights as are specified in the byelaws of the society.
Share capital: The value of share may be kept low to be within the capacity of the potential member wishing to join the society and he may also be entitled to obtain a share capital loan.
F u n d s: Financial assistance may be provided to a Labour Contract Cooperative Society by way of interest free share capital loan, interest bearing working capital loan, Reserve Fund loan and interest free loans for the purchase of minor implements either by the Dist. Coop. Central Bank or National Cooperative Development Corporation or any Nationalised Bank. Government departments and public bodies may grant 50% of the value of works under execution as advance payment of wages.
T h r i f t: It shall be competent for a Labour Contract Cooperative Society to collect thrift deposits and other funds by making a deduction at.
(i) 5 paise per rupee of remuneration payable to members.
(ii) 6% of the bonus payable to the members in relation to the wages earned.
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(iii) Thrift deposits shall be invested by the Labour Contract Co-operative Society outside its business as per section (32). Loans may be granted on the security of thrift deposit to the member upto 80% of the deposit to his credit, after 5 years period of membership; in terms of an emergency.
Maximum borrowing power: Maximum borrowing power of a Labour Contract Co-operative Society shall be ten times the paid up share capital plus the Reserve Fund.
Provided that this maximum limit may be exceeded in respect of loans granted on the security of bills accepted by Government departments and public bodies whose works have been executed by the Society.
Ready money advances & joint purchases: The Board of Directors shall be competent to make ready money advances to members or group of members for carrying out the works entrusted to them. Such advances shall be recoverable from the remuneration or other sum payable to the members concerned. A member applying for a ready money advance shall produce two sureties from among the members of his Co-operative Society. When an advance is given to a group of members, the whole group shall be jointly and severally responsible for the advance made. It shall also be competent for the Board of Directors to purchase in wholesale the domestic and other requirements of members as agent of the members and purchases shall be made only to the extent of the requirements of the members who are able to pay cash.
Execution of works: A Labour Contract Co-operative Society may take up contracts of work from Government departments; local bodies; Coop. Societies and execute the same either directly employing members on piece work basis or on daily wages or by giving sub-contract to groups of its members. When sufficient members are not available the society may employ persons other than members to the extent necessary as casual labour, to do the work on hand and pay them wages as may be decided by the Board keeping in views the nature of work done and the local ruling rates for such type of work.
The Board has to enter into contracts with the members for execution of works entrusted to them and take steps to the fulfillment of such agreements under the provisions of the workmen’s Breach of Contract Act XIII of 1859.
The members of a Labour Contract Co-operative Society are at liberty to work on their own account in any works not undertaken by the society as long as their labour is not indented upon by their Labour Contract Co-operative Society. They should however work for it whenever called upon to do so. A member is liable to a fine as decided by the Board, if he were to refuse to work and such fine is recoverable from his share amount or unpaid wages or in any manner decided by the Board.
183 Accounts books & Registers: The following are the account books and registers to be maintained by the Labour Contract Co-operative Societies in addition to relevant registers mentioned in section (82).
1. Wages Register
2. Work entrustment Register
3. Works progress Register
4. Materials stock Register
5. Materials issue Register
6. Measurement Book
7. Machinery and tools Register
8. Contract rate fixed Register
9. Register of contracts undertaken
10. Muster Roll Register
11. Member Contractor’s personal ledger
12. Register showing the quantum of work done by the
Members to calculate bonus payable to them.
A separate folio is to be allotted in a register to each work taken up, with details as to the nature of work the amount of contract and conditions, nature of execution, whether by direct labour, or sub-contract amount spent till date and the progress of work.
Provident & Unemployment funds: Out of net profits or otherwise, a Labour Contract Cooperative Society shall create and maintain Provident and Unemployment funds for the benefit of its members.
District Federations of Labour Contract Coop. Societies:
Labour Contract Cooperative Societies in a District may form themselves into a District Federation with the Collector as Chairman and representatives of Labour Contract Cooperative Societies and district heads of PWD, Irrigation Departments as members and the Dist. Cooperative Officer as Ex-officio Chief Executive Officer / Convener for technical guidance and securing of contracts of works for the member-societies.
184
CHAPTER - XXI
Special provisions applicable to
Joint Farming Co-operative Societies
SECTION 143:
In particular and without prejudice to the generality of powers under the provisions of this Act applicable to all cooperative societies, the following provisions apply exclusively to the joint farming Co-operative societies.
Definition: A Joint Farming Co-operative Society means a Co-operative Society registered under this Act which has its main object to pool the lands, capital, live stock and implements and labour of its members undertake on a joint basis the cultivation of the lands of the members pooled and also such other lands owned or possessed by such Co-operative Society where substantially the members or the members of their families engage themselves in such cultivation and are remunerated for the services rendered by them to the Joint Farming Co-operative Society. Lands having prior encumbrances shall not at all be pooled.
Membership: There shall be only one class of membership consisting of those who merely contribute land, labour and other resources and the landless contributing labour only.
Minors assisting the members in agricultural operations shall be as associate members. Thus the membership shall consist of predominantly small cultivators and landless labour working on farms.
Admission of members: Notwithstanding anything contained in section (34), every application for membership of a joint Farming Co-operative Society shall be considered by the elected board. Admissions shall be to the extent the Joint Farming Co-operative Society is in a position to extend its services to the members. The admission of landless labour in the Joint Farming Co-operative Society shall be regulated with reference to the manpower available through the members already and their family assisting them in agricultural operation.
Size of the farm: As the size of the farm is dependent on factors such as weather, rainfall, irrigation facilities, crops grown or to be grown etc., a minimum extent of 100 acres of land continuously situated shall be pooled and taken up for cultivation jointly. As far as possible lands having prior encumbrances shall not be pooled in the farm.
Funds and share capital: Share capital shall be collected from the members with reference to the extent of land pooled in each case. Land owner member shall also contribute additional share capital to the extent of 5% (five percent) of land dividend that is distributed to him.
185 Landless worker shall pay the value of one share as share capital. Value of pooled resources such as plough bullock carts, implements, pumpsets, shall be credited to the share capital to the extent necessary and the balance towards fixed deposit.
Other funds thrift: The byelaws of a Joint Farming Co-operative Society shall provide for a thrift fund collection at the rate of 6% of the wages earned by each member.
Maximum borrowing power: The maximum borrowing power should not at any time exceed fifty percent of the market value of the lands pooled by the members.
Subsidiary occupations: With a view to increase employment opportunities to its members, a Joint Farming Cooperative Society may introduce subsidiary occupations like Dairying, Poultry farming, Cottage industries for its members as an intergral part of its farming programme.
Capital improvements to lands: The programme of capital improvements like reclamation of lands, sinking of new wells or deepering of existing wells installation of pumpsets shall be implemented in a phased manner according to a time schedule so as to bring the maximum extent under cultivation during the very first season after starting of the society.
The aim shall be to get the maximum return at minimum cost by employing members and adopting improved techniques and appliances.
Fodder cultivation: Cultivation of fodder crops shall be undertaken by the Joint Farming Cooperative Society for use of the cattle maintained by the farm.
Payment of returns to members: The byelaws of a Joint Farming Co-operative Society shall provide for the payment of not more than 60 percent of the net income from the lands pooled for joint cultivation by way of land dividend and not more than 20 percent of such income by way of bonus for the labour contributed by the members in proportion to the wages earned by them.
