Act No. 06 of 1932
05th July, 1932
An Act to consolidate and amend the law relating to co-operative societies in the Presidency of Madras. Where it is expedient further to facilitate the formation and working of co-operative societies for the promotion of thrift, self-help and mutual aid among agriculturists and other persons with common economic needs so as to bring about better living, better business and better methods of production and for that purpose to consolidate and amend the law relating to co-operative societies in the Presidency of Madras.
For Statement of Objects and Reasons, see Fort St. George Gazette, dated 17th March 1931, Pt. IV, pp. 71-72.
(1) This Act may be called the Madras Co-operative Societies Act, 1932.
(2) It extends to the whole of the [Presidency of Madras]1.
1. This includes the areas transferred to Orissa from the Presidency of Madras.
In this Act, unless there is anything repugnant in the subject or context,-
The [Provincial Government]1 may appoint2 a person to be Registrar of Co-operative Societies for the Presidency of Madras or any portion of it and may appoint persons to assist such Registrar, and may, by general or special order, confer on any such persons all or any of the powers of a Registrar under this Act.
1. Substituted by the A.O., for "L.G."
2. For appointment of Registrar, tea Orissa L.S.R. & O., Vol. I, Pt. VIII
Subject to the provisions of this Act a society which has as its object the promotion of the economic interests of its members in accordance with co-operative principles, or a society established with the object of facilitating the operations of such a society, may be registered under this Act with or without limited liability:
Provided that unless the [Provincial Government]1 by general or special order otherwise directs-
1. Substituted by the A.O., for "L.G."
(1) Subject to the proviso to section 4 and to any rules made in this behalf, a registered society may, with the previous sanction of the Registrar, change its liability from limited to unlimited or from unlimited to limited
Provided that-
(2) Notwithstanding anything contained in the proviso to sub-section (1) the change shall take effect at once if all the members and creditors assent thereto.
Where the liability of the members of a society is limited by shares, no member other than a registered society shall-
(1) No society, other than a (society of which a member is a registered society, shall be registered under this Act which does not consist of at least ten persons who have attained the age of majority and, where the object of the society is the creation of funds to be lent to its members, unless such persons-
(2) The word 'limited' shall be the last word in the name of every society with limited liability registered under this Act.
When any question arises whether for the purposes of this Act a person is an agriculturist or a [non-agriculturist, or whether any person is a resident in a town or village or group of villages, or whether 'two or more villages shall be considered to form a group, or whether any person belongs to any particular tribe, class, caste on occupation, the question shall be decided by the Registrar, whose decision shall be final
(1) For purposes of registration an application to register shall be made to the Registrar.
(2) The application shall be signed-
(3) The application shall be accompanied by a copy of the proposed by-laws of the society, and the whom or on whose behalf such application is made shall furnish such information in regard to the society as the Registrar may require.
If the Registrar is satisfied that a society has complied with the provisions of this Act and the rules and that its proposed by-laws are not contrary to this Act or to the rules, he may register the society and its by-laws. In case of refusal, an appeal shall lie to the [Provincial Government]1 within two months from the date of the issue of the order of refusal by registered post.
1. Substituted by the A.O. for "L.G."
A certificate of registration signed by the Registrar shall be conclusive evidence that the society therein mentioned is duly registered unless it is proved that the registration of the society has been cancelled.
(1) No amendment of the by-laws of a registered society shall be valid until the same has been registered under this Act, for which purpose a copy of the Amendment shall be forwarded to the Registrar.
(2) If the Registrar is satisfied that any amendment of the by-laws is not contrary to this Act or to the rules, he may register the amendment. In case of refusal, an appeal shall lie to the [Provincial Government]1 within two months from the date of the issue off the order of refusal by registered post.
(3) When the Registrar registers an amendment of the by-laws of a registered society, he shall issue to the society a copy of the amendment certified by him, which shall be conclusive evidence that the same is duly registered.
1. Substituted by the A.O. for "L.G."
(a) (1) Any registered society may, at a meeting of its general body specially called for the purpose of which at least seven clear days' notice shall be given to its members, resolve to divide itself into two or more societies. The resolution (hereinafter in this sub-section referred to as the preliminary resolution) shall contain proposals for the division of the assets and liabilities or the society among the new societies into which it is proposed to divide it and may prescribe the area of operations of, and specify the members who will constitute, each of the now societies.
