The Jharkhand Self-Supporting Co-operative Societies Act, 1996

The Jharkhand Self-Supporting Co-operative Societies Act, 1996 (Act No. 2 of 1997) Contents Sections Chapter I Introduction 1. Short title, extent and commencement 2. Definitions Chapter II Cooperative Principles 3. Cooperative Principles 4. Organisations which may be registered 5. Application for registration 6. Cooperative Society to be a body corporate 7. Display of name 8. Appointment of Registrar Chapter Ill Bye-laws 9. Bye-laws 10. Amendment of bylaws 11. Change of liability, transfer of assets and liabilities, division and amalgamation 12. Promotion of subsidiary organisation 13. Creation of new organisation with others Chapter IV Union and Federation 14. Cooperative Union/Federations Chapter V Management of Funds 15. Mobilisation of funds 16. Restriction on borrowings 17. Restriction on holding of equity 18. Disposal of surplus 19. Management of Deficit 20. Reserve and other funds 21. Investment of funds outside the business 22. Restriction on contribution Chapter VI Management 23. Membership 24. Restriction on services to non-member 1/42 25. General Body 26. Board 27. Powers and functions of the board 28. Term of office 29. Elections 30. Meetings 31. Staff Chapter VII Information 32. Accounts and records to be maintained 33. Audit 34. Special Audit 35. Filing of Returns 36. Enquiry 37. Power to summon and examine persons and documents 38. Action on Special Audit or Enquiry Report Chapter VIII Settlement of Disputes 39. Constitution of Cooperative Tribunals 40. Settlement of disputes 41. Power of the Tribunal to order recovery Chapter IX Offences and Penalties 42. Offences and Penalties Chapter X Dissolution 43. Dissolution of members 44. Dissolution by Tribunal 45. Appointment of liquidator 46. Duties of liquidator 47. Powers of liquidator 48. Final Account Chapter XI Miscellaneous 49. Fee for services 50. Bar of jurisdiction 51. Rules 52. Removal of difficulty 2/42 The Jharkhand Self Supporting Cooperative Societies Act, 1996 (Act No 2 of 1997) An Act To provide for the voluntary formation of Cooperative Societies as accountable, competitive, self-reliant business enterprises, based on thrift, self-help and mutual aid and owned, managed and controlled by members for their economic and social betterment and for the matters connected therewith or incidental thereto: Be it enacted by the Legislature of the State of Jharkhand in the Forty seventh year of the Republic of India as follows: Chapter I Introduction 1. Short title, extent and commencement (1) This Act may be called the Jharkhand Self-Supporting Cooperative Societies Act, 1996. (2) It extends to the whole of the State of Jharkhand. (3) It shall come into force at once. 2. Definitions In this Act, unless the context otherwise requires (a) "State" means the State of Jharkhand; (b) "Board" means the Board of Directors of a Cooperative Society; (c) "Bye-laws"means the bye-laws of a registered Cooperative Society; (d) "Chief executive" means an individual who, subject to the superintendence, control and direction of the board, has been entrusted with the management of the affairs of a Cooperative Society; (e) "Cooperative society" means an organisation registered or deemed to be registered under this Act; (f) "Cooperative basis" means the Cooperative principles enumerated in section 3 of this Act; (g) "Primary Cooperative Society" means a Cooperative Society whose member is not a Cooperative Society; (h) "Central Cooperative Society" means a Cooperative Society which is different from Federation and Union and which has any other Cooperative Society, and, if the bye-laws so provide, individuals as its members; (i) "Federation"means a Federation constituted under sub-section (2) of section 14 of this Act; (j) "Union" means as Union Constituted under sub-section (1) of section 14 of this Act; (k) "General Body" means (i) in relation to a Primary Cooperative Society, all the members of that Cooperative Society, 3/42 (ii) in relation to a Central Cooperative Society, delegates of all the member Cooperative Societies, and, if the bye-laws so provide, individual members, (iii) in relation to a Federation the delegates of all member Cooperative Societies, (iv) in relation to the Union, the delegates of all the member Cooperative Federations and Cooperative Societies; (I) "general meeting" means a meeting of the general body of a Cooperative Society registered under this Act; (m) "Office-bearer"means a person elected or appointed by a Cooperative Society to any office of such Cooperative Society; (n) "Registrar" means the Registrar of Self-Supporting Cooperative Societies appointed under section 8 of this Act and includes any other person on whom all or any of the powers of the Registrar under this Act are conferred; (o) "family" means husband, wife and their unmarried daughters and minor sons; (p) "Cooperative tribunal" means a tribunal constituted under section 39 of this Act. Chapter II Cooperative Principles 3. Cooperative Principles Individuals or Cooperative Societies intending to form a Cooperative Society under this Act shall frame bye-laws conforming to the following Principles of Cooperation, namely: (a) membership of a Cooperative Society shall be voluntary available without restriction of any social, political, racial or religious discrimination, to all persons who can make use of its services and are willing to accept the responsibilities of membership; (b) Cooperative Societies are democratic organisations; their affairs shall be administered by persons elected or appointed in a manner agreed to by the members and accountable to them. Members of Cooperative Societies shall enjoy equal rights of voting (one member one vote) and participation in decisions affecting the Cooperative Societies of which they are members: (c) the economic results, arising out of the operations of a Cooperative Society belong to the members that Cooperative Society and shall be distributed in such a manner as would avoid one member gaining at the expense of others, which shall be achieved: (i) by provision for development of the business of the Cooperative Society, (ii) by provision of common services, or (iii) by distribution among the members in proportion to their transactions with the Cooperative Society in addition to the distribution of dividend to the share-holders; (d) all Cooperative Societies shall make provision for the education of their members, office-bearers and employees and of the general public, in the principles and techniques of Cooperation, both economic and democratic; (e) all cooperative societies, in order to best serve the interest of their members and their communities, shall actively cooperate in every 4/42 practical way with other cooperatives at local, national and international levels having as their aim the achievement of unity of action by cooperators throughout the world. 4. Organisations which may be registered Only such an organisation may be registered as a Cooperative Society under this Act which provide in its bye-laws for the social and economic betterment of its members through self-help and mutual aid in accordance with the cooperative principles: Provided that the membership of such Cooperative Societies which enjoy special privileges under government policy and programmes by virtue of their membership being confined to special groups shall be restricted to members belonging to such special groups. 5. Application for registration (1) (i) Where not less than ten individuals each being a member of a different family intend to form a Cooperative Society, they, after framing bye-laws for this purpose on the basis of section 3 and in accordance with section 9, may apply for registration under this Act. (ii) Where two or more Cooperative Societies registered under this Act intend to form a Central Cooperative Society, they after framing bye• laws for this purpose on the basis of section 3 and in accordance with section 9, may apply for registration under this Act. (iii) Where two or more Cooperative Societies registered under this Act intend to form a Cooperative federation, they after framing bye-laws for this purpose on the basis of section 3 and in accordance with section 9, may apply for registration under this Act. (iv) Where two or more Cooperative federations and such Cooperative Societies as are not the members of any Cooperative federation, intend to form Cooperative Union, they after framing bye-laws for this purpose on the basis of section 3 and in accordance with section 9, may apply for registration under this Act. (v) Where a society registered under section 11 of the Bihar Cooperative Societies Act, 1935 intends to convert itself into a Cooperative Society under this Act, it, after framing bye-laws for this purpose on the basis of section 3 and in accordance with section 9, may apply for registration under this Act. (2) An application for registration shall be submitted to the Registrar. (3) Every such application shall be accompanied by - ( a) two copies of the proposed bye-laws of the Cooperative Society as adopted by the promoting members; (b) a list of names of members with their addresses, occupation and equity participation; 5/42 (c) the list of members of the first board elected by the promoting members; (d) a true copy of the minutes of the meeting at which the bye-laws were adopted, duly signed by the chairperson; (e) in the case of a Society registered under section 11 of the Bihar Cooperative Societies Act, 1935 and wishing to convert itself into a Cooperative Society under this Act evidence to show that the Society is not in possession of any share capital from Government, and evidence also to show that the society is not in receipt of any Government loans or guarantees at the time of applying for registration as a Cooperative Society under this Act or that it has been entered into a memorandum of understanding with the Government for any such outstanding loans or guarantees; and (f) registration fee amounting to one per cent of the total authorised share capital by whatever name called subject to a minimum of one hundred rupees and a maximum of ten thousand rupees. (4) The Registrar shall, if he is satisfied that (a) the application is ain conformity with the requirements of this Act; and (b) the proposed bye-laws are not contrary to the provisions of this Act register the Cooperative Society and also its bye-laws and communicate a certificate of registration and the original of the registered by-laws signed and sealed by him within a period of ninety days from the date of submission of application, to the Chief Promoter mentioned in the application. (5) If the conditions laid down in sub-section (4) are not fulfilled, the Registrar shall communicate the order or refusal together with the reasons thereof, within ninety days from the date of submission of application, to the Chief Promoter. In case no refusal is communicated within the said period, the Cooperative Society shall be deemed to be registered and in that event the Registrar shall send a certificate of deemed registration and the original copy of deemed registered bylaws signed and sealed by him within a period of one month. (6) Where an order of refusal is received by the applicants under sub-section (5), or the certificate of deemed registration is not received by the applicants within the prescribed period, they may appeal against this to the Cooperative Tribunal within sixty days of communication of such order or within sixty days of the period prescribed for the communication of the certificate of deemed registration. The decision of the Tribunal shall be final in this regard. (7) Where a Cooperative Society is registered, the certificate of registration signed and sealed by the Registrar shall be conclusive evidence: Provided that where a Cooperative Society was earlier registered under the Bihar Cooperative Societies Act, 1935, such registration shall be deemed to be cancelled once a certificate of registration under this section is issued. 