The Andhra Pradesh Mutually Aided Co-operative Societies Act, 1995.
**THE ANDHRA PRADESH MUTUALLY AIDED CO-OPERATIVE SOCIETIES**
**ACT, 1995**

**(ACT NO. 30 OF 1995)**

**ARRANGEMENT OF SECTIONS**

**Sections**

**1.** Short title, extent and commencement

**2.** Definitions

**3.** Co-operative Principles and bye-laws

**4.** Registration

**5.** Registration Certificate

**6.** Society to be a body corporate

**7.** Registration with limited or unlimited liability

**8.** Display of name

**9.** Bye-laws

**10.** Amendment of Bye-Laws

**11.** Change of liability, transfer of assets and liabilities, division,
amalgamation

**12.** Promotion of subsidiary organisation

**13.** Creation of new organisation with others

**14.** Mobilisation of funds

**15.** Investment of fund outside the business

**16.** Disposal of surplus

**17.** Management of deficit

**18.** Reserve Fund

**19.** Eligibility for membership

**20.** General Body

**21.** Board of Directors

**22.** Powers and functions of the Board of Directors

**23.** Elections

**24.** Meetings

**25.** Staff

**26.** Accounts and Records

**27.** Audit

**28.** Special Audit

**29.** Inquiry

**30.** Power to summon and examine persons and documents

**31.** Action on Special Audit or Inquiry Report

**32.** Constitution of Tribunals

**33.** Power of the Tribunal to order recovery

**34.** Filing of returns

**35.** Rights and privileges

**36.** Execution of decisions, decrees and orders

**37.** Settlement of disputes


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**38.** Offence and penalities

**39.** Dissolution by members

**40.** Dissolution by Tribunal

**41.** Appointment of Liquidator

**42.** Duties of Liquidator

**43.** Powers of Liquidators

**44.** Final accounts

**45.** Fee for services


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**THE ANDHRA PRADESH MUTUALLY AIDED CO-OPERATIVE**
**SOCIETIES ACT, 1995**

**ACT No.30 OF 1995**

(18[th] May, 1995)

**AN** **ACT** **TO** **PROVIDE** **FOR** **THE** **VALUNTARY** **FORMATION** **OF**

**CO-OPERATIVE SOCIETIES AS ACCOUNTABLE, COMPETITIVE SELF**
**RELIANT BUSINESS ENTERPRISES, BASED ON THRIFT SELF HELP AND**
**MUTUAL AID 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 Legislative Assembly of the State of Andhra Pradesh
in the Forty-sixth Year of the Republic of India, as follows:
**1. Short title, extent and commencement – (1) This Act may be called the**
Andhra Pradesh Mutually Aided Co-operative Societies Act, 1995.

(2) It extends to the whole of the State of Andhra Pradesh.

(3) It shall come into force on such date as the Government may by
notification in the Andhra Pradesh Gazette, appoint.

**2. Definitions - In this Act unless the context otherwise requires:—**

(a) **“Board” means the Board of Directors of a Co-operative Society;**

(b) **“bye-laws” means the bye-laws of a Co-operative Society as**
originally framed or as altered from time to time in pursuance of this
Act;

(c) “Co-operative principles” means the Co-operative principles
specified in section 3;

(d) “Co-operative Society” means a Mutually Aided Co-operative
Society registered under section 4 whose bye-laws prohibit it from
raising share capital from the Government a operative Society
registered [1][under the provisions] of the Andhra Pradesh Co-operative
Societies Act, 1964 if it amends its bye-laws where necessary to
reconstitute its capital base and in respect of other relevant aspects
to be in accordance with this Act and returns to the Government its
share capital if any, and either enters into a Memorandum of
Understanding with the Government for any outstanding loans due
to, or guarantees given by the Government or returns to the
Government of such assistance and further gets itself registered
under section 4 as a Co-operative Society under this Act, [2][but does
not include the Milk/Dairy Co-operative Societies.]