(2) (i) A copy of the preliminary resolution shall be sent to all the members and creditors of the society.
(ii) Any member of the society may, notwithstanding any by-law to the contrary, by notice given to the society within a period of three months from his receipt of the preliminary resolution, intimate his intention not to become a member of any of the new societies.
(iii) Any creditor of the society may, notwithstanding any agreement to the contrary, by notice given to the society within the 'said period, intimate his intention to demand a return of the amount due to him.
(3) After the expiry of three months from the receipt of the preliminary resolution by all the members and creditors of the society, a meeting of the general body of the society, of which at least fifteen clear days' notice shall be given to its members, shall be convened for considering the preliminary resolution. If, at such meeting, the preliminary resolution is confirmed by a resolution passed by a majority of not less than two-thirds of the members present, either without changes or with such changes as, in the opinion of the Registrar, are not material, he may, subject to the provisions of clause (5) and section 10, register the new societies and the bylaws thereof. On such registration the registration of the old society shall be deemed to have been cancelled.
The opinion of the Registrar as to whether the changes made in the preliminary resolution fare or are not material shall be final and no appeal shall lie there from.
(4) At the meeting referred to in clause (3) provision shall be made by another resolution for-
Provided that no member or creditor shall be entitled to such repayment or satisfaction until the preliminary resolution is confirmed as provided in clause (3).
(5) If, within such time as the Registrar considers reasonable, the share capital of the members referred to in clause (4) is not repaid or the claims of the creditors referred to in that clause are not satisfied, the Registrar may refuse to register the new societies.
(6) The registration of the new societies shall be a sufficient conveyance to vest the assets and liabilities of the original society in the new societies in the manner specified in the preliminary resolution as confirmed under clause (3).
(b) (1) Two or more registered societies may, at meetings of their respective general bodies specially called for the purpose of which at least seven clear days' notice shall be given to their respective members, resolve to amalgamate into one society. This resolution is hereinafter in this sub-section referred to as the preliminary resolution.
(2) (i) A copy of the preliminary resolution of each society shall be sent to all the members' and creditors thereof.
(ii) Any member of arty such society may, notwithstanding any by-law to the contrary, by notice given to the society of which he is a member within a period of three months from his receipt of the preliminary resolution, intimate his intention not to become a member of the new society.
(iii) Any creditor of any such society may, notwithstanding any agreement to the contrary, by notice given to the society of which he is a creditor within the said period, intimate his intention to demand a return of the amount due to him.
(3) After the expiry of three months from the receipt of the preliminary resolution by all the members and creditors of all the societies, a joint meeting of the members of such societies of which at least fifteen clear days' notice shall be given to them, shall be convened for considering the preliminary resolution. If, at such meeting, the preliminary resolution is confirmed by a resolution passed by a majority of not less than two-thirds of the members present, either without changes or with such changes as, in the opinion of the Registrar, are not material, he may, subject to the provisions of clause (5) and section 10, register the new society and the by-laws thereof. On such registration, the registration of the old societies shall be deemed to have been cancelled.
The opinion of the Registrar as to whether the changes made in the preliminary resolution are or are not material shall be final and no appeal shall lie there from.
(4) At the joint meeting referred to in clause (3), provision shall be made by another resolution for-
Provided that no member or creditor shall be entitled to such repayment or satisfaction until the preliminary resolution is confirmed as provided in clause (3).
(5) If, within such time as the Registrar considers reasonable, the share capital of the members referred to in clause (4) is not repaid or the claims of the creditors referred to in that clause are not satisfied, the Registrar may refuse to register the new society.
(6) The registration of the new society shall be a sufficient conveyances to vest in it all the assets and liabilities of the original societies.
(1) No member of a registered society shall, save as otherwise provided in sub-section (2), exercise the rights of a member unless or until he has made such payment to the society in respect of membership or acquired such interest in the society as may be prescribed by the rules and by-laws
(2) In the case of a society registered after the commencement of this Act, the persons who have signed the application to "register the society may elect a committee to conduct the affairs of the society for a period of three months from the date of registration or for such further period as the Registrar may consider desirable:
Provided that the committee shall cease to function as soon as the members of the society have elected a committee in accordance with its by-laws.