6/42 6. Cooperative Society to be a body corporate (1) The Cooperative Society shall be a body corporate by the name under which it is registered having perpetual succession and a common seal. The Cooperative Society shall be entitled to a acquire, hold and dispose of property, to enter into contracts on its behalf, to institute and defend suits and other legal proceedings and to take all such steps necessary to achieve its objectives. (2) All transactions entered into in good faith prior to registration, in furtherance of the purposes of the Cooperative Society shall be deemed to be transactions of the Cooperative Society after registration. (3) A Cooperative Society may be registered with limited liability and it shall have the word "limited" as suffix to its name. 7. Display of name: (1) Every Cooperative Society shall display its name and the address of its registered office and the words "registered under Jharkhand Self• Supporting Cooperative Societies Act, 1996" (a) at every office or place at which it carries on 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 and 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. (2) The name of every Cooperative Society shall contain the words "Cooperative" and "Limited". 8. Appointment of Registrar (1) The State Government may appoint a person to be Registrar of Self• Supporting Cooperative Societies for the State or any portion of it, and may appoint other officers to assist such Registrar. (2) The State Government may, by notification, confer on such other officers appointed under sub-section (1) to assist the Registrar, all or any powers of the Registrar under this Act. (3) The term of office of the Registrar shall normally be for a period of three years. 7/42 Chapter Ill Bye-laws 9. Bye-laws (1) Except on such specific matters, which the Act has provided, the functioning of every Cooperative Society shall be regulated by its bye• laws subject to the provisions of this Act. (2) The bye-laws of the Cooperative Society may provide for the following matters: (a) the name, address and area of operation of a Cooperative Society, (b) the objectives of the Cooperative Society explicitly (stated as a common central need of the members), (c) the cooperative principles as described in section 3, (d) the services to be provided to its members, (e) eligibility for obtaining membership, (f) procedure for obtaining membership, (g) conditions for continuing membership, (h) 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, (i) procedure for withdrawal/transfer of membership, (j) procedure for termination and cessation of membership, (k) rights of members, (I) fixation of minimum performance required annually of each members vis-a-vis use of services, financial commitments and participation in meetings, in order to be eligible to exercise the rights of membership including the right of vote. (m) the consequences of default in payment of any sum due by a member, (n) the nature and amount of capital, if any, of the Cooperative Society, (o) the maximum capital to which a single member can subscribe, (p) the nature and extent of the liability of the members for the debts contracted by the Cooperative Society, (q) the sources and types of funds to be raised by the Cooperative Society, (r) the purposes for which the funds may be applied, (s) the extent and conditions under which deposits, loans, debentures and other funds may be mobilised, (t) the conditions and purposes for which State aid and aid from other financial institutions may be sought and obtained, (u) the manner of disposal of surplus, (v) the constitutions of various funds, reserves and their purpose, (w) the manner of convening general and other special meetings and quorum thereof, (x) the frequency of general meetings, (y) the role of general body and the matters to be placed before the general body, (z) the manner of amending bye-laws, (aa) the procedure for conducting election, 8/42 (bb) the procedure for conducting election in case the Cooperative Society fails to do so, (cc) the size and constitution of the board, (dd) eligibility for becoming director, (ee) conditions for retaining directorship, (ff) the tenure of the directors, chairperson and other office-bearers, (gg) the procedure for removal of directors and for filling of vacancies, (hh) the manner of convening board meetings and quorum, (ii) the frequency of board meetings, (jj) powers and functions of the board, (kk) powers and functions of office-bearers including chair-person, (II) powers and functions of the Chief-Executive, (mm) penalties for acting against the interests of members and for non• fulfillment of duties by members, directors and staff, (nn) the appointment and role of auditors and procedure for conduct of audit where the Cooperative Society fails to make necessary arrangements and time limit for audit compliance, (oo) the authorisation of an officer or officers to sign documents and to institute and defend suits and other legal proceedings on behalf of the Cooperative Society, (pp) the terms on which a Cooperative Society may deal with non• members, (qq) the terms on which a Cooperative Society may associate with other Cooperative Societies, (rr) the terms on which a Cooperative Society may deal with organisations other than Cooperative Societies, (ss) the rights, if any, which the Cooperative Society may confer on any Cooperative Society or other federations and the circumstances under which these rights may be exercised by the federations, (tt) the manner of disposal of funds if the Cooperative Society is under liquidation, (uu) the accounting year for the Cooperative Society, (vv) transfer of shares and interest in the name of a nominee in case of death of a member, (ww) the manner of dissolution of the Cooperative Society, (xx) restriction, if any, on service to non-members, (yy) organise self-help groups of people living in its area to conduct education and training programme, (zz) special measures for women, scheduled castes and scheduled tribes and other weaker sections including provision for their representation on the board. 10. Amendment of bye-laws (1) A Cooperative Society may amend any of the provisions of its bye-laws by a resolution of its general body, or by the representative of general body, where this exists of a majority of two-third members having voting right: Provided that no such resolution shall be passed unless atleast twenty clear days of written notice of the meeting has been given along with a copy of the proposed amendment to each member of the general body or representative general body, as the case may be, and such notice and proposed amendment is also displayed on the notice board of the Cooperative Society for a period of twenty days immediately proceeding the date of the meeting: 9/42 Provided further that the representative general body shall not alter any provision in the bye-laws relating to its own constitution and powers. (2) An application for the registration of the amendment shall be submitted to the Registrar within a period of thirty days from the date of resolution. (3) Every application submitted to the Registrar shall be signed by the chair• person and two members of the board and shall be accompanied by the following particulars: (a) a copy of the resolution adopting the amendment, (b) the date of the general meeting at which the amendment was approved, (c) the date of the notice issued for the general meeting, (d) the total number of members on the rolls of the Cooperative Society having the right of vote on the date of such general meeting, (e) the number of members having the right of vote present at such general meeting, and (f) the number of members who voted for the resolution. (4) The Registrar, if the proposed amendment is in consonance with the provisions of the Act, shall register the amendment within a period of ninety days from the date of receipt of the application. (5) The Registrar shall forward to the Cooperative Society within a period of fifteen days after registration, a copy of the registered amendment together with a certificate signed and sealed by him, and such certificate shall be conclusive proof that the amendment has been duly registered. (6) The Registrar, if the proposed amendment is not in consonance with the provisions of the Act, shall communicate the order of refusal together with the reasons therefore to the Cooperative Society within a period of ninety days from the date of receipt of the application: Provided that no order refusing to register the amendment shall be passed except after giving the Cooperative Society an opportunity of making its representation. (7) Where no order of refusal is communicated under sub-section (6) within the period specified in that sub-section, the amendment shall be deemed to be registered, and in that event the Registrar shall send a certificate of deemed registration and the original copy of deemed registered amendment signed and sealed by him within a period of one month. 11. Change of liability, transfer of assets and liabilities, division, amalgamation (1) A Cooperative Society may, by a resolution of its general body, change the extent of its limited liability. (2) A Cooperative Society may, by a resolution of its general body transfer its assets and liabilities, in whole or in part, to any other Cooperative Society which agrees to such transfer by a resolution of its general body. 10/42 (3) A Cooperative Society may, by a resolution of its general body, divide itself into two or more Cooperative Societies. (4) Any two or more Cooperative Societies may, by a resolution of their respective general bodies, amalgamate themselves and form a new Cooperative Society. (5) Every resolution of a Cooperative Society under this section shall be passed at its general meeting by a majority of total members with right of vote and such resolution shall contain all particulars of the liability, transfer, division, amalgamation as the case may be. (6) Where a resolution is passed under this section, the Cooperative Society shall give notice thereof together with a copy of the resolution to all its members and federation to which it is affiliated and creditors who may give their consent. Notwithstanding any bye-law or contract to the contrary any member, federation 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. (7) Any member, federation or creditor who or which does not exercise within the specified period the right under sub sub-section (6) shall be deemed to have assented to the resolution. (8) A resolution passed by a Cooperative Society under this section shall not take effect until (a) (i) all the members, federation and creditors have assented under sub-section (6) or are deemed to have assented to the resolution under sub-section (7), or (ii) all claims of the members, federation and creditors who have exercised the option referred under sub-section (6) within the period specified therein have been met in full or otherwise satisfied, and (b) (i) in the case of change of liability, amendment of the bye-laws of the Cooperative Society concerned is registered or deemed to have been registered, or (ii) in the case of division or amalgamation, the certificate of registration of the Cooperative Society or the Cooperative Societies as the case may be, is issued or deemed to have been issued. (9) When a resolution passed by a Cooperative Society under sub-section (2) takes effect the resolution shall be a sufficient conveyance to vest the assets and liabilities in the transferee without any further assurance. (1 O)The registration of a Cooperative Society shall stand cancelled and the Cooperative 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 Cooperative Society are transferred to another Cooperative Society, or (b) When such Cooperative Society divides itself into two or more Cooperative Societies. 