Determination of net income: Out of the gross income i.e., the income from the lands pooled, the cultivation costs the payment due towards land revenue and the rental, if any due on lands taken on lease should be deducted to arrive at the net income. The loan installments due on the amounts borrowed for development, as well as the expenses on establishment and contingencies should also be set off against the gross income. Provision for depreciation on the value of assets shall also be made. The expenditure incurred on other activities and income got are to be shown in detail.
Maintenance of account books and records: Every Joint Farming Co-operative Society shall maintain the following account books and registers in addition to those mentioned in Section (82) of this Act.
(i) Register of lands pooled with details of lands pooled, date of pooling and period of pooling, name of the member, his admission number, valuation fixed by the General Body, date of creation of charge on the land in favour of the Joint Farming Co-operative Society, survey number and extent of the land pooled, allotting one folio to each member and noting the capital cost incurred on the improvement of the land and land dividend disbursed.
186 (ii) Register of other resources of members pooled in the society, such as live stock, implements; pumpsets, motors etc., member’s name, particulars of resources pooled, value fixed by the General Body and particulars of credit of such value between share capital and deposit in the name of the member.
(iii) Register of improvements to lands pooled by the members:-
This Register shall contain the description of the lands taken up for improvement, cost of improvement, the date of commencement of the work and its completion. An abstract has to be shown in the Register giving the details of the apportiontment of costs of improvements as between the different plots benefited by the improvement.
(iv) Live Stock Register: In this register, particulars of the live stock, in the possession of the society, dates of birth, purchase, age at the time of purchase, breed, marks of identification, purchase value, value realized by sale value set off against reserve in cases of death, and book value of remaining live stock at any given time are to be recorded.
(v) Dead Stock Register: This register shall be maintained for agricultural implements, pumpsets, machinery tools pooled and furniture belonging to the Joint Farming Co-operative Society.
(vi) Stock Register for farm produce: A register shall be maintained for farm produce gathered seeds and fertilizers, purchases, issue and stocks remaining in each case. Sales bills shall be issued for the sale of farm produce and straw.
(vii) Cultivation Account: A separate folio in this register shall be maintained for each crop cultivated. On the top of each folio, the name of the crop, the total extent of land and with survey numbers, the date of commencement of cultivation, the date of completion of harvest shall be entered. In the body of the account, the cost of seeds and pesticides, and wages with cross reference to cash book and stock register folios and values are to be entered. In an additional column the month, proportionate costs of maintenance of bulls debitable to the particular crop are to be entered. In another column is to be entered, the main crop produce as well as by products such as straw as per quantities of yield and stock register folios related to them. The cultivation account is to be closed in each folio with an abstract as soon as the harvest is over, which gives.
(i) Market value of the produce … xxxxxx
(ii) Market value of the by produce
such as straw … xxxxxx
----------- Total …
-----------
The total cost of cultivation is to be deducted from the value of the yield to arrive at the gross income from the crop. The average yield per acre is to be compared with the average cost of cultivation per acre.
187 (viii) Crop yield receipt or crop yield register: This has to be written on each day of harvesting of crop. It has to contain the name of the crop, the quantity harvested under the attestation of the Agricultural fieldman and area of the Directors who supervised the harvesting, and the receipt is to be posted in the stock register under the signature of the godown-keeper taking the custody of the harvests. The yield register is to be the chronological record of the yield in the farm day after day, containing the name of the crop, the quantity harvested the yield register number and the stock register folio.
(ix) Muster Roll Register: This register shall be maintained on daily basis or weekly basis depending on the system of payment of wages either daily or weekly. It serves, as the basis for apportioning costs among several operations carried on the farm and debitable to capital or revenue expenditure according to the nature of work turned out and wages paid.
(x) Register of work done: This register has to incorporate the day’s total work turned out-wise showing the date, the nature of the work, the number of workers employed male and female, the rate of wages, the hours of work and the details of work done. The entries in this Register facilitate checking of muster rolls with the register of improvements to land, the cultivation account and the register apportionment of wages paid.
(xi) Register of apportionment of wages paid: This register has to be posted from the register of work done. The total wages paid weekly or monthly as entered in the register of work has to be apportioned in this register to
(i) Capital expenditure (reclamation items)
(ii) Cultivation account (separately for each crop)
(iii) Maintenance of Live stock
(iv) Operation of pumpsets; and
(v) Other sundry items like watch and ward driving of carts;
post harvest operations not debitable to items (i) to
(iv) above.
(xii) Register of land dividend and bonus paid: This register shall contain the name of the member, and admission number, the extent of land pooled by him, their value, the rate of land dividend declared by the General Body, amount payable as land dividend, total wages earned by the member, the rate of bonus declared by the General Body, the amount payable as bonus, total of land dividend bonus accruing to the member, the date of payment with cash book folio number and signature of the payee. The land dividend paid should have relation to the lands pooled.
(A) Documentation:
Creation of charge in favour of Joint Farming
Co-operative Society by a member:
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(i) Notwithstanding anything contained in this Act or in any other law for the time being in force, a member of Joint Farming Co-operative Society whose lands have been pooled in the manner set out in this chapter, shall if so required by such society make a declaration in the form given in the byelaws that he thereby creates a charge upon those lands in respect of any loan taken by the Joint Farming Co-operative Society in connection with, or to facilitate the operation of such society and the charge so created shall be deemed to have been transferred to the person from the Joint Farming Cooperative Society has taken the loan. No declaration made under sub-section (1) shall be varied or cancelled by a member without the prior approval in writing by the Joint Farming Cooperative Society which shall not give such permission without the permission and approval of the person to whom the charge stands transferred. No land in respect of which a declaration has been made or any part of such land, or any interest in such land shall be sold or otherwise transferred without the previous permission of the Joint Farming Co-operative Society in writing which shall not give such permission without the approval of the person to whom the charge stands transferred.
(ii) Notwithstanding anything contained in any law for the time being in force, any transaction made in violation of the above clauses shall be null and void.
The declaration made under sub-section (A)(1) or any variation or cancellation thereof shall be sent by registered post by the Joint Farming Co-operative Society to the sub-register having jurisdiction over the area in which the lands are situated.
On receipt of the declaration, variation or cancellation the Sub-Registrar shall notwithstanding anything contained in any law for the time being in force register such declaration, variation or cancellation and issue a copy thereof to the Joint Farming Co-operative Society.
Any declaration made under sub-section (1) or any variation or cancellation thereof which has not been registered shall notwithstanding anything contained in this Act or any other law for the time being in force be null and void.
The declaration and variation, if any, upon registration shall be deemed to create an interest in the property to which the declaration relates and shall constitute notice to every person dealing with the said property.
(iii) Agreement between the Joint Farming Co-operative Society
and its members in respect of lands:
A Joint Farming Cooperative Society may require any of its members to pool his lands voluntarily for the purpose of cultivation by the Joint Farming Coop. Society of which they are members on a joint basis and for that purpose to place those lands at the disposal of the society for such period not being less than seven years or such period by which the lands placed at the disposal of the society reach a reasonable level of uniform development enough to provide sustainable income to the member whichever is earlier, as may be agreed upon by the Joint Farming Co-operative Society and such members.