(1) The committee may at any time call a general meeting of the society and shall call such a meeting within one month after receipt of a requisition in writing from the Registrar or from a financing bank to which the society is indebted or from such number of members or proportion of the total number of members as may be specified in the by-laws of the society
(2) If a general meeting is not called in accordance with such requisition, the Registrar shall have power to call a general meeting of the society himself.
(1) No member of any registered society shall have more than one vote in the affairs of the society provided that in the case of an equality of votes the Chairman shall have a casting vote
(2) A registered society which has invested any part of its funds in the shares of another registered society may appoint any of its members not disqualified for such appointment under any rules prescribed in that behalf to vote in the affairs of such other registered society.
(1) The transfer of the share or interest of a member in the capital of a registered society shall be subject to such conditions as to maximum holding as may be prescribed by this Act or by the rules
(2) In the case of a society registered with unlimited liability a member shall not transfer any 6th are held by him or his interest in the capital of the society or any part there of unless-
Every registered society shall have an address, registered, in accordance with the rules, to which all notices and communications may be sent, and shall send to the Registrar notice of every change thereof.
Every registered society shall keep a copy of this Act and of the rules governing such society and of its by-laws open to inspection free of charge at all reasonable times at the registered address of the society
The registration of a society shall render it a body corporate by the name under which it is registered, with perpetual succession and a common seal, and with power to hold property, to enter into contracts, to institute and defend suits and other legal proceedings and to do all things necessary for the purposes for which it was constituted
(1) Subject to the prior claim, if any, of [the Grown]1 in respect of land revenue or any money recoverable as land revenue or of a landlord in respect of rent or any money recoverable as rent, a registered society shall be entitled in priority to other creditors to enforce any outstanding demand due to the society from a member or past or deceased member-
(2) The priority created by sub-section (1) in favour of a registered society shall be available against any claim of [the Grown]1 arising from a loan granted under the Land Improvements Loans Act 1883 (XIX of 1883), after the grant of the loan by the society.
1. Substituted by the A.O., for "the Government".
A registered society shall have a charge upon the share or interest in the capital and on the deposits of a member or past or deceased member and upon any dividend, bonus or profits payable to a member or past member or the estate of a deceased member in respect of any debt due from such member or past member or the estate of such deceased member to the society, and may set off any sum credited or payable to a member or past or deceased member or the estate of a deceased member in or towards payment of any such debt
Subject to the provisions of' section 22, the share or interest of a member in the capital of a registered society shall not be liable to attachment or sale under any decree or order of a Court of Justice in respect of any debt or liability incurred by such member, and neither the Official Assignee under the Presidency Towns insolvency Act, 1909 (III of 1909), nor a Receiver under the Provincial Insolvency Act, 1920 ( V of 1920), shall be entitled to or have any claim' on such share or interest.
(1) Subject to the provisions of section 22, a registered society may on the death of a member transfer his share or interest in the capital to the person nominated in accordance with the rules made in this behalf, or, if there is no person so nominated, to such person as may appear to the committee to be the heir or legal representative of the deceased member, or pay to such' nominee heir or legal representative, as the case may be, a sum representing the value of such member's share or interest, as ascertained in accordance with the rules or by-laws:
Provided that-
(2) Subject as aforesaid, a registered society may pay all other moneys due to the deceased member from the society to such nominee, heir or legal representative, as the case may be.
(3) All transfers and payments made by a registered society in accordance with the provisions of this section shall be valid and effectual against any demand made upon the society by any other person.
The liability of a past member or of the estate of a deceased member for the debts of a registered society as they existed on the date of his ceasing to be a member or of his decease, as the case may be, shall continue for a period of two years from such date
Any register or list of members or shares kept by any registered society shall be prima facie evidence of any of the following particulars entered therein:-
(1) A copy of any entry in a book of a registered society regularly kept in the course of business shall, if certified in such manner as may be prescribed by the rules, be received in any suit or legal proceedings as prima facie evidence of the existence of such entry, and shall be admitted as evidence of the matters, transactions and accounts therein recorded in every case where, and to the same extent as, the original entry itself is admissible
(2) No officer or liquidator of a registered society and no officer in whose office the books of a registered society are deposited after liquidation shall, in any legal proceedings to which the society or the liquidator is not a party, be compelled to produce any of the societies books the contents of which can be proved under sub-section (1), or to appear as a witness to prove the matters, transactions and accounts therein recorded, unless by order of the court or the arbitrator made for special cause.