11/42 (11 )Where two or more Cooperative Societies are amalgamated into a new Cooperative Society the registration of the Cooperative Societies so amalgamated shall stand cancelled and they shall be deemed to have been dissolved and shall cease to exist as corporate bodies. 12. Promotion and subsidiaryorganisation (1) Any Cooperative Society may, by a resolution passed at general meeting by a majority of members present having voting right, promote one or more subsidiary organisations for the furtherance of its stated objectives, and such organisation or organisations may be registered under any law for the time being in force, as agreed to by the general body. (2) The annual reports and accounts of any such subsidiary organisation shall be placed before are general meeting of the promotion Cooperative Society every year. (3) Any subsidiary organisation created under sub-section (1) shall exist only as long as general body of the Cooperative Society deems its existence necessary. 13. Creation of new organisation with others Where the collaboration between a Cooperative Society and any other organisation or organisations requires the creation of a new organisation, the new organisation may be registered as a company or a public society, as appropriate for the fulfillment of the objective with which it was created. Chapter IV Union and Federation 14. Cooperative Union/Federations (1) A Cooperative Union shall be registered in the State under this Act and it shall be known as the State Cooperative Union of Jharkhand. The Cooperative Union shall be constituted consisting of the Cooperative Federations and such Cooperative Societies as are not the members of any Cooperative Federation. (2) Cooperative Federations consisting of Primary and Central Cooperative Societies having same nature of objects may be established and shall be eligible for registration under this Act: Provided that there shall be only one federation in the State for a class of Primary and Central Cooperative Societies having same nature of objects. (3) For servicing their constituents and in accordance with their bye-laws, union/Federations may perform the following functions (a) safeguard the observance of the Cooperative Principles, 12/42 (b) promote and organise Cooperative Societies and for this purpose frame model bye-laws and guidelines for framing various regulations and policies for consideration by Cooperative Societies. (c) provide Cooperative training, education and information and propagate Cooperative Principles, (d) Undertake research and evaluation and assist in preparation of perspective development plans of member Cooperative Societies, (e) promote harmonious relations between member Cooperative Societies, (f) help member Cooperative Society in the settlement of dispute among themselves and between a Cooperative Society and its members, (g) represent the interests of member Cooperative Societies and lobby policies and legislation favourable to Cooperative Societies, (h) undertake business services on behalf of its members, (i) provide Cooperative and management development services to member Cooperative Societies including participation in board meeting where invited, (j) to prepare a panel of auditors and ensure timely conduct of annual audit in member Cooperative Societies, (k) ensure timely conduct of election in member Cooperative Societies, (I) assist member Cooperative Societies in regular conduct of general meeting, (m) envolve code of conduct for observance by member Cooperative Societies, (n) envolve availability norms for member Cooperative Societies, (o) provide legal aid and advice, (p) assist member Cooperative Societies in organising self-help groups of people living in its area, (q) provide any other services, at the behest of member Cooperative Societies. (4) (a) A federation may request the board of a member Cooperative Society to convene a general body meeting of its members and shall request the board to do so where atleast ten percent of the members of the member Cooperative Societies have requested the federation to do so. (b) The requisition shall contain the items to be included in the agenda and these shall be dealt with at the general body meeting. (c) The board of the member Cooperative Societies shall convene such a meeting within thirty days of receipt of the requisition. (d) Where a member Cooperative Society fails to convene a general meeting within thirty days of receipt of a requisition to do so by a Federation, the board of the Federation may themselves call such meeting for dealing with such items as included in the requisition. (5) (a) General body of Federation shall consist of the delegates from the member Cooperative Societies. (b) The chair-person of a Cooperative Society shall ordinarily be the delegate of the next tier of Cooperative Society: Provided that if the chair-person is unable to represent owing to illness or other unavoidable reasons, he may nominate the Chief Executive or any other member of the board to be the delegate. 13/42 (c) The delegate shall continue to represent his Cooperative Society in the next tier of Cooperative Society, Federation/Union as long as he remains in office in the member Cooperative Society. (6) The Cooperative Union may (i) create and maintain the Cooperative education fund, (ii) represent the interest and welfare of all types of Cooperative Societies at the district and State level, (iii) promote new forms of Cooperative enterprise, (iv) undertake experimental projects towards the application of Cooperative ideology, (v) liaise on of behalf of and amongst Cooperative Societies, and (vi) serve as a data bank on Cooperation. Chapter V Management of funds 15. Mobilisation of funds A Cooperative Society may mobilise funds in the shape of share capital, deposits, debentures, loans and other contributions from its members to such extent and under such conditions as may be permissible under the bye-laws of the Cooperative Society: Provided that at the time of dissolution of a Cooperative Society the amounts due to the members shall be settled only after settlement of due to others. 16. Restriction on borrowings (1) A Cooperative Society may mobilise debentures, deposits, raise loans and receive grants from external sources to such extent and under such conditions as may be specified in the bye-laws. Deposits and loans raised from external sources, however shall at no time exceed ten times the sum of member funds and organistional reserves less accumulated deficit, if any. (2) A Cooperative Society may accept funds/guarantees from the government or other financing institution for the fulfillment of its objectives on such terms and conditions as are mutually contracted upon and such conditions may include the right of the government or other financier to nominate one expert on the board. 17. Restriction on holding of equity (1) No member in a primary Cooperative Society shall, at anytime, hold more than one-tenth of the paid up equity capital. (2) No Cooperative Society shall accept funds from the Government by way of equity. 14/42 18. Disposal of surplus (1) In any year, a Cooperative Society shall, out of the surplus arising from transactions with members in that year, make deferred payment to members as patronage rebate, an amount not exceeding twenty-five percent of surplus and make payment of dividend on share capital not exceeding fifteen percent of surplus divided into the members according to their shares. (2) The balance surplus accruing from members and the entire surplus accruing from transactions with others, shall be utilised in the following manner: (a) not less than twenty-five percent shall be transferred to a statutory reserve fund, (b) not less than twenty percent shall be transferred to a reserve for meeting unforeseen losses, (c) where the Cooperative Society is a member of the Cooperative Union, upto three percent may be transferred to a Cooperative Education Fund with the Cooperative Union, (d) bonus shall be paid to employees in accordance with the decision of the general body, (e) not less than five percent may be transferred towards a common good fund whose purpose is approved by the general body, (f) not more than five percent may be paid as contribution for any purpose connected with the development of the Cooperative movement. 19. Management of Deficit (1) Where a Cooperative Society is left with a deficit in any given year, the board shall place before the general body in the first following annual general meeting, a detailed report on the causes of deficit and the manner in which the deficit is proposed to be met. (2) The general body of the Cooperative Society shall decide to have the deficit covered by setting it off against the amounts available in the deficit cover fund, and/or by debiting the deficit to the account of the members in proportion to the services they had availed or were expected to avail of the Cooperative Society during the year. 20. Reserve and other funds (1) A Cooperative Society may create statutory and non-statutory reserves and other funds for the promotion of the objects of the Cooperative Society. (2) Reserves and other funds shall be used for the purpose for which they were created when necessary but otherwise may be used in the business of the Cooperative Society. 15/42 21. Investment of funds outside the business Such of its funds as are not needed for use by a Cooperative Society may be invested or deposited outside its business (a) in any union/federation of which it is a member, (b) in a local Cooperative bank, (c) in the equities of any other Cooperative Societies, (d) in any of the securities specified in section 20 of the Indian Trust Act, 1882, (e) in the local Postal Savings Bank, (f) in any of the non-speculative manner as provided in the bye-laws. 22. Restriction on contribution No Cooperative Society shall make a contribution either in money or in kind, either directly or indirectly to an organisation that has as an object the furtherance of the interests of a political party or of any religious faith. Chapter VI Management 23. Membership (1) Any person, who needs the services of the Cooperative Society, accept the responsibilities of membership and fulfils such other conditions as may be specified in the bye-laws of the Cooperative Society, may be admitted as a member: Provided that the Cooperative Society is in a position to extend its services to the applicant and that the applicant is not already a member of a Cooperative Society registered under this Act, or the Bihar Cooperative Societies Act, 1935 providing the same or similar services. (2) Membership shall be available without any discrimination on grounds of sex. (3) Admission of members and removal from membership shall be made in accordance with the procedure specified in the bye-laws only by an elected board or by the general body where such an elected board does not exist for the time being. (4) No Cooperative Society shall, without sufficient cause, refuse admission to any person duly qualified for membership under the bye-laws. Where admission is so refused, the decision with the reasons therefor shall be communicated to such applicant within fifteen days of the date of the decision or within thirty days from the date of application for membership. Whichever is earlier: Provided that if no such decision is communicated within thirty days of applying for membership then the person shall be deemed to have been admitted as a member of the Cooperative Society on the thirty-first day. (5) Where a person has been refused membership by the board, an appeal may be lie within thirty days of communication of such decision to the general body against the decision of the board. 