(e) “Co-operative Society with limited liability” means a Cooperative Society in which the liability of its members for the debts of
the Co-operative Society in the event of its being wound up, is limited
by its bye-laws to such amount as they may undertake to contribute
to the assets of the co-operative;

(f) “Co-operative Society with unlimited liability” means a Cooperative Society the members of which are, in the event of its being
wound up, jointly and severally liable for and in respect of all its
obligations and to contribute to any deficit, in the assets of the Cooperative Society;

(g) **“Co-operative Tribunal”** means the Tribunal or Tribunals
constituted under section 32;

1. Substituted by Act No.20 of 2006, s.2, for the words “under section 7”.

2 . The words added by Act No.20 of 2006, s.2,


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(h) “deficit” means the net excess of expenditure over income;

(i) “delegate” means a member nominated by a Co-operative Society
to represent its interests in a federation;

(j) “director” means a director of the Board of directors;

(k) **“federation”** means a Mutually Aided Co-operative Society
registered under section 4 whose members are Mutually Aided Cooperative Societies;

(l) “Financial Year” in relation to a Co-operative Society means the
twelve month accounting period as provided for in the bye-laws;

(m) “general body” in relation to a Co-operative Society means all the
members of the Co-operative Society and includes a representative
general body of the Co-operative Society referred to in section 20;

(n) “general meeting” means a meeting of the general body of a Cooperative Society;

(o) “Government” means the State Government of Andhra Pradesh;

(p) “member” means a member of a Co-operative Society.

(q) “office-bearer” means an individual elected by the general body
or the board of the Co-operative Society to any office of such Cooperative Society in accordance with its bye-laws;

(r) “Registrar” means the Registrar of Mutually Aided Co-operative
Societies appointed under section 4 of this Act, and includes any
other person on whom all or any of the powers of the Registrar under
this Act are conferred;

(s) “surplus” means the net excess of income over the expenditure.

**3. Co-operative Principles and bye-laws -** Individuals or Co-operatives
intending to form into a Co-operative Society under this Act shall frame byelaws conforming to the following principles of co-operation, namely,
(a) membership of a Co-operative Society shall be voluntary and
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) Co-operative Societies are democratic organisations; their affairs
shall be administrated by persons elected or appointed in a manner
agreed by the members and accountable to them. Members of
primary Co-operative Societies shall enjoy equal rights of voting (one
member one vote) and participation in decisions affecting their Cooperative Societies. In other than primary Co-operative Societies, the
administration shall be conducted on a democratic basis in a suitable
form;

(c)  share capital shall only receive a strictly limited rate of interest, if
any;

(d) the economic results, arising out of the operations of a

Co-operative Societies belong to the members of that Co-operative
Societies and shall be distributed in such a manners 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 Co-operative Society;


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(e)  all Co-operative Societies shall make provision for education of
their members, office-bearers and employees and the general public,
in the principles and techniques of co-operation, both economic and
democratic;

(f)  all Co-operative Societies, in order to best serve to interest of their
members and their communities, shall members activity co-operate
in every practical way with other co-operatives at local, national and
international levels having as their aim the achievement of unity of
action by co-operatives on throughout the world.

**4. Registration - (1) Where not less than ten individuals of each being**
member of a different family intend to form a Co-operative Society, or two or
more Co-operative Societies registered under this section wish to form into a
federation, or a society registered [1][under the provisions] of the Andhra Pradesh
Co-operative Societies Act, 1964 intends to convert itself into a Co-operative
society under this Act, they shall frame bye-laws for this purpose in accordance
with section 3 in the first instance.

2[Provided that no Co-operative Society shall be registered as a Dairy or
milk Co-operative Society and no Dairy or milk Co-operative Society registered
under any other law shall be converted into a dairy or milk Cooperative Society
under this Act.]

3[(1A) Notwithstanding anything contained under this Act or under the
provisions of the Andhra Pradesh Co-operative Societies Act, 1964, (Act 7 of
1964), all the Dairy/Milk Co-operative Societies registered or deemed to have
been registered or converted under the provisions of this Act, shall be deemed
to have been excluded from the provisions of this Act and deemed to have been
registered and continued under the provisions of the Andhra Pradesh Cooperative Societies Act, 1964 (Act 7 of 1964).]

(2) Thereafter an application for registration shall be submitted to the
Registrar by hand or by registered post.