1[ Omitted]
1. Repealed by the Madras Co-operative Societies (Second Amendment) Act, 1934 (Mad. Act V of 1935), s. 2.
Nothing in clauses (6) and (c) of sub-section (1) of section 17 of the Indian Registration Act, 1908 (XVI of 1908), shall apply to-
1[Where, under this Act or any rule made there-under, any sum due to a registered society from any person is recoverable as an arrear of land revenue, and the immovable property of such person, is brought to sale under the provisions of the Madras Revenue Recovery Act, 1864 (Mad. Act II of 1864), and the society is the purchaser at such sale, the provisions of section 36 of the said Act shall apply thereto as if for the third and fourth clause thereof the following clauses were substituted, namely:-
"Third-The sum due to the purchaser shall be set oil, in whole or in part, against the purchase money and the remainder, if any, of the purchase money shall be paid to the Collector or other officer empowered by the Collector in that behalf within thirty days of the date of sale.
Fourth-Where the purchaser refuses or omits to complete the payment of the remainder, if any, of the purchase money, the property shall be resold at the expense and hazard of such purchaser and the amount of all loss or expense which may attend such refusal or omission shall be recoverable from such purchaser in the same manner as arrears of public revenue. Where the property, on the second sale, sells for a higher price than at the first sale, the difference or increase shall be the property of him on whose account the said first, sale was made."]
1. Inserted by the Madras Co-operative Societies (Amendment) Act, 1933 (Mad. Act VIII of 1933), s. 2.
(1) The [Central Government]1 by notification in the [official class of respect other account Gazette]2 may, in the case of any registered society or registered societies, remit the income-tax payable in of the profits' of the society, or of the dividends or payments received by the members of the society on of profits
(2) The [Government]3, by notification in the [official Gazette]4 may in the case of any registered society or class of registered societies remit-
5[In this sub-section 'Government', in relation to stamp duties, means the Government which is the collecting Government for the purchases of the Indian Stamp Act, 1899, and save as aforesaid, means the Provincial Government.]
1. Substituted by the A.O., for "G.G. in C."
2. Substituted by ibid, for "Gazette of India".
3. Substituted by ibid, for "L.G."
4. Substituted by ibid, for "Fort St. George Gazette".
5. Inserted by ibid.
Not with standing anything contained in any other enactment, the [Provincial Government]1 may, subject to rules as may be prescribed in this behalf, Grant loans to, shares in or give financial assistance in any other form to any registered society.
1. Substituted by ibid, for "L.G."
(1) A registered society shall not make a loan to any person other than a member:
Provided that, with the [general or special sanction of the Registrar, a registered society may make loans to another registered society.
(2) Save with the sanction of the Registrar, a registered society shall not lend money on the security of movable property other than agricultural produce.
(3) Notwithstanding anything contained in sub-sections (i) and (2), a registered society may make a loan to a depositor on the security of his deposit.
(4) The [Provincial Government]1 may, by general or special order, prohibit or restrict the lending of money on mortgage of immovable property by any registered society or class of registered societies.
1. Substituted by the A.O., for "L.G."
A registered society shall receive deposits and loans only to such extent and under such conditions as may be prescribed by the rules or the by-laws of the society
(1) Subject to the provisions of sub-section (4) of section 32, a registered society may invest or deposit its funds-
(a) in the Government Savings Bank, or
(b) in any of the securities specified in section 20 of the Indian Trusts Act, 1882 (II of 1882), or
(c) in the shares or securities of any other registered society provided that no such investment shall be made in the shares of any society with unlimited liability, or
(d) with any bank or person carrying on the business of banking, approved for this purpose by the Registrar, or
(e) in any other mode permitted by the rules.
(2) Any investments or deposits made before the commencement of this Act which would have been valid if this Act had been in force are hereby ratified and confirmed.
No part of the funds of a registered society shall be divided by way of bonus or dividend or otherwise among its members
Provided that payment may be made to a member for work done by him as Secretary or as clerk on such scale as may be prescribed by the by laws:
Provided also that after at least one-fourth of the net profits in any year have been carried to a reserve fund, payments from the remainder or such profits and from any profits of past years available for distribution may be made-
(i) as a bonus to a member for any specific service rendered, by him to the society including work done as Secretary or as clerk, and
(ii) among the members to such extent and under such conditions as may be prescribed by the rules or by-laws.