189 (iv) Vesting lands in Joint Farming Co-operative Society
and registration of agreement:
(a) Notwithstanding anything contained in this Act or in any other law for the time being in force every member of a Joint Farming Co-operative Society whose lands have been pooled in the manner set out in this Act shall in addition to the declaration made, execute an agreement with the Joint Farming Co-operative Society specifying the period for which the lands shall vest in the Co-operative Society, the basis on which the share of his income shall be determined and other matters incidental thereto as decided by the General Body of the Joint Farming Co-operative Society.
(b) The agreement so executed shall be sent by registered post by the Joint Farming Co-operative Society to the sub-Registrar having jurisdiction over the area in which the lands are situated. On receipt of the agreement, the sub-Registrar shall notwithstanding anything contained in any law for the time being in force, register such agreement and issue a copy thereof to the Joint Farming Cooperative Society.
(c) Any agreement executed as aforesaid which has not been registered under sub-section (iv)(b) shall notwithstanding any thing contained in this Act or in any other Law for the time being in force be null and viod.
(v) Prohibition amongst withdrawal of lands during the period of agreement:
Notwithstanding anything contained in this Act or any other law for the time being in force, no member of a Joint Farming Cooperative Society whose lands have been pooled in the manner set out in this Act shall before the expiry of the period specified in the agreement executed by him be entitled or allowed to withdraw the lands so pooled by him from the possession or control of the Joint Farming Cooperative Society.
(vi) Disposal of lands after the expiry of the agreement:
The Joint Farming may after the period specified in the agreement executed by the member under sub-section (A)(iii) of section (143) by such member shall reconvey the land to the member concerned, after collecting the expenditure incurred by the society pro-rata on the development of land and provision of infrastructure facilities; so that the ownership of the land revests with the member. After reconveying the title of the lands to the members who have pooled them the Joint Farming Coop. Society shall voluntarily apply to the Registrar for its being wound up; observing the usual procedure for such a course as provided in this Act.
District Federations of Joint Farming Co-operative Societies:
Joint Farming Cooperative Societies in a district may form themselves into a federation with Collector as Chairman and representatives of Joint Farming Cooperative Societies and district heads of departments of Agriculture, P.W.D., Ground water Engineer as members and Dist. Cooperative Officer as Chief Executive Officer/ Convenor for giving technical guidance to them.
190
CHAPTER - XXII
Special provisions applicable to
Handloom Weavers’ Co-operative Societies
SECTION 144:
Without prejudice to the generality of the provisions in this Act applicable to all types of Co-operative Societies registered or deemed to be registered under this Act, the provisions in this section shall apply to Weavers’ Co-operative Societies exclusively.
(1) Definition:- A Weavers’ Co-operative Society means a Co-operative Society registered or deemed to be registered under this Act which has as its principal object the production of Handloom cloth only through or with the help of its weaver members by supplying raw materials and appliances to them and receiving back cloth or fabric or product and shall not produce or purchase cloth or fabric or product from any other source other than the weaver members of the society either for sale on its own account or for sale through its federal society or otherwise; but it may purchase fabric or cloth or product, produced by weaver members of other weavers cooperative societies with the permission of the general body on reciprocal basis when so required on its own account for sale to consumers or others.
(2) Membership and Area of operation:- Every Handloom Weavers Co-operative Society shall get itself affiliated to APCO (A.P. State Handloom Weavers’ Co-operative Society).
(i) Membership shall be open to a person owning a loom and who ekes out his living depending upon weaving as his profession and residing in the area of operations of the Society and having ID card issued by NCAER, New Delhi and is not in debted to master weaver about which he has to solemnly declare;
(ii) No master weaver shall be admitted as a member in the weavers Co-operative Society. Dealers in Handloom cloth and yarn shall also not to be admitted as members;
(iii) No weaver is eligible to become a member of a proposed new Weavers’ Co-operative Society, if the Weavers’ Co-operative Society in which he is already a member is in working condition;
(iv) The area of operations of a weavers cooperative society shall be clearly demarcated in terms of streets/wards to avoid overlapping of jurisdiction of the existing Weavers’ Cooperative Society and may extend to a radius of 8 kilometres having clear road access;
(v) A new Weavers’ Cooperative Society may be registered with 100 looms and an anticipated turnover of Rs.3.50 lakhs per annum after taking an assurance from the Dist. Cooperative Central
191 Bank or any financing institution regulated by Reserve Bank of India that it will be able to finance the new Weavers’ Cooperative Society. Care shall be taken that the registration of a new Weavers’ Cooperative Society shall not defeat the interest of the existing Weavers’ Society in any way;
(3) F u n d s:-
(a) Share capital:- Share linking shall be to the value of yarn and other production inputs that may be issued to a member and outstanding with him at any point of time and may be fixed as 12 times the share capital contributed by the members where the society finds it difficult to collect share capital from the members it may avail share capital loans from Governmental schemes for being lent to members and such loans shall be retired by deduction of one percent of wages of the beneficiary members.
(b) Working capital:- Viable and potentially viable Weavers’ Cooperative Societies carrying out production and sales actively may avail refinance facilities from NABARD for financing the production marketing of Handloom cloth under Section 21(1)(v) read with Section 21(3)(a) of the NABARD Act, 1981 against the guarantee of the Government; provided there is adequate supervision over the working of the Weavers’ Co-operative Societies and the Dist. Co-operative Central Bank, financing them, if any, is not under Section (11) of the Banking Regulation Act, 1949.
Credit limits:- (a) The credit limits of Primary Weavers’ Co-operative Societies shall be worked out at 40% of the value of anticipated production during the year provided the sales during the previous year were atleast 60% of the production in that year.
(c) During the slack season additional credit limits may be availed against pledge or hypothecation of finished cloth or against bills payable by the Apex Weavers’ Cooperative Society subject to the borrowing Weavers’ Co-operative Society providing a margin of 10 percent for the accommodation asked for.
(d) Enhanced additional limits in drought affected areas for working capital requirements may be obtained by the Primary Weavers’ Cooperative Societies against stocks of finished goods of not more than 1 year old; current dues receivable from the Apex Weavers’ Co-operative Society, for a period not exceeding six months, current prepaid dues not exceeding six months provided the aggregate of normal and additional credit limits does not exceed 75% of the anticipated production during the year i.e., previous year’s production plus 20% thereon.
(e) The normal credit limit sanctioned to a Primary Weavers’ Co-operative Society shall not exceed 9 times its net disposal resources.
(f) Stocks in trade at their full value shall be insured against fire and other risks.
(g) The maximum borrowing power of Primary Weavers’ Co-operative Society shall be (12) times the paid up share capital plus Reserve fund.
192 (4) Cover for borrowings:- Yarn in stock; yarn with members, dyes and chemicals, finished goods age-wise and rebate claims dues receivable from apex Weavers’ Cooperative Society, wages advanced to members not exceeding 50 percent of the value of knots of yarn issued, bills payable by apex Weavers’ Cooperative Society for cloth sold to it, and book debts.
(5) Towards providing of 10% margin by the Primary Weavers’ Co-operative Society, the following shall be reckoned.