16/42 (6) Any applicant aggrieved by the decision of the general body may file a revision within sixty days of communication of such decision before the Cooperative Tribunal. (7) A person admitted as a member may exercise the rights of membership, including the right to vote, only on fulfilment of such conditions as may be laid down from time to time in the bye-laws: Provided that a person shall have been a member for at least one year before being eligible to exercise the right of vote: Provided further that the above proviso shall not apply to the promoter members in the first year of registration of a Cooperative Society. 24. Restriction on services to non-members A Cooperative Society's services shall ordinarily be available only to members unless otherwise provided in the bye-laws. 25. General Body (1) Subject to the provisions of this Act and the bye-laws the ultimate authority of a Cooperative Society shall vest in its general body. (2) Where a Cooperative Society so desires, its bye-laws may provide for a representative general body drawn from the members to be constituted in such a manner and with such functions as specified in the bye-laws: Provided that the representative general body shall not have the right to amend the bye-laws of the Cooperative Society except those in relation to which the bye-laws have delegated the power of amendment to the representative general body. (3) Subject to the provisions of this Act, and of the bye-laws the following matters shall be dealt with by the general body (a) election of directors of the board, (b) removal of directors of the board and filling up of vacancies, (c) consideration of the annual report presented by the board for being filed with the Registrar, (d) appointment and removal of statutory auditors and internal auditors, ( e) consideration of the auditor's report and audited statement of accounts for being filed with the Registrar, (f) consideration of audit/special audit compliance report, (g) report on action taken on inquiry report under section 36, if any, (h) disposal of net surplus, (i) review of operational deficit, if any, (j) approval of the long term perspective plan and the annual operational plan, (k) approval of the annual budget, (I) creation of specific reserves and other funds, (m) review of actual utilisation of reserve and other funds, (n) report on membership of the Cooperative Society in other Cooperative Societies, (o) review of annual report and accounts of any subsidiary organisation, 17/42 (p) appeal of a person whose application for membership has been rejected, or whose membership has been terminated by the board, (q) appointment, reconstitution and disbanding of the representative General Body, (r) remuneration payable to any Director or internal auditor in connection with his duties in that capacity or his attendance at related meetings, (s) membership of the Cooperative Society in Union/federation, (t) collaboration with other organisation, (u) amendment of bye-law, (v) formulation of code of conduct for the Directors and office-bearers, (w) note of admission and termination of members, (x) dissolution of the Cooperative Society, (y) such other functions specified in the bye-laws. 26. Board (1) The general body of a Cooperative Society shall constitute a board in accordance with the bye-laws. (2) The size of the board shall be in accordance with the bye-laws. Chief Executive shall be an ex-officio member of the board. (3) In addition to such criteria as may be specified in the bye-laws, a person shall be ineligible for being chosen as a director, if he (a) has at any time lost the right to vote as a member as specified in the bye-laws. (b) loses the right to continue as member as specified in the bye-laws, or (c) incurs any other disqualification specified in the bye-laws. (4) In addition to such criteria as may be specified in the bye-laws, a person shall cease to be a director if he incurs any of the disqualifications specified in sub-section (3), or (a) absents himself from three consecutive board meetings without leave of absence, (b) absents himself from three consecutive general body meeting without leave of absence, or (c) is penalised under this Act. (5) In addition to such criteria as may be specified in the bye-laws, the directors of the board shall incur disqualification for a period of three years for being chosen as directors and shall be ineligible to continue as directors of any Cooperative Society if during their term as directors of a Cooperative Society: (a) they did not conduct elections within the time specified in the bye-laws and before the expiry of their term, (b) they did not conduct annual general body meeting within four months of closure of the Cooperative's accounting year or a requisitioned meeting of the general body, or (c) they did not place the audited accounts for the preceding financial year alongwith the reports of the auditors before the general body at its annual general meeting. 18/42 (6) In order to be eligible for being chosen as a director of the board of a Cooperative Society which has been in existence for more than two years, a member (a) shall have been a voting member of the Cooperative Society for atleast two years immediately preceding the year of election, (b) shall have attended two general body meetings of the Cooperative Society immediately preceding the elections, and (c) shall not have been a director or an office-bearer of the Cooperative Society for two consecutive terms. (7) Every director and employee of a Cooperative Society while exercising his powers and discharging his duties shall: (a) act honestly and in good faith and in the best interests of the Cooperative Society, and (b) exercise such due care, diligence and skill as a reasonably prudent person would exercise in similar circumstances. (8) A director or employee which is guilty of misappropriation, breach of trust or any other omission or commission resulting in loss to the Cooperative Society, shall be personally liable to make good that loss, without prejudice to such criminal action to which he is liable under the law. 27. Powers and functionsof the board (1) The board shall in accordance with the bye-laws, be the authority to (a) admit and terminate membership, (b) elect the Chair-person and other office-bearers, (c) remove from office the chair-person and other office-bearers, (d) appoint and remove the chief executive, ( e) fix staff strength, (f) frame policies concerning (i) organisation and provision of services to members, (ii) qualifications, recruitment, service conditions and other matters related to its employees, (iii) mode of custody and investment of funds, (iv) manner of keeping accounts, (v) mobilization, utilisation and investment of various funds, (vi) monitoring and management of information system including statutory returns to be filed, (vii)such other subjects and matters necessary for the effective performance of the Cooperative Society. (g) place the annual report, annual financial statements, annual plan and budget for the approval of the general body, (h) consider audit and compliance reports and place these before the general body, (i) review membership in other Cooperative Societies, (j) undertake such other functions as delegated by the general body. 19/42 (2) The chair-person shall be elected by the board from among the elected members and shall, in accordance with the bye-laws (a) preside at meetings of the board and the general body meetings, (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 election, (c) exercise such other powers as delegated by the board specified in the policies framed or resolutions adopted by the board. 28. Term of office The term of office of the director of the board, or where the bye-laws provide for retirement of directors by rotation, the term of office of the individual director, shall be for such period as specified in the bye-laws but shall not exceed three years from the date of assumptions of office: Provided that the term of office can be terminated by the general body at its meeting by a majority of members with right of vote: Provided further that the first board shall not exceed twelve months from the date of registration of the Cooperative Society. 29. Elections (1) The conduct of elections to the board of a Cooperative Society shall be the responsibility of the incumbent board. (2) Elections shall be conducted in the manner specified in the bye-laws before the term of office of the outgoing directors comes to an end. (3) The election of the directors shall take place at the general body meeting. (4) The directors shall hold office for the period specified in the bye-laws and for which they were elected and the newly elected directors shall assume office on completion of the period of the outgoing directors or the cessation of the period as the case may be. (5) The directors shall if the bye-laws so permit, be eligible for re-election: Provided that he had not been a director or an office-bearer of the Cooperative Society for two consecutive terms. (6) Where the number of nominees exceeds the numbers of directors to be elected, the election of directors shall be by secret ballot. (7) Where a board does not take necessary steps to conduct elections before the expiry of the terms of the directors, or where there are no directors remaining on the board, a minimum of five percent of total members of the Cooperative Society may jointly convene a general meeting of the members, for appointing an ad-hoc board for the specific purpose of conducting elections. (8) The term of ad-hoc board so appointed shall not exceed three months. 20/42 (9) If an ad-hoc board is not constituted in accordance with sub-section (7), it shall be the duty of the federation to inform the Registrar. (1 O)The Registrar on the report of the Federation under sub-section (9) may suo moto convene a general meeting for appointing another ad-hoc board for the specified purpose of conducting elections. (11 )The term of the ad-hoc board appointed under sub-section (10) shall not exceed one month and this ad-hoc board shall cease to function as soon as a regular board is elected in accordance with the bye-laws. (12)The cost of conducting elections shall be borne by the Cooperative Society. (13)Where there is vacancy on the board and where there is not a quorum of directors due to such vacancy the remaining directors shall call a general meeting for the purpose of electing members to fill any vacancies for the remaining period, if the remaining period is over six months. 30. Meetings (1) The bye-laws of a Cooperative Society shall specify the frequency of and manner in which board meetings and general body meetings shall be hold, so however the board shall meet at least once in every three months and the general body shall meet atleast once a year. (2) The board shall also convene a general meeting within thirty days of receipt of a requisition of convening a meeting signed by atleast one-tenth of members of the Cooperative Society and any such requisition shall contain the proposed agenda and the reasons why the meeting is felt necessary. (3) Where the board fails to convene the annual or requisitioned general meeting within due time, it shall be competent for the Registrar to convene the requisitioned or annual general meeting as the case may be. (4) Every Cooperative Society shall record in the minute's book minutes of all proceedings of every general meeting and of every meeting of its board of directors.