Any registered society may, after one-fourth of the net profits in any year has been carried to a reserve fund, contribute an amount not exceeding 10 per cent. of the remaining net profits to any charitable purpose as defined in section 2 of the Charitable Endowments Act, 1890 (VI of 1000)
(1) The Registrar shall audit or cause to be audited by some person authorized by him by general or special order in writing in this behalf the accounts of every registered society once at least in every year
(2) The audit under sub-section (1) shall include an examination of overdue debts, if any the verification of the cash balance and securities and a valuation of the assets and liabilities of the society.
(3) The Registrar or the person authorized by him under sub-section (1) shall, at all reasonable times, have free access to the books, accounts, documents, securities cash and other properties belonging to or in the custody of thy society and may summon any person in possession, or responsible for the custody of any such books accounts, documents, securities, cash or other properties to produce the same at any place at the headquarters of the society or any branch thereof.
(4) Every officer or member of the society shall furnish such information in regard to the transactions and working of the society as the Registrar or the person authorized by him under sub-section (1) may require.
(1) The Registrar may of his own motion, and shall on the request of the Collector, or in the application of a majority of the committee or of not less than one-third of the members, hold an inquiry, or direct some person authorized by him by order in writing in this behalf to hold' an inquiry into the constitution, working and financial condition of a registered society
(2) The Registrar or the person authorized by him under sub-section (1) shall have the following powers, namely:-
(a) He shall, at all reasonable times, have free access to the books, accounts, documents, securities, cash and other properties belonging to or in the custody of the society and may summon any person is possession or responsibly for the custody of any such books, accounts, documents, securities, cash or other properties to produce the same at any place at the headquarters of the society or any branch thereof.
(b) He may summon any person who he has reason to believe has knowledge of any of the affairs of the society to appear before him at any place at the headquarters of the society or any branch thereof and may examine such person on oath.
(c) (i) He may, notwithstanding any rule or by-law prescribing the period of notice for a general meeting of the society, require the officers of the society to call a general meeting at such time and place at the headquarters of the society or any branch thereof and to determine such matters as may be directed by him. If the officers of the society refuse or fail to call such a meeting, he shall have power to call it himself. (ii) Any meeting (called under clause (i) shall have all the powers of a! general meeting called under the by-laws of the society and its proceedings shall be regulated by such by-laws.
(3) When an inquiry is made under this section, the Registrar shall communicate the result of the inquiry to the financing bank, if any, to which the society is indebted.
(1) The Registrar may, on the application of a creditor of a registered society, inspect or direct some person authorized by him in this behalf by a general or special order in writing to inspect the books of the society and the Registrar or the person so authorized shall have all the powers of the Registrar when holding an inquiry under section 38.
(2) No inspection shall be made or directed under sub-section (1) unless the creditor-
(a) satisfies the Registrar that the debt is a sum then due, and that the has demanded payment thereof and has not received satisfaction within a reasonable time; and
(b) deposits with the Registrar such sum as security for the costs of the proposed inspection as the Registrar may require.
(3) Where an inspection is made under sub-section (1), the Registrar shall communicate the results of such inspection to the creditor and to the financing bank, if any, to which the society is indebted.
A financing bank shall have the right to inspect the books of any registered society which is indebted to it
The inspection may be made either by an officer of the financing bank or by a member of its paid staff certified by the Registrar as competent to undertake such inspection
The officer or member so inspecting shall at all reasonable times have free access to the books, accounts, documents, securities, cash and other properties belonging to or in the custody of the society and may also call for such information, statements and returns as may be necessary to ascertain the financial condition of the society and the safety of the sums lent to it, by the financing bank
Where an inquiry is held! under section 38 or an inspection is made under section 39, the Registrar may after giving the parties an opportunity to be heard, apportion the costs, or such part of the costs as he may think right, between the society, the members or creditor demanding an inquiry or inspection, the officers or former officers of the society. Costs may also be awarded by the Registrar to the financing bank in the case of inspection under section 40, by the financing bank
Any sum awarded by way of costs under section 41 may be recovered as if it were an arrear of land revenue.