(i) Cash balance and Bank balances;
(ii) Unencumbered Reserve Fund investments in Government securities or Truste securities;
(iii) Unencumbered Reserve Fund deposits in District Co-operative Central Bank;
(iv) Building constructed of its own funds;
(v) Plants, equipment and machinery used for business which are not hypothecated; and
(vi) Investments of the Primary Weavers’ Cooperative Society in the shares of the financing bank upto 2½ percent of its maximum outstanding borrowings.
(6) Maintenance of Accounts Books and records:- The following additional books shall be maintained by the Primary Handloom Weavers’ Co-operative Societies in addition to those mentioned in section (82) of this Act.
(a) Stock Register for raw materials
(b) Raw materials issue Register
(c) Conversion Register
(d) Finished goods receipt Register
(e) Stock Register of finished goods
(f) Sales classification sheet
(g) Wages Register
(Note:- If wages are paid on piece-work rate basis arrangements for measuring cloth, for inspecting its quality, grade and method adopted for the fixation of purchases from the producer members shall be laid down. When producer members are to be paid only wages, rates of wages are to be fixed according to counts of yarn, design, and width of border, weaving pattern design etc.)
(h) Personal Register of members
(i) Sets outstanding against members register
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(j) Thrift Deposit Register
(k) Sundry debtors Register
(l) Task Tables (The quantity of raw material for the various items of finished goods has to be available in this table, worked out in consultation with the technical persons)
(m) Appraiser Ticket:- Finished products brought by members are to be tested by the Appraiser, who is a technical person as regards workmanship of finished goods as to whether they are upto the standard and in accordance with the specifications. On satisfactory examination of goods a ticket in duplicate be made noting name of the member, the name of the variety, quantity received, the amount of wages payable, deduction to be made for the shortage of yarn, thrift deposit, recovery of advances, fines and the net amount payable on which the Appraiser and the member put their signatures.
(n) Costing Register:- Cost of finished products are to be entered in this Register after they are arrived at taking into account the cost of raw material, (yarn, dyes etc.) labour and adding a percentage or profit margin to the actual cost.
(o) Stock Register of weaving appliances intended to be given for use by the members
(p) Group Insurance fee remittance Register
(q) Rebate claims Register
(r) Quarterly reports on defects rectification in regard to the defects pointed out during mechanical audit of accounts of the Weavers’ Co-operative Society from the date of last visit upto the date of the current (present) visit by the supervising officer.
(s) A monthly receipts and charges statement of the transactions made by the Weavers’ Co-operative Society and a demand, collection and balance statement in respect of yarn and finished goods shall be entered in a register.
(t) A Primary Weavers’ Co-operative Society shall adopt special byelaws governing service conditions of its employees and an undertaking from the employees to the effect that they will abide by them.
(u) Each Primary weavers’ Co-operative Society shall concentrate on producing particular kinds of fabric of public utility and for which its members are noted as efficient.
(6) Marketing:- A Primary weavers’ Co-operative Society may adopt the following order of priority in the disposal of its finished goods.
(i) A P C O (Andhra Pradesh State Handloom Weavers’ Cooperative Society)
(ii) Cooperative institutions in dealing with cloth, i.e., Cooperative Consumer Stores and Super Bazars.
194
(iii) General public
(iv) Merchants on outright sale basis. It may also announce clearance sales periodically by writing down the cost in respect of slow moving goods which remained as dead stock.
(7) Profits:- A Primary Weavers’ Co-operative Society shall build up a strong Reserve Fund by contributing even upto 40% of its net profits to the Reserve fund. It shall create reserves like “Price fluctuation Fund” and “Wages equalization Fund” to meet crisis situations when the prices of goods and resultant wages to members tend to reach all time low. Bonus to members may be paid out of net profits according to the value of finished products delivered by them or raw materials purchased by them (dyes and chemicals) or wages earned by them as may be decided by the General Body.
(8) A Primary Weavers’ Co-operative Society which has accumulated large sums of common good fund out of its net profits may utilize such funds to provide medical aid to its members and their families on a scale prescribed by the General Body.
(9) Ready money advances may be sanctioned to members for ceremonial expenses like marriage, confinement, house repairs etc., out of their thrift deposits upto 50% of the amount outstanding to their credit.
(10) Every Primary Weavers’ Co-operative Society/its members shall strive to become eligible for all the welfare schemes put in place by the Central/State Government.
195
CHAPTER - XXIII
Special provisions applicable to Fishermen Co-operative Societies
SECTION 145:
Without prejudice to the generality of the provisions in this Act applicable to all types of cooperative societies the following provisions in this section apply to fishermen cooperative societies exclusively.
(i) Definitions: A Fisherman Co-operative Society means, a Co-operative Society registered under this Act to improve fishing industry on co-operative lines and the economic condition of the fishermen residing in the area of operation of the Co-operative Society by securing and providing steady work and employment to them, during fishing season, skilled or otherwise, and ensuring reasonable return or wages for them for the work done.
(1) Fisheries Co-operatives form a three-tier structure in the State with the primary fishermen Co-operative Society at the base at village level, District Fishermen Co-operative Societies at district level and a State Co-operative Fishermen Federation as the apex at State level. At the National level there is National Federation of Fishermen Co-operatives.
(2) According to the membership of the fishermen, the fishermen Co-operative Societies shall be classified as below:
(a) Fishermen Co-operative Societies carrying on fishing in the sea known as “Marine fishermen Co-operative Societies”.
(b) Fishermen Co-operative Societies carrying on fishing in the inland waters such as rivers, tanks, reservoirs, lakes known as inland fishermen co-operative societies.
(c) Fisher Women Co-operative Societies under Matsya Mitra
Programme wherein members are all women.
(ii) Definitions of Inland and Marine fisherman:
An inland fisherman is a person who personally and actively engages himself in fishing in any inland water body such as ponds, tanks, lakes, reservoirs, canals, rivers, estuaries back waters during major part of fishing season in any particular area to earn his livelihood and he shall satisfy the following criteria while seeking membership in an inland fishermen Co-operative Society in a skill test.
(iii) (a) should know the operation of cast net in knee deep water with atleast 60% of gear efficiency (60% gear efficiency means, when the net is cast it forms a circle to the extent of 60%);
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(b) operation of the dragnet by a group of applicants in such a way that fish do not escape under the foot-rope;
(c) operation of the Gill net and Teppa / Coracle; The applicant’s ability to shoot / thread the net in such a way that the head rope and foot rope are spread out vertically to achieve maximum gilling of fish;
(d) he should undergo a test to confirm his swimming ability i.e., the applicant should be able to swim for about 100 metres to and fro from the starting point;
(e) net mending – applicant should be able to repair webbing of commonly used nets like cast and gill net.
The Board of a Fishermen Co-operative Society has to satisfy itself that the applicant is able to perform in these tests with reasonable proficiency.
(iv) The Three Men Committee: There shall a Three-Men Committee to conduct the skill test comprising the following:-
(b) President, Dist. Fishermen Co-operative Society (Non-official Member)
(c) The Dist. Fisheries Officer or the Divisional Asst. Director of Fisheries (Convenor / Official Member)
In the ITDA areas, one officer nominated by the Project Officer, ITDA will be the additional member.