(5) Such minutes shall be communicated to all persons invited for the meeting within thirty days of the conclusion of the meeting. (6 The minutes so recorded shall be signed by the person who chaired the said meeting. 31. Staff (1) All staff of the Cooperative Society shall be the employees of the Cooperative Society and shall be fully accountable to the Cooperative Society and be appointed, removed and function in accordance with such service conditions as may be framed by the board. Provided that a Cooperative Society may take personnel on deputation from other agencies on such terms as are mutually agreed upon. 21/42 (2) An officer of the Government shall not either during the course of his service with the Government or for a period of three years the reafter, serve in any capacity with any Cooperative Society. Chapter VII Information 32. Accountsand recordsto be maintained (1) Every Cooperative Society shall keep at its registered office the following accounts and records (a) a copy of this Act with amendments made from time to time, (b) the minutes book, (c) registration certificate and a copy of the registered bye-laws and of the amendments registered from time to time with date of amendment, (d) a copy of the authenticated bye-laws of the federation/union of which it is a member and of each of its member Cooperative Societies, (e) account of all sums of money received and expended by the Cooperative Society and their respective purposes, (f) account of all purchases and sales of goods by the Cooperative Society, (g) account of the assets and liabilities of the Cooperative Society (h) a register showing total membership and the memberwise use of various services, (i) a list of members with voting rights for the current year updated within thirty days of closure of the financial year; (j) copies of the board policies, (k) annual report, audit report, special audit report, enquiry report and their compliances, (I) copies of other laws and regulations to which the Cooperative Society is subject, (m) such other documents as are relevant to the functioning of the Society: Provided that where a Cooperative Society has branch offices, accounts and records related to the branch, shall be available at the registered office for any period within twenty five days of the end of the financial year. (2) Copies of this Act, bye-laws, minutes book, voters' list, and such accounts as related to a member shall be made available to any member during business hours at a fee to be decided by the Cooperative Society. (3) The books of accounts of every Cooperative Society together with supporting records and vouchers shall be preserved for such period as may be provided in the bye-laws subject to any other laws for the time being in force. 22/42 33. Audit (1) A Cooperative Society shall get its accounts audited by an auditor selected from the panel prepared by federation. Such Auditor shall either be a Chartered Accountant within the meaning of the Chartered Accountants Act, 1949 or from the office of the Registrar. The panel shall also be maintained by the office of the Registrar. Where there is no union/federation such auditor shall be selected from the panel maintained by the Registrar. (2) The auditor's report in addition to the report on the accounts of the Cooperative Society shall also contain report on the attendance at meetings by directors, loans and advances sanctioned to or the business done with the Cooperative Society by the directors, expenditure of board meetings, remuneration paid to directors, expenses reimbursed to directors, expenditure on education and training for members, staff, directors and others. (3) It shall be the duty of the board to ensure that annual financial statements are prepared and presented for audit within forty-five days of closure of the financial year. (4) The remuneration of an auditor may be fixed by the board and placed before the general body at its next meeting, for information. (5) The general body federation may at a special meeting remove an auditor from office by a resolution passed by a majority of the members present and voting. (6) The auditor shall be given notice of every general meeting and will be entitled to attend the meeting. (7) Upon the demand of the auditor of a Cooperative Society the present or former office-bearers, board member, members or employees of the Cooperative Society shall furnish (a) such information and explanation, as may be considered necessary, and (b) each of the records, documents, books, accounts and vouchers of the Cooperative Society as are, in the opinion of the auditor, necessary to enable him to make the examination and report. (8) Where a Cooperative Society fails to get its annual account audited when due, it shall be the responsibility of the Cooperative Union/Federation to get the accounts of the Cooperative Society audited within a period of ninety days from the date when the audit was due. (9) The cost of conducting such audit shall be borne by the Cooperative Society. (1 O)lf the Cooperative Union/Federation is unable to get the audit of the Cooperative Society conducted for any reason, the Registrar shall get the accounts of the Cooperative Society audited. 23/42 34. Special Audit (1) A Cooperative Society dealing with funds from the Government or other external individual or reinstitution may be subject to a special audit initiated by the Registrar at the request of such creditor, on such specific terms of reference as agreed to by the Registrar. (2) The cost of the special audit under sub-section (1) shall be met by the creditor: Provided that where the special audit reveals serious mismanagement in the Cooperative Society, such costs may be recovered from the Cooperative Society or the persons responsible for the mismanagement. (3) Every special audit shall be completed and the report submitted to the Registrar within one hundred and twenty days of its commencement. (4) The special audit report shall contain a statement of: (a) every payment which appears to the auditor to be contrary to 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 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 he 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 transmit copies of the same to (a) the applicant creditor, (b) the Cooperative Society concerned, and (c) the Cooperative Tribunal where necessary. 35. Filing of Returns Every Cooperative Society within five months of the close of the year shall file the following information with the Registrar: (a) annual report of activities, (b) audited statement of accounts, (c) plan for surplus disposal as approved by the general body, (d) list of names of directors and their terms of office, (e) list of amendments to the bye-laws of the Cooperative Society, (f) declaration regarding date of holding of general body meeting and conduct of elections where due, (g) compliance report relating to audit/special audit/enquiry. 36. Enquiry (1) Every Cooperative Society shall furnish any relevant information required by the Registrar in order to enable him to satisfy whether the Cooperative 24/42 Society has conducted its affairs in accordance with the Cooperative Principles and the provisions of this Act. (2) The Registrar may, of his own motion, and shall on the application, of union/federation to which the Cooperative Society concerned is affiliated, or of a creditor to whom the Cooperative Society is indebted or of not less than one-third of the directors, or of not less than ten percent of the members, hold an enquiry or cause an enquiry to be made into the specific matter or matters relating to any gross violation of any of the provisions of this Act by the Cooperative Society. (3) The Registrar shall order an enquiry only after the receipt of a fee, from the applicant or applicants, deemed sufficient to meet the costs of the enquiry to be conducted. (4) The enquiry shall be completed within a period of four months from the date of ordering the enquiry. (5) The Registrar shall within a period of one month from the date of completion of enquiry, communicate the report of the enquiry: (a) to the Cooperative Society concerned, (b) to the applicant and person designated by the applicant to receive such a report, (c) to any member of a Cooperative Society, to any Federation of which the Cooperative Society is a member, to any creditor on payment of fee specified by the Registrar, (d) to the Cooperative Tribunal. 37. Power to summon and examine persons and documents (1) The person authorised to conduct special audit under section 34 or enquiry under section 36 shall give the concerned Cooperative Society, not less than fifteen days notice in writing of the date on which he proposes to commence the special audit for enquiry: Provided that for special reasons to be recorded in writing, he may give a shorter notice than fifteen days or commence a special audit or enquiry on the authority of the Registrar without such notice. (2) For the purpose of any special audit or enquiry under this Act, the person conducting such audit or enquiry may: (a) require in writing the chair-person or other authority concerned to produce at the head office of the Cooperative Society such receipts, vouchers, statements, returns, correspondence, notice or any other documents as he may consider necessary for the purpose of special audit or enquiry; (b) require in writing, (i) any employee of the Cooperative Society or other authority accountable for or having the custody or control of such receipts, vouchers, statements, returns, correspondence, notes or other documents, to appear in person; or 25/42 (ii) any person having directly or indirectly any share or interest in any contract with the Cooperative Society to appear in person or by an authorised agent, before him at the head office of the Cooperative Society and answer any question or sign a declaration with respect thereto; (c) in the event of an explanation being required from the chairperson or any other authority concerned invite him in writing specifying the points on which his explanation is required to meet him at the head office of the Cooperative Society; or (d) exercise such other powers as can be reasonably said to be necessary for the purposes of this section. (3) The person conducting special audit or enquiry may fix a reasonable period of not less than seven days for the purpose of compliance of the provisions of sub-section (2), and such compliance shall be mandatory on the persons required to provide information under sub-section (2). 