(3) Every such application shall be accompanied by,
(a) the original and one copy of the bye-laws of the proposed Cooperative Society as adopted by the individuals or delegates of Cooperative Societies who wish to form into a co-operative society under
this Act or by the general body of a Society registered under the
Andhra Pradesh Co-operative Societies Act, 1964 which wishes to
convert itself into a Co-operative Society under this Act;

(b) a list of names of individuals or Co-operatives who wish to form
into a Co-operative Society under this Act or of the members of the
Committee of the society registered under the Andhra Pradesh Cooperative Societies Act, 1964 which intends to convert itself into a Cooperative Society under this Act with their addresses, occupations
and their financial commitments to the proposed Co-operative
Society;

(c) a true copy of the minutes of the meeting at which the bye-laws
were adopted, duly signed by atleast a majority of individuals or
delegates present at the meeting where the bye-laws were adopted, or
by a majority of the members of the Committee of the Co-operatives
concerned where a Society registered under the Andhra Pradesh Cooperative Societies Act, 1964 intends to convert itself into a Cooperative Society under this Act;

1 . Substituted by Act No.20 of 2006, s.3, for the words “under section 7”.

2. Proviso added by Act No.20 of 2006, s.3.

3 . Inserted by Act No.20 of 2006, s.3.


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(d) registration fee amounting to one percent 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; and

(e) In the case of a Society registered under section 7 of the Andhra
Pradesh Co-operative Societies Act, 1964 and wishing to convert itself
into a Co-operative 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 Co-operative Society under this Act, or that it has
entered into a memorandum of understanding with the Government
for any such outstanding loans or guarantees.

(4) The Registrar shall if he is satisfied that,
(a) the application is in conformity with the requirements of this Act;

(b) the proposed bye-laws are not contrary to the provisions of this
Act; and

(c)  the name of the proposed Co-operative Society is not the same as
that of a Co-operative Society already registered under this section, or
the same as that used by a class of Societies already registered under
section 7 of the Andhra Pradesh Co-operative Societies Act, 1964,
Register the Co-operative Society and also its bye-laws and
communicate by registered post a certificate of registration and the
original of the registered bye-laws signed and sealed by him, within
period of sixty 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 by registered post the order of refusal together
with the reasons therefor, within sixty days from the date of submission of
application, to the Chief Promoter.

(6) There shall be appointed a Registrar of Mutually Aided Co-operative
Societies for the State and as many other Officers as the Government may
think fit for the purposes of this Act.

**5. Registration Certificate - Where a Co-operative Society registered, the**
certificate of registration signed and sealed by the Registrar shall be conclusive
evidence that the Co-operative Society mentioned therein, is a Mutually Aided
Co-operative Society duly registered under this Act:

Provided that where a Society was earlier registered under the Andhra
Pradesh Co-operative Societies Act, 1964, such registration shall stand
cancelled once a certificate of registration under this section is issued.

**6. Society to be a body corporate - (1) A Co-operative Society registered**
under this Act shall be a body corporate by the name under which it is
registered having perpetual succession and a common seal. The Co-operative
Society shall be entitled to acquire, hold and dispose of property, to enter into
contracts, to sue and be sued and to do all other things necessary to achieve
its objectives.

(2) All transactions entered into in good faith prior to registration, in
furtherance of the objectives of the Cooperative Society, shall be deemed to be
transactions of the Co-operative Society after its registration.

**7. Registration with limited or unlimited liability - A Co-operative Society**
may be registered with limited or unlimited liability. Where the liability is
limited, it shall have as a suffix to its name the expression “limited” or its
equivalent in any Indian language.

**8. Display of name - (1) Every Co-operative Society shall display its full name**


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registration number and the address of its registered office in legible characters
in a conspicuous position,

(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 account, receipts and letters of credit; and

(d) on all bills of exchange, promisory notes, endorsements, cheques
and orders for money it signs or that are signed on its behalf.

(2) Where a Co-operative Society has a corporate seal, it shall display its
full name in legible characters on its corporate seal.

**9. Bye-laws - (1) Except on such specific matters for which this Act has**
provided, the functioning of every Co-operative Society shall be regulated by its
bye-laws. Subject to the provisions of this Act and the bye-laws every Cooperative Society shall have regard to the Co-operative principles in its
functioning.