(v) Persons belonging to (30) Fishermen communities (as included in the G.O.Ms.No.98, Revenue Department, dated 22-01-1964, Gangaputra community which is another name of Bestha community (G.O.Ms. No.1793, Education Department, dated 23-09-1970) and engaged in fishing shall be considered for skill test. Only persons living in the village/villages in the area of operation of the proposed Fishermen Co-operative Society are eligible. Residential status is to be verified with the ration card/adhar card, voter’s identity card, residence and caste certificate issued by concerned authorities.
(vi) As per G.O.Ms. No.90, Revenue Department, only Fishermen Co-operative Societies composed of 30 communities and Gangaputras are eligible for taking tanks on lease / on rentals fixed by competent authorities.
(vii) Advance intimation of date, time and venue of the skill test shall be given by the Dist. Fisheries Officer well in advance to the applicants and others concerned by beat of tom-tom, notice in Gram Panchayat and other public places in the village (including hamlets if any) and obtain an acknowledgement from the Chief Promoter and the Sarpanch.
197 (viii) Observer: An Officer of the Commissioner of Fisheries, Hyderabad, not below the rank of Assistant Director shall be deputed as observer for the skill test process. The skill test shall be conducted by the above mentioned Committee in the presence of the observer and fishermen elders of the village. It shall be the responsibility of the observer to ensure presence of majority of the fishermen elders of the area of operation of the proposed Fishermen Co-operative Society and conduct skill test in fair and transparent manner.
(ix) Vide recording: The entire process of conducting the skill test shall be videographed in the presence of the observer. The District Fisheries Officer shall submit a soft copy of the video recording along with the proposal for the registration of a Fishermen Co-operative Society.
(x) Selection of applicants: At the first instance all those applicants from the communities listed in G.O.Ms. No.98, Revenue Department, dated 22-01-1964 and Gangaputras who posses the skills (as per the five tests prescribed above) and residing in the area of operation of the proposed society and not ineligible as per model byelaws and the provisions of this Act should be provisionally selected. If the number of such skilled applicants is more than the viability norm (one hectare/beneficiary) the following selection process shall be adopted in order of priority.
(a) poorest of the poor (POP) among the applicants (POP list available with the I.K.P. / SERP officials;
(b) even after the above step, if the number is still more than the norm of one hectare water spread area per member, the age criteria should be followed eliminating people of higher age group to start with (e.g: persons of 60 years to be eliminated in preference to 50 years and so on);
(c) the District Fisheries Officer has to send a proposal for the formation of Fishermen’s Co-operative Society along with the video recording and proceedings of the Three-men Committee to the Commissioner of Fisheries;
(d) the observer should also submit his report on the entire selection process independently to the Commissioner of Fisheries;
(xi) Scheduled areas: In the agency areas (Scheduled Tribal areas) of the State the rights of the local tribal have to be protected. Therefore, the Project Officers of ITDAs have to nominate one senior officer of ITDA in the skill test committee as an additional member. If local tribals are not skilled in fishing they should be imparted training and selected to form Tribal Fishermen Co-operative Societies. The proposal for formation of Fishermen Co-operative Societies in agency areas has to be routed through concerned Project Officer, ITDA.
(xii) Weeding out of the ineligible/deceased members: It shall be the responsibility of the Chairperson of the Fishermen Co-operative Society to bring to the notice of the District Fisheries Officer about the members of the Fishermen Co-operative Society who have become ineligible as per the provisions of this Act and model byelaws of Fishermen Co-operative Society such as becoming member of in any other similar society (dual membership), getting employment in Government / Private firms, migration outside the area of operation of the society and also about the deceased members. The District Fisheries Officer has to enquire into such cases and ensure
198 that the society removes such ineligible / deceased members before getting fishing rights to the society for the next fasli year from 1st July every year. He should also ensure that any eligible applicant should undergo skill test and are made as members of the Co-operative Society, before the next fasli year.
(xiii) Complaints of bogus members: No fishing rights shall be issued to such societies till the bogus members are removed by the Society as per the procedure and guidelines of the Department.
(3) Marine Fisherman: Marine fisherman means, a person who is personally engaged in full time fishing in sea and who is a member of Marine Fishermen Co-operative Society below poverty line and below 60 years of age. If any member of Marine Fisherman family has regular employment or is engaged in any other income generating activity, such family will not qualify for savings-cum-relief scheme. (4) The thrust areas in fisheries development shall be
(i) Optimising production and productivity through innovation (ii) Augmenting export of marine products after value addition (iii) Generating employment among fishermen (iv) Improving welfare of fishermen and their socio-economic status
(5) To achieve sustainable development in the sector the Fishermen Co-operative Societies shall perform the following functions:
(i) Take on lease the inland water sources for being leased to their members; (ii) Undertake integrated marine fisheries development with financial assistance from National Co-
operative Development Corporation; (iii) Under the centrally sponsored national scheme of welfare of fishermen work the components of
the scheme and also the scheme of integrated fisheries development project and Chief Minister’s Matsya Kranthi Padhakam;
(iv) Start and undertake development of model fishermen villages providing housing, drinking water facilities, community halls, worksheds, group accident insurance scheme for active fishermen and savings-cum-relief scheme to sustain them during lean seasons;
(v) Undertake distribution of yarn for nets; (vi) Securing of mechanized boats with Government assistance; (vii) Own or hire machinery and implements to members for carrying out improved types of fishing
and for handling and preservation of fish; (viii) Own or hire curing sheds, tanks, vans etc., for processing fish and appliances for the extraction of
fish liver oil; (ix) Own or hire godowns for storing fish catches of members for sale at the time of advantageous
prices; (x) Undertake non-credit activities such as distribution of yarn for nets and domestic necessities
required by members; (xi) Undertake Central Government scheme of constructing fish landing centres, modernization of
fishing harbours, supply of disease free fish seed; (xii) Undertake construction of new fishing tanks under Prime Minister’s Package scheme; (xiii) Co-ordinate activities of the Fishermen Co-operative Societies with the National Fisheries
Development Board (NFDB) established at Hyderabad;
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(xiv) Encourage fisher-women to join “Matsya Mitra Scheme” initiated by the State Government; (xv) Generally spread education among fishermen members and knowledge of latest improvement in
fishing industry and net making and encourage them to adopt.
(6) F u n d s:- Fishermen Co-operative Societies shall raise its financial resources by horizontal mobilization of funds such as share capital and thrift deposits from members. Their efforts towards vertical mobilization of funds may include Government share capital participation, working capital loans, long and medium-term loans to marine fishermen, provision of vehicles, fishing boats on hire purchase system and long-term loans for liquidation of old debts. Other types of indirect Government assistance may be in the form of preferential treatment in tenders relating to leasing of water bodies and supply of fish to Government Hospitals and hostels and supply of cotton and nylon yarn and HSD oil at subsidized rates.
(7) Account Books and Registers to be maintained by Fishermen Co-operative Societies:
(i) Cash Book (ii) Receipt Book (iii) Voucher file
(iv) Minute Book (v) Admission Book (vi) Landing Register
(vii) Curing Register (viii) Stock Register for cured fish
(ix) Boat Account (x) Nylon Net Account
(xi) Register of loans for housing
(xii) Synthetic yarn Stock Register
(xiii) Synthetic yarn Distribution Register
(xiv) Cotton yarn Stock Register
(xv) Subsidized Cotton yarn Register
(xvi) Shark liver oil extraction costing Register (xvii) Stock Register of shark liver oil (xviii) Craft and Tackle Register (xix) Borrowing ledger (xx) Loans ledger (xxi) Register of bills and cheques received (xxii) Thrift Fund Register (xxiii) Register for Market lease (xxiv) Register for lease to member
Note:- Item (vii) is posted from item (vi) Register; Register at item (viii) is posted from Register at (vii).