38. Action on Special Audit or Enquiry Report On communication of a special audit report under section 34 or an enquiry report under section 36 to the persons concerned the Registrar may, where the special audit or enquiry report reveal mismanagement on the part of any or all of the office-bearers or directors, without prejudice to any civil on criminal proceedings to which they may be liable: (a) director the board to convene a general body meeting within such reasonable time as he may specify, to enable him to bring to the notice of the general body, either directly or through his nominee, the findings of the special audit or enquiry report, for necessary action; or (b) make a prayer to the Cooperative Tribunal for necessary action. Chapter VIII Settlement of Disputes 39. Constitutionof Cooperative Tribunals Subject to such rules as may be prescribed the State Government shall, by a notification published in the Official Gazette, constitute as many Cooperative Tribunals as may be necessary, for such area or areas as may be specified in the notification, consisting of one or more members to exercise all the powers and perform all the functions conferred by or under this Act or any other law for the time being in force upon such Tribunals. 40. Settlement of disputes (1) If any dispute arises touching the constitution, management or business of a Cooperative Society, and matters connected therewith or incidental thereto: (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 Cooperative 26/42 Society, its board, director, office-bearer or liquidator, past or present, or (c) between the Cooperative Society or its board and any past board, director, office-bearer, or the nominee, heirs or legal representatives of any deceased director, deceased office-bearer of the Cooperative Society, or ( d) between the Cooperative Society and any other Cooperative Society, or (e) between the promoters of a Cooperative Society and the Registrar, or a Cooperative Society and the Registrar, or (f) between a Cooperative Society and liquidator of another Cooperative Society or between the liquidators of two or more Cooperative Societies, Such disputes may be referred to the Cooperative Tribunal for decision: Provided that no dispute shall be referred under this section to the Cooperative Tribunal unless the disputing parties exhausted all remedies that may be available in the bye-laws for the settlement of disputes. (2) Any dispute relating to elections held to a Cooperative Society may be referred to the Cooperative Tribunal for decision. (3) Any appeal against a decision of the Tribunal shall lie before the High Court within sixty days of the date of order. 41. Power of the Tribunal to order recovery (1) A member, director or chair person of the Cooperative Society may and the Registrar shall file a copy of the report of the auditor or the special auditor or the enquiry officer, before the Tribunal with an application for necessary action against the person on account of whose conduct the Cooperative Society has incurred loss. The Tribunal may on the basis of such report disallow every item of expenditure incurred contrary to law and order recovery of the same from the person held responsible in the said report for any deficiency, loss or unprofitable outlay occasioned by his negligence or misconduct or of any such amount which ought to have been accounted but is not brought into account by that person and shall, in every such case, specify the amount liable to be paid by such person to the Cooperative Society. Explanation: It shall be open to any person whose negligence or misconduct has caused or contributed to any such deficiency or loss, to contend that notwithstanding his negligence or misconduct the deficiency or loss would not have occurred, but for the negligence or misconduct of some other person. (2) The Tribunal shall state in writing the reasons for its decision in respect of every disallowance, surcharge and a copy of such decision shall be served on the person against whom it is made in the manner laid down for the service of summons in the Code of Civil Procedure, 1908: Provided that the Tribunal shall not pass any order of recovery under this section unless the person against whom any such order is passed has 27/42 had an opportunity of making a representation either by himself or through the counsel. (3) Any person aggrieved by an order passed under this section may, within sixty days after the date of service on him of the order by the Tribunal, file an appeal against such order in the High Court. (4) The order passed by the Tribunal or the High Court shall be executed in the same manner as a decree of a Civil Court under the Code of Civil Procedure, 1908. Chapter IX Offences and Penalties 42. Offences and Penalties It shall be an offence under this act, if a Cooperative Society: (a) 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 bye-laws required to give, send, do or allow to be done; (b) willfully neglects or refuses to do an act or to furnish information required for the purposes of this Act or does an act forbidden by this Act, or the bye-laws; (c) makes a return, or willfully furnishes information in any respect false or insufficient; (d) indulges infraudulent activities concerning the constitution, management and business of the Cooperative Society; (e) misuses the funds and property of the Cooperative Society; or (f) indulges in the conduct of elections to the Board in "corrupt practices" as defined under section 123 of the Representation of People Act, 1951. (2) It shall be an offence under this Act, if any person or Cooperative Society contravenes the provisions of this Act or the bye-laws of the Cooperative Society. (3) An offence by a Cooperative Society shall be deemed to have been also committed by each office-bearer of the Cooperative Society bound by the bye-laws thereof to fulfil the duties whereof the breach is an offence, or if there is no such office-bearer then by each of the directors, unless the office-bearer or director, as the case may be, proves to have attempted to prevent the commission of the offence. (4) An offence under this section shall be punishable with imprisonment for a term which may extend to one year or with fine which may extend to Rs. 2000 (Rupees two thousand), or with both: Provided that where a person is guilty of misappropriation, fraud, breach of trust, cheating or any other act involving moral turpitude, resulting in a loss to the Cooperative Society, he shall also be punishable under the relevant provisions of the Indian Penal Code, 1860. 28/42 Chapter X Dissolution 43. Dissolution by members (1) A Cooperative Society may, by a special resolution, authorise its own dissolution: Provided that a notice of the general meeting shall also be sent with an invitation to attend, to the Registrar, to any federation of which the Cooperative Society is affiliated, to creditors and to any organisation with which a partnership contract has been entered into. (2) Invitees under the proviso of sub-section (1) shall have the right to make representation to the general body if they so wish to, giving reasons why dissolution is not called for. (3) Within fifteen days of such authorisation for dissolution, the Cooperative Society shall send to the Registrar a copy of the authorisation to dissolve the Cooperative Society. (4) The authorisation approved in pursuance of sub-section (1) shall be required to set out the following namely: (a) the asset and liabilities of the Cooperative Society; (b) the claims of creditors, and collaborators and protected share holders; (c) the number of members; (d) the nature and extent of the members interest in the Cooperative Society; and (e) the name of the liquidator, if appointed by the general body, or a request to the Registrar to appoint the liquidator or a request to the Registrar to issue a certificate of dissolution where there are no assets or liabilities. (5) Where the Registrar receives the special resolution passed in-pursuance of sub-section (1) he shall cause at the expense of the Cooperative Society a notice of the special resolution to be published once a week for two weeks in a newspaper published or distributed in the district where the registered office of the Cooperative Society is located. (6) The Registrar may require from the Cooperative Society, the liquidator appointed by the Cooperative Society or any other person who is required to furnish information, a periodical return showing: (a) the progress of dissolution; (b) the distribution of any undistributed surplus or reserve; and (c) any other relevant information that he may require. 44. Dissolution by Tribunal: (1) The Registrar or an interested person may, after giving the Cooperative Society ninety days notice of the proposed application, apply to the Tribunal for an order dissolving the cooperative Society, where he has 29/42 reasonable cause to believe that the Cooperative Society has no right to be or to continue to be recognised as a Cooperative Society, because it: (a) obtained its registration by fraud or mistake; (b) is serving illegal purposes; (c) has willfully; after notice by the Registrar; violate any of the provisions of this Act or its bye-laws; (d) is no longer operating in accordance with Cooperative Principles and the provision of this Act; (e) has not commenced business within two years of the date of registration; or (f) has not carried on business for the past two consecutive years. (2) Where an interested person applies in pursuance of this section, he shall give the Registrar notice of his application and the Registrar shall be entitled to appear and be heard in person or by counsel. (3) Where the Tribunal receives an application in pursuance of this section it may, after giving a reasonable opportunity to the Cooperative Society to state its case, order that the Cooperative Society be dissolved or liquidated and dissolved under the supervision of the Registrar. (4) Where the Registrar receives an order made in pursuance of sub-section (3) he shall, (a) where the order is to dissolve the Cooperative Society, issue a certificate of dissolution, or (b) where the order is to liquidate and dissolve the Cooperative Society under the supervision of the Registrar, publish a notice in a newspaper published or distributed in the district in which the registered office of the Cooperative Society is situated. 45. Appointmentof liquidator Where a Cooperative Society is to be liquidated and dissolved and no liquidator is appointed by the general body or the Tribunal, the Registrar may (a) appoint any person as a liquidator to wind up the affairs of the Cooperative Society, or (b) where he is satisfied that the Cooperative Society has no assets and liabilities, issue a certificate of dissolution. 46. Duties of liquidator On his appointment, a liquidator shall (a) immediately give notice of his appointment (i) in the case of a liquidator not appointed by the Registrar, to the Registrar, and (ii) to each claimant and creditor known to the liquidator; (b) immediately publish notice of his appointment once a week for two consecutive weeks in a newspaper published or distributed in the place where the Cooperative Society has its registered office and take reasonable steps to give notice of the liquidation in every jurisdiction where the Cooperative Society carries on business; 30/42 (c) place in the notice mentioned in clause (a) and (b) a provision requiring any person; (i) indebted to the Cooperative Society, to render an account and pay to the liquidator at the time and place specified any amount owing, (ii) possessing property of the Cooperative Society to deliver it to the liquidator at the time and place specified, and (iii) having a claim against the Cooperative 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 of the Cooperative Society; (e) open and maintain a trust account for the moneys of the Cooperative Society; (f) keep accounts of the moneys of the Cooperative Society received and paid out by him; (g) maintain a separate list of members, creditors and other persons having claims against the Cooperative Society; (h) where at any time he determines that the Cooperative Society is unable to pay or adequately provide for the discharge of its obligations apply to the Registrar for directions; and (i) deliver to the Registrar, periodically as the Registrar may require, financial statements of the Cooperative Society in any form that the liquidator considers proper or that the Registrar may require. 