(2) Subject to section 3, the bye-laws of a Co-operative Society shall be
specific on the following matters, namely:
(i) the name and address of the Co-operative Society;

(ii) the object of the Co-operative Society explicitly stated as a
common central need of the members which the Cooperative Society aims at fulfilling;

(iii) eligibility, ineligibility and procedure for obtaining and
retaining membership;

(iv) procedure for withdrawal, cessation and termination of
membership;

(v) the services that it intends to give its members;

(vi) fixation of minimum performance expected annually of each
member vis-a-vis use of service financial commitment and
participation in meetings, in order to be eligible to exercise
the right of membership including the right to vote;

(vii) the consequences of performing below the minimum level
fixed;

(viii)    the consequences of default in payment of any sum due by a
member;

(ix) rights of members;

(x) the nature and extent of the liability of the member or the
debts contracted by the Co-operative Society;

(xi) the manner of making or amending bye-laws;

(xii) the powers and functions of the general body and the
powers and functions an the manner of constitution of
representative general body, if any, and subjects which
must be defelt with by the general body, and by the
representative general body, if any;

(xiii)   the manner and frequency of convening general meetings and
quorum required;

(xiv) the manner of conducting elections and of filling casual
vacancies;

(xv) the size and composition of the Board of Directors;

(xvi) the term of office of the Directors;

(xvii) the manner of removal of Directors;


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(xviii) the manner and frequency of convening board meeting and
quorum;

(xix) the powers and duties of the Board;

(xx) the powers and duties of the Chairperson;

(xxi) the term of on which the Co-operative Society may deal with
non-members;

(xxii) eligibility, ineligibility for becoming and continuing as
Director;

(xxiii) penalties for acting against the interests of the Co-operative
Society and for non-fulfilment of duties by members, officebearers, Directors or staff;

(xxiv) the nature and extent of the liability of office-bearers, Directors
for debts contracted by the Co-operative Society;

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

(xxvi) the manner of choosing delegates to higher tier co-operative and
federations;

(xxvii)   the rights, if any, which the Co-operative Society intends to
confer on any co-operative society or other federation and
the circumstance under which these rights may be
exercised by the society or federation;

(xxviii)   the nature and amount of capital, if any, of the Co-operative
Society;

(xxix)    the maximum capital which a single member can hold;

(xxx)   the maximum interest payable to members on paid up share
capital;

(xxxi)   the sources, types and extent of funds to be raised by the Cooperative Society;

(xxxii)   the purposes for which the funds may be applied;

(xxxiii)   the constitution of various funds and their purposes;

(xxxiv)   the manner of appointment of auditors and their powers and
functions;

(xxxv)  the manner of appointment of internal auditors and their
powers and functions;

(xxxvi)  the manner of disposal of funds when the Co-operative
Society is under liquidation; and

(xxxvii) the manner of dissolution of the Co-operative Society.

**10. Amendment of Bye-Laws - (1) Amendment of bye-laws:- A Co-operative**
Society may amend any of the provisions of its bye-laws by a resolution of its
general body, or by the representative general body, where this exists:

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 or representative
general body, as the case may be, and such notice and proposed amendment is
also displayed on the notice board of the Co-operative Society for a period of
twenty days immediately preceding the date of the meeting:

Provided further that the representative general body shall not alter any
provision in the bye-laws relating to its own constitution and powers.


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(2) in the case of amendment of its bye-laws with regards to matters
relating to items (i), (ii), (ix), (x), (xi), (xii), (xiii), (xiv), (xv), (xvi), (xvii), (xix), (xxiv),
(xxix), (xxxvi) and /(xxxvii) of sub-section (2) of section 9, an application for the
registration of the amendment shall be forwarded by the Cooperative Society by
registered post to the Registrar within a period of thirty days from the date of
the resolution.

(3) Every application forwarded to the Registrar shall be signed by the
Chairperson and shall be accompanied by a copy of the resolution adopting the
amendment and the following particulars, namely:
(a) the date of the meeting at which the amendment was
approved;

(b) the total number of members on the rolls of the cooperative society who were eligible to vote on the date of such
meeting, the number present at the meeting and the number of
eligible members who voted for the resolution.