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(8) Working procedures:
(i) Inland fishermen societies
(a) When inland fishermen Co-operative Society acquires and holds water courses such as rivers and tanks either in auction or on lease or otherwise from Government or from any other sources, the fishing rights shall be distributed equitably among members.
(b) Board members themselves taking sub-lease for low amounts on the ground that members did not come forward shall be discouraged.
(c) All leases taken by the Fishermen Cooperative Society and sub-lease made to its members shall be duly recorded in the Minutes Book with details of lease amount and the Fishermen Co-operative Society shall strictly adhere to the conditions of lease.
(ii) Marine Fishermen Co-operative Societies:
(a) The Marine Fishermen Co-operative Societies obtaining long-term loans, subsidies for mechanized boats, nylon nets on hire purchase system and motor vans for transport of fish on hire basis shall bring all transactions of this nature to accounts then and there and issue proper receipts to the Government.
(b) Separate accounts for loans borrowed in the regular course and loans taken under hire purchase system shall be maintained.
(c) A Register shall be maintained for mechanized boats indicating the make of their engines, their number, length and capacity.
(d) In the case of nets, a Register shall be maintained regarding the type of nets and accessories. (e) A Register for maintenance of and repairs to fishing crafts, net equipment shall be maintained.
Major repairs shall be got executed by Government Boat Building Yard. (f) Running expenses of a boat, generally fall under the following heads:
(i) Cost of diesel (ii) Cost of Engine oil (ii) Cost of cotton waste (iii) Hauling and launching charges
(iv) Miscellaneous expenses such as coir ropes and wire ropes
(v) All such running expenses shall be recorded boat-wise and cost of diesel and oil entered in the log book of the boat concerned
(g) The supplies of diesel oil shall be acknowledged by the crew leader of the Boat and the entries of their consumption shall be entered in the respective log-book along with the number of hours worked.
(h) The Marine Fishermen Co-operative Society shall maintain Boat Register along with its name, No., names of members engaged, leader of the crew, engine No., make of engine, date of fishing,
201 place, time of start and arrival, type of net used for fishing, oil consumed, quantity and value of fish netted in each case. It shall be ensured that all catches are handed over to the Co-operative Society promptly.
(i) The State Federation of Fishermen Co-operative Societies shall co-ordinate with its constituents in all their marketing activities relating to sale of fish and its products.
(j) In the case of sales of fish by auction, auctioner’s report shall be presented to audit.
(k) Share of value of produce realized by mechanized boats for different items of expenses shall be as below:
(i) 55% as wages to members engaged (ii) 30% as fund for repayment of loan (iii) 10% for compulsory thrift deposit for members (iv) 5% for contingent expenditure incurred by the Society
(l) The division of apportionment of catches for various items of expenses in a marine mechanized boats shall be as below:
(i) 40% as wages to members engaged in the catch (ii) 30% as fund for repayment of loan (iii) 20% for expenses on oil (iv) 5% towards thrift for members engaged in fishing (v) 5% as Society’s share for contingent expenditure
The byelaws of Marine Fishermen Co-operative Societies shall incorporate these provisions as business regulations.
(9) District Fishermen Co-operative Societies Federation
The main function of the Federation shall be to obtain the fishing requirements of the affiliated Fishermen Co-operative Societies in the district and distribute them to their members and to undertake marketing of fish by opening stalls in Urban areas.
(10) The A.P. State Fishermen Co-operative Societies Federation
The Federation shall endeavour for the disposal of fish catches of the primary fishermen Co-operative Societies by setting up of stalls in twin cities and urban areas of the State, procure fishery requisites, fish fertilizers, quality disease free fish seed for distribution to the primaries through the District Federation, export processed fish, set up yarn and net manufacturing plant, cold storages etc., for preservation of catches. It shall also arrange for fishery rights either by obtaining leases or by public auction.
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CHAPTER - XXIV
Miscellaneous
SECTION 146: FEE FOR SERVICES
The Registrar may charge a reasonable fee for any of the services including for supervision over Co-operative Societies at their request provided by him or by an Officer authorized by him under the provisions of this Act and apportion the costs among the applicants. Any sum awarded by way of fees or costs may be recovered as per provisions of this Act in Section 111.
SECTION 147: CO-OPERATIVE REHABILITATION AND RE-CONSTRUCTION FUND
1) The state Government shall establish a fund to be called the “cooperative rehabilitation and reconstruction fund” (herein after in this section referred to as the fund)
2) There shall be credited to the fund the following amounts namely:
a) A cooperative society registered under this Act shall credit 0.005% to 1% of its turn over subject to a maximum of 5 lakhs per year
b) Grants and donations given to the fund by the state/central Government and other national and international agencies approved by the Government from time to time for making contributions to this fund.
c) the interest or other income received out of the investment made from the fund 3 The fund shall be utilized for rehabilitation and strengthening of sick cooperative societies referred to in section 50(14)
4. The state Government by notification in the official gazette specify an authority or committee/cooperative advisory council to administer the fund which such members as the Government may appoint to administer the fund and maintain separate accounts and relevant records in relation to the fund in such form as may be specified in consultation with the Accountant General of the State.
5. It shall competent for the authority or committee appointed under sub section (4) to spend moneys out of fund for carrying out the objects for which the fund has been established.
203 SECTION 148: OFFICERS TO BE PUBLIC SERVANTS
The Registrar or any person appointed or authorized to conduct audit under section (83) or special audit under section (87) or to make an inquiry under section (88) or authorized to conduct inspection under section (89) or the arbitrator or the Tribunal or a liquidator or any person authorized under section (108) to make attachment and sale or to execute any orders or decisions of the Registrar except non-monetary decisions shall be deemed to be a Public Servant within the meaning section (21) of the Indian Penal Code (Act XLV of 1860).
SECTION 149: POWERS OF REGISTRAR TO GIVE DIRECTION IN PUBLIC INTEREST
(1) Where the Registrar is satisfied in public interest and for the purpose of securing proper implementation of Co-operative and other development programmes approved or undertaken by the State Government or for specially safeguarding the interests of the members belonging to the Scheduled Castes, Scheduled Tribes or classes or women in the services under the Co-operative Societies or in the interests of the Co-operative movement or in order to prevent the affairs of the Co-operative Society from being conducted in a manner detrimental to the interests of the members or of the depositors or creditors thereof, he may after placing the matter before the A.P. State Co-operative Council and after considering their views, if it is felt necessary to issue directions to any class of societies generally or to any Co-operative Society or Co-operative Societies in particular, he may by order issue directions to them from time to time and all such Co-operative Societies or the Co-operative Society concerned shall be bound to comply with such directions.
Provided that in so far as Co-operative Banks are concerned the Registrar shall exercise his power only with prior consultations with the Reserve Bank of India.
(2) The Registrar may modify or cancel any direction issued under sub-section (1) and in modifying or cancelling such directions may impose such conditions as he may deem fit.