47. 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 proceeding in the name and on behalf of the Cooperative Society; (c) carry on the business of the Cooperative Society as required for an orderly liquidation; (d) sell by public auction any property of the Cooperative Society; (e) do all acts and execute any documents in the name and on behalf of the Cooperative Society; (f) borrow money on the security of the property of the Cooperative Society; (g) settle or compromise any claims by or against the Cooperative Society; and (h) take all other steps that he considers necessary for the liquidation of the Cooperative Society and distribution of its properties and funds. (2) Where a liquidator has reason to believe that any person has in his possession or under his control, has concealed, withheld or misappropriated any property of the Cooperative Society he may apply to the court for proceeding into the matter in accordance with law. (3) Where the proceeding under sub-section (2) discloses that a person has concealed, withheld or misappropriated property of the Cooperative Society, the Court may order that person to restore the property or pay compensation to the liquidator on behalf of the Cooperative Society. 31/42 (4) No liquidator or his relatives shall purchase, directly or indirectly any part of the stock-in-trade, debts or assets of the Cooperative Society. 48. Final Account (1) A liquidator shall pay the costs of liquidation out of the property of the Cooperative Society and shall pay or make adequate provision for all claims against the Cooperative Society. (2) After paying or making adequate provision for all claims against the Cooperative Society, the liquidator shall apply to the Registrar for approval of his final accounts and for permission to distribute in money or in kind the remaining property of the Cooperative Society in accordance with the bye-laws. (3) Where the Registrar approves the final accounts rendered by a liquidator in pursuance of sub-section (2), he shall (a) issue directions with respect to the custody or disposal of the documents and records of the Cooperative Society; and (b) discharge the liquidator, (4) Where the Registrar discharges a liquidator pursuant to sub-section (3), he shall issue a certificate of dissolution. (5) The Cooperative Society ceases to exist on the date shown in the certificate of dissolution, which shall not be later than twenty-four months after appointment of the liquidator. Chapter XI Miscellaneous 49. Fee for services The Registrar may charge a reasonable fee for any of the services provided by him or by an officer authorised by him under the provisions of this Act. 50. Bar of Jurisdictionof Court (1) Save as otherwise expressly provided in this Act, no Civil or Revenue Court shall have any jurisdiction in respect of any dispute required by section 40 to be referred to the Cooperative Tribunal, or recovery proceedings under section 41 or dissolution under sections 43 and 44. (2) While a Cooperative Society is in liquidation under section 45, no suit or other legal proceedings shall be proceeded with or instituted against the liquidator as much or against the Cooperative Society or any member thereof on any matter touching the affairs of the Cooperative Society, except by leave of the Registrar and subject to such terms as he may impose. 32/42 51. Rules (1) The State Government may by notification make rules, to carry out all or any of the provisions of this Act. (2) The power to make rule conferred by this section is subject to the condition to the rules being made after previous publication. (3) All rules made under this section shall be published in the Official Gazette and on such publication shall have effect as if enacted under this Act. 52. Removal of difficulty (1) if any practical difficulty arises in giving effect to the provisions of this Act, the State Government, as occasion may require, by notification published in the Official Gazette, do any thing not inconsistent with the provisions of this Act for purpose of removing the difficulty. (2) should any doubt arise as to the construction and interpretation of any provision of this Act, the same may be referred to the Registrar or the State Government for decision. 33/42 The Jharkhand Self Supporting Co-operative Societies (Amendment) Act, 2015 (Jharkhand Act 22, of 2015) An Act to amend the Jharkhand Self-Supporting Co-operative Societies Act, 1996 Preamble: Where as, voluntarily constituted Co-operative Societies can lead to the socio-economic betterment of their members as based on their economic participation, democratic control and autonomous functioning so as to act more meaningfully in the interests of their members; And where as it is an obligation of the State Government to promote voluntary formation, autonomous functioning, democratic control and professional management of the Co- operative Societies in the State and promote them and take such measures as are necessary for this purpose; And where as in pursuance of the 97th amendment Act of the constitution of India many amendments are imperative in the Jharkhand Self Supporting Co-operative Societies Act, 1996. Be it enacted by the Governor of Jharkhand in the 66th year of the Republic of India as follows: - 1. Short title, extent and commencement. – (1) This Act may be called the Jharkhand Self- Supporting Co-operative Societies (Amendment) Act, 2015. (2) It shall extend to the whole of the State of Jharkhand. (3) It shall come into force at once. 2. Amendment in subsection (b) of Section - 2 of the Act 2 of 1996 – Subsection (a) of Section 2 of the Jharkhand Self-Supporting Co-operative Societies Act, 1996 shall be substituted by the following, namely– (b) “Board” means Board of Directors or Governing Body or Managing Committee by whatever name it is called to which the direction and control of the management of the affairs of a Co- operative Society is entrusted to; 3. Insertion after sub-section (p) of section 2 of the Act 2 of 1996 – The following subsection (q) shall be added after the subsection (p) of section 2 of the Jharkhand Self- Supporting Co-operative Societies Act, 1996, namely “Apex Society” means a Co- operative Society whose area of operation covers whole of Jharkhand or any Co-operative 34/42 federation/union having in its area of operation whole of Jharkhand and which has been declared as Apex Society by the Registrar of Co-operative Societies; 4. Insertion after subsection (q) of section 2 of the Act 2 of 1996 – The following subsection (r) shall be added after the subsection (q) of subsection 2 of the Jharkhand Co-operative Act, 1996 namely “Functional Directors” means functional executive directors of the society specified as per rules or Bye-laws of that co-operative society; 5. Amendment in subsection (7) of section 23 shall be substituted by the following: “A person admitted as a member may exercise the rights of membership, including the right to vote only after ensuring minimum attendance, as required in the meetings convened for participation in the management of the society and availing of minimum requisite services of the society as may be prescribed in the bye-laws of the society; Provided that a person shall have been a member for at least one year before being eligible to exercise the right to vote; Provided further that the above provision shall not apply to the promoter members in the first year of registration of a Co-operative Society.” 6. After subsection (7) of section 23 the following sub-sections (8), (9) and (10) shall be inserted, namely: “(8) Every Co-operative Society shall provide access to every member to the books, information and accounts of the Co-operative Society kept in regular transaction of its business with such member. (9) Every member of a Co-operative Society shall have the right to get all information/ documents regarding books, information and accounts of the Co-operative Society kept in regular transaction of its business. The chief executive officer/manager of the Co-operative Society shall ensure access to every member to all required information/documents. (10) The members of any Co-operative Society shall have the right to get education and co- operative related training as per the rules or bye-laws made under any provisions of this Act.” 7. In the said Act section - 25 shall be amended as follows, namely – (a) Sub-section (1) shall be substituted by the following, namely - “(1) Subject to the provisions of this Act and the bye-laws the ultimate authority of a Co- operative Society shall vest in its general body. Board of every Co-operative Society shall 35/42 convene annual general meeting within six months from the closure of financial year, which shall deal with all or any matter dealt with subsection (3) except those in relation to the election of members and office- bearer of the Board.” (b) Sub section (3)(a) and (b) shall be deleted. 8. In the said Act sub-section 2 of section - 26 shall be amended as follows, namely – “(2) The Board shall consist of maximum twenty one members including office-bearers in accordance with the bye-laws. Chief Executive shall be an ex-officio member of the Board. The Board shall co-opt such persons having experience in the field of banking, management, finance or specialization in any other field relating to the object and the activities under taken by the Co- operative Societies, as members of the board; provided that the number of such co-opted members shall not exceed two and this shall be in addition to the total members of the board; Provided further that such co-opted members shall not have the right to vote in any election of the Co-operative Society in their capacity as such member or to be eligible to be elected as office bearers of the board; Provided further also that the functional directors of a Co-operative Society shall also be the members of the board and such members shall be excluded for the purpose of counting the total number of directors; Provided that at least 50 percent seats of managing board shall be reserved for the women members, out of which two seats shall be reserved for the scheduled castes or Scheduled Tribes women in the board of every Co-operative Society consisting of individuals as members and having members from such class or category of persons. The seats so reserved shall be filled up from amongst the members of scheduled castes or scheduled tribes women members either by election or/ and by co-option.” 9. In the said Act section - 28 shall be amended as follows, namely – The term of office of elected members of the board and its office bearers shall be five years from the date of election and the term of office bearers shall be co-terminus with the term of the board; 36/42 Provided 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 the board is less than half of its original term. Provided further that the term of the first board shall not exceed twelve months from the date of registration of the Co-operative Society.” 