(4) If the proposed amendment is in consonance with the provisions of
this Act, the Registrar shall register the proposed amendment within a period
of sixty days from the date of receipt of the application.

(5) The Registrar shall forward by registered post to the Co-operative
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 evidence that the amendment has been
duly registered.

(6) If the proposed amendment is not in consonance with the provisions
of this Act, the Registrar shall refuse, within a period of sixty days from the
date of receipt of the application, to register the proposed amendment:

Provided that no order refusing to register the amendment shall be passed
except after giving the Co-operative Society an opportunity of making its
representation.

(7) The Registrar shall forward by registered post to the Co-operative
Society, within a period of fifteen days after refusal, the order of refusal
together with the reasons therefor.

(8) Where no order of refusal is received by the Co-operative Society
under sub-section (7) within a period of seventy five days from the date of
submission of application, it shall be deemed that the Registrar has registered
the amendment on the last date of the period specified in that sub-section.

(9) In the case of all amendments to the bye-laws other than those
specified in sub-section (2), information about the amendment shall be
forwarded by the Co-operative Society by registered post, with the enclosures
and particulars specified in sub-section (3), to the Registrar within a period of
thirty days from the date of the general meeting at which the resolution was
passed, and the Registrar shall immediately take on file such amendment:

Provided that such action shall not in any way preclude the Registrar
from proceeding against the Co-operative Society or its management, where
such amendment is found to be contrary to the provisions of this Act.

(10) An amendment to the bye-laws under sub-section (9) shall come into
effect only after registration or on the thirtieth day from the date of the
amendment has been sent to the Registrar for taking on record, as the case
may be.

**11. Change** **of liability, transfer of assets and liabilities, division**
**amalgamation -**

(1) A Co-operative Society may, by a resolution of its general body,
(a) decide to amend its bye-laws to change the form or the extent of
its liability;


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(b) decide to transfer its assets and liabilities, in whole or in part, to
any other Co-operative Society which agrees to such transfer by a
resolution of its general body;

(c) divide itself into two or more Co-operative Societies.

(2) Any two or more Co-operative Societies may, by a resolution of their
respective general bodies, decide to amalgamate themselves and form a new
Co-operative Society.

(3) Every resolution of a Co-operative Society under this section shall be
passed at its general meeting by a majority of total members with right of/vote
or two-thirds of members present and voting whichever is less and such
resolution shall contain all particulars of the liability, transfer, division,
amalgamation as the case maybe.

(4) Before passing a resolution under this section, the Co-operative
society shall give notice thereof together with a copy of the resolution to all its
members, and federations to which it affiliated, and creditors who may give
their consent. Notwithstanding any bye-law or contract to the contrary, any
member federation, or creditor not consenting to the resolution 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.

(5) Any member, federation, or creditor who or which does not exercise
within the specified period the right under sub-section (4) shall be deemed to
have consented to the resolution.

(6) A resolution passed by a Co-operative Society under this section shall
not take effect until,
(a) (i) the members, federations, and creditors have consented or are
deemed to have consented to the resolution under sub-section (4) or,
as the case may be, sub-section (5); or

(ii) all claims of the members, federations and creditors who
have exercised the option referred to under sub-section (5)
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 Co-operative Society concerned is registered or is deemed to have
been registered; or

(ii) in the case of division or amalgamation, certificate of
registration of the Co-operative Society or Societies is issued.

(7) When a resolution passed by a Co-operative Society under subsection (2) takes effect the resolution shall be a sufficient conveyance to vest
the assets and liabilities in the transferee without any further assurance.

(8) The registration of a Co-operative Society shall stand cancelled and
the Co-operative Society shall be deemed to have been dissolved and shall
cease to exist as a Corporate body,
(a) when the whole of the assets and liabilities of such Co-operative
Society are transferred to another Co-operative Society; or

(b) when such Co-operative Society divides itself into two or more Cooperative Societies.