SECTION 150: POWER TO EXEMPT CO-OPERATIVE SOCIETIES
FROM CONDITIONS OF REGISTRATION
Notwithstanding anything in this Act, the Government may by special order and for reasons to be recorded therein in each case and subject to such conditions, if any as they may impose exempt any Co-operative Society from any of the requirements of this Act as to registration.
SECTION 151: POWER TO EXEMPT CLASS OF SOCIETIES
The Government may, in the public interest, by general or special order whether prospectively or retrospectively;--
(a) exempt any Co-operative Society or any class of Co-operative Societies
204 from any of the provisions of this Act other than section (60) and (61) of this Act subject to such conditions as may be specified; or
(b) direct that such provisions shall apply to such society with such modifications as may be specified in the order.
Provided that exercise of this power retrospectively does not affect any vested rights of an institution or any person.
SECTION 152: ACTS OF A CO-OPERATIVE SOCIETY NOT TO BE INVALIDATED BY CERTAIN DEFECTS
No Act of a Co-operative Society or any Board or of any Officer of it shall be deemed to be invalid by reason only of the existence of any defect in the organization of the Co-operative Society or in the formation of the General Body or the constitution of the Board or in the appointment or election of an Officer or on the ground that such Officer was disqualified for his appointment or election.
SECTION 153: INDEMNITY
No suit, prosecution or other legal proceedings shall lie against the Registrar or, any person subordinate to him or acting on his authority or any nominee of the Government or the Administrator or the Special Officer for anything which is in good faith done or intended to be done in pursuance of any of the provisions of this Act or byelaws made thereunder.
SECTION 154: NOTICE NECESSARY IN SUITS
No suits shall be instituted against a Co-operative Society or any of its Officers in respect of any Act touching the constitution, management or the business of the Co-operative Society until the expiry of sixty days next after notice in writing has been delivered to the Registrar or left at his Office stating the cause of action, the name, description and place of residence of the plaintiff and the relief which he claims and the plaint shall contain a statement that such notice has been so delivered or left.
SECTION 155: POWER OF GOVERNMENT TO GIVE DIRECTION TO THE REGISTRAR
(1) The Government may in any particular matter under this Act, issue such orders and directions which are in accordance with the provisions of this Act and in the interest of the Co-operative movement in the State as they may consider necessary to the Registrar and thereupon the Registrar shall give effect to such orders or directions and report to the Government in due course the result thereof.
(2) In any case in which a direction has been given under sub-section (1) the Government may call for and examine the record or proceedings of the Registrar and pass such orders in the case as they may think fit.
205 Provided that before passing any order under this sub-section, the person likely to be affected by such order shall be given an opportunity of making his representation.
SECTION 156: RIGHT TO INFORMATION OF MEMBERS
1.Every cooperative society shall keep a list of members, the Act and its byelaws updated, open to inspection free of charge at all reasonable times at its Registered office.
2. Every cooperative society shall designate one of its officers as information officer to provide on application made to him and on payment on such fee as may fixed, information about the affairs and management of the cooperative society to any member or creditor seeking information within thirty days from the date of receipt of application.
3. Every cooperative society shall also designate one of its officers as chief information officer who shall hear and dispose of any complaint regarding the non –supply of information by the cooperative information officer within the specified time of thirty days from the receipt of application seeking information under sub section (2) above.
4. Any person aggrieved by the order of the chief information officer may file an appeal before the Registrar whose decision thereon shall be final.
Provided that the Registrar may impose penalty on the officers responsible for non furnishing of information to the amount of fifty Rupees per each day of delay above the specified period.
5. The manner of appeal, the time, within which such appeal may be filed and the procedure of appeal shall be such as is followed in the case of appeals to the tribunal constituted under section 115 of this Act.
SECTION 157: DUTIES OF POLICE OFFICER
(1) It shall be the duty of every Police Officer to assist the Registrar or any person subordinate to the Registrar reasonably demanding his aid for the lawful exercise of any power vesting in the Registrar or such person under this Act or byelaw made thereunder.
(2) Any Police Officer who omits or refuses to perform any duty imposed on him under sub-section (1) shall be deemed to have committed an offence under section (29) of the Police Act, 1861 (Central Act V of 1861).
SECTION 158: REGISTRAR TO SUBMIT ANNUAL REPORT TO GOVERNMENT
(1) The Registrar shall submit an Annual Report to the Government by 30th April of each year containing statistical information on the Co-operative Societies in the State of the previous year; with regard to the total number of co-operatives in the State, their membership, funds, services, profits/loss and such report shall also contain information on the strength of the staff in the Department of Co-operation, including those on deputation, the establishment expenses and revenue earned including user charges collected under this Act and a statistical summary of
206 statutory powers exercised during the year over Co-operative Societies in the state with particular reference to directions, exemptions given, ordering of statutory inquiries, inspections and special audit in the affairs of the societies ordered, supersession of boars of Co-operative Societies, compulsory amalgamation, division and mergers and winding up of societies, disposal of arbitration references and execution petitions.
(2) The audit reports of accounts of apex Co-operative Societies as may be defined in the State Act shall be laid before the State Legislature as required in this Act.
SECTION 159: PROHIBITION OF THE USE OF PREMISES OF A CO-OPERATIVE SOCIETY
No Co-operative Society shall use or allow to be used any premises or portion thereof which is intended for its business or other activity relating thereto without the specific permission of its General Body.
Provided that a private dealer if not permitted by the General Body of the Co-operative Society shall not do business of similar nature done by such Co-operative Society within its premises.
SECTION 160: CONTRIBUTION OF EXPENSES CO-OPERATIVE CONFERENCES
No Co-operative Society shall contribute any money towards the expenses of any conference unless such conference is held under the auspices of a Co-operative Society, federal or District or an apex Co-operative Society or the A.P. State Co-operative Union which is authorized by its byelaws to undertake holding of such conference.
SECTION 161: MEMBERSHIP OF EMPLOYEES IN CERTAIN CLASSES OF CO-OPERATIVE SOCIETIES
The paid employee of any one of the Co-operative Societies given below may become its member but shall not hold any post as an Officer in such Co-operative Society—
(a) Consumers Co-operative Stores
(b) Spinning Mills
(c) Sugar Factories
(d) Andhra Pradesh State Co-operative Bank
(e) The Andhra Fishermen Central Co-operative Society
(f) The Hyderabad Fishermen Central Co-operative Society
207 (g) The Central Delta Fishermen Central Co-operative Society
(h) The Co-operative Town/Urban Bank
Provided that this prohibition shall not apply to a Business Manager, General Manager, Managing Director or Director representing labour employed in Consumer Co-operative Stores, Spinning Mill or Sugar Factory, the Andhra Pradesh State Co-operative Bank or the Andhra Fishermen Central Co-operative Society or the Hyderabd Fishermen Central Co-operative Society or the Central Delta Fishermen Central Co-operative Society, the Co-operative Town/Urban Banks as the case may be.
SECTION 162: POWER TO DIRECT AMALGAMATION AND RE-ORGANISATION
(1) Notwithstanding any thing contained in this Act, if the Registrar is of opinion that—
(i) for the purpose of ensuring economic viability of any
Co-operative Society; or
(ii) for avoiding overlapping or conflict of jurisdiction of
Co-operative Societies; or
(iii) in order to secure proper management of any
Co-operative Society; or
(iv) in public interest; or
(v) in the interest of co-operative movement in general or any sector in it, in the State, it is necessary to amalgamate two or more Co-operative Societies or to re-organize any Co-operative Society, he may by order publish in A.P. Gazette, provide for amalgamation of two or more Co-operative Societies into a single Co-operative Society with limited liability or re-organize the Co-operative Society.