10. In the said Act sub-section (1), (2) & (3) of section - 29 shall be amended as follows, namely – “(1) The conduct of elections to the board of a Co-operative Society shall be the responsibility of the incumbent board. “(2) The election shall be conducted before the expiry of term of the outgoing director in the manner specified in the bye-laws and the provisions made there under and as per the provisions of the Jharkhand Self-Supporting Co-operative Societies Act, 1996 and rules made there under.” Subsection (3) shall be deleted. 11. (a) Subsection (1) shall be substituted by the following, namely - “(1) A Co-operative Society shall get its accounts audited by an auditor from a panel approved by Registrar, co-operative societies or by the authority authorized by him. at least once in every financial year. Such Auditor shall either be a Chartered Accountant within the meaning of the Chartered Accountants Act, 1949 or from the office of the Registrar. The minimum qualification and experience of auditors and Chartered Accountant firm in the panel approved by the Registrar, co-operative societies or authorized by him shall be determined from time to time. Only such Auditor or Chartered Accountant firm shall be eligible for the audit of the accounts of Co-operative Society.” (b) Subsection (4) shall be substituted by the following, namely - “(4) The audit of the accounts of every Co-operative Society shall be done by the auditor or Chartered Accountant firm, specified under sub-section (1), appointed by the General Body of Co- operative Society. The remuneration of the auditor shall be fixed by the General Body in terms with the audit fee fixed by the Registrar; (c) After subsection (10) following new subsection (11) shall be inserted as follows – 37/42 “(11) Apex Co-operative Society with the approval of general body shall compulsorily submit the audit report after the audit of the statement of accounts to the Registrar within thirty days so that the report may be placed in the Legislature through State Government in accordance with the procedure laid down by the State Government for this purpose.” 12. In the said Act Section - 35 shall be substituted by the following, namely – “35. Filing Annual statements of Accounts. - Every Co-operative Society shall file annual statement of accounts before the Registrar within six months of the end of financial year which shall include following subjects: (a) Annual report of the activities. (b) Audited statement of accounts. (c) Plan to deal with the surplus as approved by general body. (d) List of the amendments done, if any, in the bye-laws of the Co-operative Society. (e) Declaration regarding date for the conduct of election, if due, and date for the holding of its general body meeting. (f) Any other information, by the Registrar in pursuance of any of the provisions of the act. 13. Insertion of section - 41A after section - 41 of the Jharkhand Act 2 of 1997. – In the said Act after section - 41 the following new Section - 41A shall be inserted, namely - “41A. Supersession of the Board by the Tribunal. - (1) If upon the receipt of application from the member of a Co-operative Society, the tribunal is of the opinion that the Board of any Co- operative Society, where loan or financial aid has been provided by the State Government or loan has been provided on Government guarantee, is persistently making defaults or is negligent in the performance of the duties imposed on it by this Act, the Rules or the bye-laws, or conducting business against the interest of its members or there is stalemate in the formation or functioning of the Board, it may, after giving opportunity to the managing committee to state its objection, if any, by order with reasons in writing supersede the Board of the Co-operative Society for a period not exceeding six months. The members of the boards of societies so superseded shall not be eligible for reelection for five years from the date of supersession. 38/42 Registrar shall record every order passed under this section in writing and inform the concerned Co-operative Society through registered post; Provided that in case of Co-operative Society carrying on the business of banking, provisions of Banking Regulation Act, 1949 shall also apply; Provided also that in case of Co-operative Society carrying the business of banking the maximum period of dissolution shall be of one year; Provided that the dissolution of the Board of the Co-operative Society having banking operation shall be done in consultation with the Reserve Bank of India. (2) When any Co-operative Society is under supersession under sub-section (1), the Tribunal shall appoint an Administrator to conduct the affairs of the society. The Administrator appointed under this sub-section, shall take necessary action for the election of the Board of Co-operative Society within the specified period and shall hand over the management to elected Board. (3) The Administrator appointed under sub-section (2) shall get remuneration, as may be fixed by the Tribunal, as it deems fit to carry on the business of the Co-operative Society. The remuneration so fixed shall be payable from the accounts of Co-operative Society. (4) Administrator appointed under sub-section (2) shall work in accordance with the service conditions laid down by the Tribunal and shall perform all the duties and carry on responsibilities assigned to the Board under this Act, rules and the bye-laws; Provided that the Tribunal shall have the power to change the Administrator during the period of supersession.” 14. In the said Act subsection (1) of section - 42 shall be substituted by the following, namely:- “ (1) It shall be an offence under this Act if- (a) A Co-operative Society or an officer or member thereof wilfully furnishes a false return or false information, or does not furnish wilfully 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 or lawful written order issued under the provisions of this Act; 39/42 (c) any employer who, without sufficient cause, fails to pay to a Co-operative 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 wilfully fails to handover custody of books, accounts, documents, records, cash, security and other property belonging to a Co-operative Society of which he is an officer or custodian, to an authorized person; and, (e) any person indulges in corrupt practices before, during or after the election of the office bearer or member of the Board of the Co-operative Society.” 15. Insertion of new chapter-X- A after chapter- X comprising of section 48A to 48F of the Act 2 of 1997. – In the said Act, after chapter X the following new chapter-X- A shall be inserted, namely – CHAPTER- X- A 48A. Applicat io n o f t he Chapt er t o cooper at ive Bank. – (1) The provisions of this chapter shall apply to a Cooperative Bank as defined in the Deposit Insurance Corporation Act, 1961 (47 of 1961) in addition to the provisions contained in other parts of this Act, Where any question of apparent or implied inconsistency arises, the provisions of this Chapter shall prevail over the provisions of the other parts of this Act. (2) For the purposes of this chapter, “Deposit insurance corporation means the Deposit insurance corporation established under the Deposit Insurance Corporation Act, 1961) and “Reserve Bank’ means the Reserve Bank of India established under the Reserve Bank of India Act, 1934 (2 of 1934) 48B. D i v i s i o n , a m a l g a m a t i o n , c o m p r o m i s e , e t c . – (1) No order sanctioning a scheme of compromise or arrangement or of amalgamation or reconstruction or of division or transfer of assets and liabilities of a Cooperative Bank shall be made without the pervious sanction in writing of the Reserve Bank. (2) Where an order of moratorium has been made by the Central Government under sub-section (2) of section 45 of the Banking Regulation Act, 40/42 1949(10 of 1949) in respect of a Cooperative Bank, the Registrar, with the previous approval of the Reserve Bank in writing, may during the period of moratorium, prepare a scheme,- (i) for the re-construction of the Cooperative Bank; or (ii) for its amalgamation with any other Cooperative Bank (herein referred to as the transferee Bank). (3) Notwithstanding anything to the contrary contained in this Act where a Cooperative Bank being an insured bank within the meaning of the Deposit Insurance Corporation Act, 1961 (47 of 1961) is amalgamated or in respect of which a scheme of compromise or arrangement or of reconstruction has been sanctioned and the Deposit Insurance Corporation has become liable to pay to the depositors of the insured bank, under sub-section (2) of section 16 of the Act, the bank with which such insured bank is amalgamated or, the new Cooperative Bank formed after such amalgamation or, as the case may be, the insured bank or the transferee bank shall be under an obligation to repay the Deposit Insurance Corporation in the circumstances, to the extent and in the manner referred to in section 21 of that Act. 48C. Supersession of Managing Committee of Cooperative Bank. – Notwithstanding anything contrary contained in this Act, Registrar shall, if so required in writing by the Reserve Bank in public interest or for preventing the affairs of the Cooperative Bank being conducted in a manner detrimental to the interests of the depositors or for securing the proper management of the Cooperative Bank; pass an order for the supersession of the managing committee or other managing body (by whatever name called) of that Cooperative Bank, appoint an administrator, upon such terms and for such periods not exceeding five years in the aggregate, as may from time to time be specified by the Reserve Bank. 48D. Reserve Bank’s sanction or requisition for winding up order. – (1) Notwithstanding anything to the contrary contained in this Act, no Cooperative Bank shall be wound up except with the previous sanction in writing of the Reserve Bank. (2) Notwithstanding anything to the contrary contained in this Act, the Registrar shall make an order for the winding up of a Cooperative Bank if so required by the Reserve Bank in the circumstances mentioned in section 13 D of the Deposit insurance Corporation Act, 1961 (47 of 1961) 41/42 48E. Reimbursement to Deposit Insurance Corporation. – Where a Cooperative Bank, being an insured bank within the meaning of Deposit Insurance Corporation Act, 1961 (47 of 1961) is wound up or is taken into liquidation and the Deposit Insurance Corporation has become liable to pay to the depositors of the insured bank under sub-section (1) of section 16 of that Act, the Deposit Insurance Corporation shall be reimbursed in the circumstances to the extent and in the manner provided in section 21 of that Act. 48F. Finality of the Reserve Bank’s sanction or requisition. – Notwithstanding anything to the contrary contained in this Act where with the previous sanction in writing or on the requisition of the Reserve Bank- (i) an order for the winding up of the cooperative bank is made, or (ii) in respect of which a scheme of compromise or arrangement or of reconstruction or amalgamation is made, or (iii) in respect of which an order for the supersession of its managing committee or other managing body (by whatever name called) and the appointment of an administrator therefore has been made. no appeal or revision on review there against shall lie or be permissible and such sanction or requisition of the Reserve Bank shall not be liable to be called in question in any manner.] 42/42