(9) Where two or more Co-operative Societies are amalgamated to form a
new Co-operative Society, the registration of the Co-operative 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 of subsidiary organisation - (1) Any Co-operative Society may,**
by a resolution passed at general meeting by a majority of members present
and voting, promote one or more subsidiary organisations for the furtherance
of its stated objectives, and such organisations may be registered under any


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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 the general meeting of the promoting Co-operative
Society every year.

(3) Any subsidiary organisation created under sub-section (1) shall exist
for only as long as the general body of the Co-operative Society deems its
existence necessary.

**13. Creation of new organisation with others - Where the collaboration**
between a Co-operative 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 fulfilment of
the objective with which it was created, and such collaboration shall be
reviewed every year by the general body of the Co-operative Society.

**14. Mobilisation of funds - (1) A Co-operative Society may mobilise funds in**
the shape or 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 Co-operative Society:

Provided that, at the time of dis-solution of a Co-operative Society the
amounts due to the members shall be settled only after the settlement of dues
to others.

1[ Provided further that in the case of a co-operative society, other than a
co-operative bank, deposits shall be mobilized only from those members who
have voting rights in that co-operative society.]

2[(1-A) Notwithstanding anything contained in the sub-section (1), a cooperative bank may mobilize funds in the shape of deposits, debentures, loans
and other contributions from any person other than its member, to such extent
and under such conditions as may be permissible under the bye-laws, subject
to provisions of the Banking Regulation Act, 1949 (Central Act 10 of 1949).]

(2) A Co-operative Society may also mobilise funds in the shape of [3][****],
debentures, loans and other contributions from other individuals and
institutions, to such extent and under such conditions as may be permissible
under the bye-laws;

Provided that a Co-operative Society shall not accept share capital from
the Government but may accept other funds or guarantee from the
Government on such terms and conditions as are mutually agreed upon
through a memorandum of understanding.

**_4[Explanation: For the purpose of this section a "co-operative bank"_**
means a society registered under this Act, which is doing the business of
banking as defined in clause (b) of sub-section (1) of Section 5 of the Banking
Regulation Act, 1949.]

**15. Investment of fund outside the business - A Co-operative Society may**
invest or deposit its funds in any non-speculative manner outside its business.

**16. Disposal of surplus – (1) In any year a Co-operative Society shall allocate**
towards a deficit cover fund, reserve funds, deferred payment to members as
patronage rebate in proportion to their use of the Co-operative Societies

1. Proviso inserted by Act No.20 of 2018, s.2

2 . Inserted by Act No.20 of 2018, s.2.

3 . The word “deposits” omitted by Act No.20 of 2018, s.2.

4 Added by Act No.20 of 2018, s.2.


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services and payment on share capital of interest not exceeding the rate of
interest paid by scheduled banks such percentage of the surplus arising from
its business transactions in the previous year, as may be approved by the
general body.

(2) Reserves created under sub-section (1) shall be costed by crediting on
annual interest equal to the rate paid by scheduled banks on fixed deposits.

**17. Management of deficit - (1) Where a Co-operative Society is left with a**
deficit in any given year, the board of directors shall place before the general
body in the first following annual a 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 Co-operative 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 accounts of the members in
proportion to the services they had availed or were expected to avail of the Cooperative Society during the year.

**18. Reserve Fund - A Co-operative Society may create a Reserve for such**
purpose as may be specified in the bye-law.

**19. Eligibility for member ship - (1) Subject to the bye-laws, any person who**
is desirous of utilising the services of the Co-operative Society may express his
willingness to accept the responsibilities of membership and fulfil such other
conditions as may be specified in the bye-laws of the Co-operative Society and
there upon he may be admitted as a member, subject however to the condition
at the Co-operative Society is in a position to extend its services applicant and
that the Applicant is not already a member of a Co-operative Society registered
under this Act, or the Andhra Pradesh Co-operative Societies Act, 1964,
providing the same or similar services.

(2) 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.

(3) 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 last one year
before being eligible to exercise the right of vote.

Provided further that the other above proviso shall not apply to the
promoter, member in the first year of registration of a Co-operative Society.