(2) Such order may also provide for—
(a) reduction of the interests or the rights which the members, depositors, creditors, employees, other persons may have in or against any Co-operative Society, so to be amalgamated to such extent as the Registrar may consider necessary in the interest of such persons or for maintenance of the business of that Co-operative Society having due regard to the proportion of assets of such Cp-operative Society to its liabilities.
(b) Such incidental, consequential and supplemental provisions as may in the opinion of the Registrar be necessary to give effect to the amalgamation of the Co-operative Societies.
(3) No order shall be made under sub-section (1) unless—
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(i) A copy of the proposed order has been sent in draft to each of the Co-operative Societies concerned; and
(ii) the Registrar has considered and made such modification in the draft as may seem to him desirable in the light of any suggestions or objections which may be received by him within such period (not being less than fifteen days) from the date on which the copy of the proposed order was received by the Co-operative Societies as the Registrar may fix in this behalf, either from the Co-operative Societies or any members, depositors, creditors, employees or other persons concerned.
(4) Notwithstanding anything contained in this Act or in any other law, or in any contract, award, or other instrument for the time being in force, on the issue or order in sub-section (i) the provisions thereof shall be binding on all Co-operative Societies and their members, past members, depositors, creditors, employees and all persons having dealings with the concerned Co-operative Societies.
(5) On and from the date from which the amalgamation takes effect, the assets and liabilities of the Co-operative Societies referred to therein shall stand amalgamated or merged with the assets and liabilities of the Co-operative Societies formed out of such amalgamation and the members, creditors and debtors of such Co-operative Society or societies shall be deemed to be members, creditors and debtors as the case may be of the new Co-operative Society or Societies as ordered by the Registrar.
(6) Notwithstanding anything contained in any law for the time being in force relating to transfer of properties or registration of documents an order issued under this section shall be sufficient conveyance to transfer the assets and liabilities of the Co-operative Society or societies covered by any order passed under sub-section (1) of this section.
(7) Any order made by the Registrar under this section shall be subject to appeal under Section (115) of this Act be conclusive and shall not be called in question by any Court.
SECTION 163: RESTRICTIONS ON OFFICERS OF A CO-OPERATIVE SOCIETY APPEARING AS LEGAL PRACTITIONERS
(1) No officer of a Co-operative Society shall appear as a legal practitioner—
(i) against such Co-operative Society or against any other Co-operative Society which is a member of the former Co-operative Society; or
(ii) otherwise than in an honorary capacity on behalf of such Co-operative Society or on behalf any other Co-operative Society which is a member of the former Co-operative Society.
(2) Any such person who contravenes the provisions of sub-section (1) shall be deemed to cease to be the officer of such Co-operative Society
209 SECTION 164: CO-OPERATIVE ADVISORY COUNCIL
(1) There shall be a council to be called “A.P. State Co-operative Advisory Council” consisting of such number of members including the Chairman and Vice-Chairman and Parliamentarians, Members of Legislature, Co-operators as the State Government may determine.
(2) The Council shall be headed by the Hon’ble Minister of Co-operation as Chairman.
(3) The State Government shall appoint a Secretary to the Council.
(4) The functions of the Council constituted under sub-Section (1) shall be as follows namely:-
(a) to suggest to the Government a road map for the development of Co-operative movement;
(b) to suggest new schemes of Co-operative development especially for the development of women, S.Cs; S.Ts & B.Cs and minorities;
The Government may provide by an order for
(i) calling of the meeting of the Council; (ii) duties of the Secretary to the Council;
(iii) the term of office of members of the Council and their honorarium.
SECTION 165: The state Government shall frame a scheme to carry out certain actions and proceedings under this Act in electronic form. Under this scheme proposals for registration of Cooperative Societies, for registration of amendment of Bye laws, returns to be filed with the Registrar , notice or summons to be issued or served or delivered and fees and charges to be paid to the Government shall be included.
SECTION 166: ACT TO OVERRIDE TO OTHER LAWS
(1)The provisions of Companies Act 1956 shall not apply to the Cooperative societies registered under this Act.
(2)The provisions of this Act shall have effect not withstanding any thing inconsistent therewith contained in any other Law.
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SECTION 167: POWER TO REMOVE DIFFICULTIES
If any difficulty arises in giving effect to the provisions of this Act, the Government may after previous publication in A.P. Gazette by order make such provisions not inconsistent with the purposes of this Act, as appear to them to be necessary or expedient for removing the difficulty.
If the Government is satisfied that any modification is necessary in any of the schedules, they may by notification in A.P. Gazette amend the said schedule so as to include therein or exclude any portion there from and there upon the said schedule shall be deemed to be amended.
SECTION 168: POWER TO AMEND SCHEDULES
1. The government may, by notification from time to time amend the schedule.
2. When the schedule is so amended any reference to the schedule in this Act, shall be construed as a reference to the schedule as so amended.
SECTION 169:Saving of existing Co-Operative societies :Every Co-operative Society which has been registered under the A.P. Cooperative Societies Act 7 of 1964 or under the A.P. Mutually Aided Co-Operative Societies act of 1995 shall be deemed to have been registered under the corresponding provisions of this act byelaws framed thereof shall so far as the same are not inconsistent with the express provisions of this Act, continue in force until altered or recinded.
All appointments and orders made notifications and notices issued and suits and other proceedings instituted under the above said Acts, shall so far as they are consistent with the provisions of this Act be deemed to have been respectively made, issued, and instituted under this Act.
All guarantees given by the government for the debentures floated by the A.P. State Co-operative Bank its predecessors and other guarantees which excess loan has been issued over the above and entitled on the basis of value of land mortgaged, are confirmed and the role, functions and powers of the Trustee and the board of A.P. State Co-operative Bank in regard to issue to debentures and the charges of debenture-holders on mortgages and assets transferred to the said Bank and the priority of mortgages in favour of Financing Bank/Primary Agricultural Co-operative Society over any claim of the Government and right of the A.P. State-Co-operative / Financing Bank / Primary Agricultural Co-operative Society to purchase mortgaged property shall stand including the provisions in the Trust Deed executed between the A.P. State Co-operative and the Trustee, till all the debentures in circulation as on date are redeemed.
211 Every co-operative society registered under this Act shall within a period of one year from the date of coming into force of this Act delete or amend such byelaws, as are inconsistent with the provisions of this Act and make such further byelaws as may be necessary having regard to the provisions of this Act.
A mutually Aided Cooperative Society shall not accept any share capital from Government but may accept loans and guarantees or any other funds under any special scheme of the Government or under a memorandum of understanding with the Government. Provided that the Government assets either in the form of lands and buildings leased, transferred, or handed over to any such Cooperative Society under the APCS act 1964 or APMACS Act 1995 before the commencement of this Act shall stand reverted to the Government from the date of commencement of this act and such of those Cooperative Societies which are in possession and enjoyment of the Government properties under any agreement or lease shall enter into a memorandum of understanding with the Government within one month of this Act coming into force, if not already done so.