**20. General Body - (1) Subject to the provisions of this Act and the bye-laws,**
the ultimate authority of a Co-operative Society shall vest on its general body:

Provided that where, because of spread of number of members, a Cooperative Society feels the need for constituting a Representative General body
for more effective decision making, it may constitute a Representative General
body in such manner and with such functions as may be specified in the byelaws.

(2) The following matters, among others specified in the bye-laws shall be
dealt with by the general body of a Co-operative Society, namely:
(a) amendments to bye-laws;

(b) election and removal of Directors;

(c) consideration of,
(1) the long term perspective plan and budget;

(2) the normal operational plan and budget;

(3) the annual report of activities for being filed with the
Registrar;


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(4) the auditor's report and the annual audited statement of
accounts for being filed with the Registrar;

(5) special audit report or inquiry report, if any;

(6) compliance report relating to audit, special audit and/or
inquiry, if any;

(d) approval of appointment and removal of auditors;

(e) disposal of surplus;

(f) management of deficit;

(g) creation of specific reserves and other funds;

(h) review of actual utilisation of reserves and other funds;

(i) review of the Chief executive’s report of the attendance at
meeting by Directors and review of the business done with
the Co-operative Society by the Directors;

(j) appointment, reconstitution and disbanding on the
Representative General body;

(k) remuneration payable to any Director or internal auditor in
connection with his duties in that capacity or his
attendance at related meetings;

(l)  membership of the Co-operative Society in federation;

(m) collaboration with other organisation and its review;

(n)  promotion of subsidiary organisations and review;

(o)  dissolution of the Co-operative Society; and

(p) all other functions expected of the general body under the
other provisions of this Act.

**21. Board of Directors - (1) There shall be a Board of Directors for every Co-**
operative Society constituted and entrusted with the direction of the affairs of
the Co-operative Society in accordance with the provisions of the Act and the
bye-laws.

(2) This size of Board shall be a multiple of the term of office of its
Directors.

(3) The Directors of the Board shall have staggered terms such that at
any point of time the vacancies arising as a result of the terms of Directors
coming to an end, are less than one half of the total strength of the Board;

Provided that the term of a Director shall not exceed five years:

Provided further that at the first election all the Directors shall be elected
at once, and their terms staggered by drawal of lots specifying different terms.

(4) 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 such person,
(a) has at any time lost the right to vote as a member or to continue
as one as specified in the bye-law;

(b) incurs any other disqualification specified in the bye-laws.

(5) 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 (4) or,
(a) absent himself from three consecutive Board meetings to leave or
absence;

(b) absents himself from General Body Meetings out of three


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consecutive Board meetings without leave or absence;

(c)  is penalised under this Act.

(6) 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
Co-operative Society, if during their term as Directors of a Co-operative
society,
(a) they did not conduct elections within the time specified in the
bye-laws and before the expiry of the terms;

(b) They did not conduct their annual general body meeting within
six months of closure of the Co-operative accounting year, or a
requisitioned meeting of the general body within the specified time;

(c) They did not place the audited accounts for the preceding
financial year along with the reports of the auditors before the general
body at its annual general meeting.

(7) In order to be eligible for being chosen as director of the Board of a
Co-operative Society which has been in existence for more than two years a
member,
(a) shall have been a voting member of the Co-operative Society for at
least two years immediately preceding the year of election;

(d) shall have attended the two general body meetings of the Cooperative Society held immediately preceding the elections.

(8) Every Director and employee of a Co-operative Society while
exercising his powers and discharging his duties shall,
(a) act honestly and in good faith and in the best interests of the Cooperative Society; and

(b) exercise such due care, diligence and skill as reasonably prudent
person would exercise in similar circumstances.

(9) A Director or employee who is guilty of misappropriation, breach of
trust or any other omission or commission resulting in loss to the Co-operative
Society as a result thereof, shall be personally liable to make good that loss,
without prejudice to such criminal action to which he is liable under the law.

**22. Powers and functions of the Board of Directors - (1) The Board shall, in**
accordance with the bye-laws be the authority to,
(a) admit and terminate membership;

(b) elect the chairperson and other office bearers;

(c) remove from office the chairperson 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) recruitment, and conditions of service of the staff at the Cooperative Society;

(iii) mode of custody and investment of funds;

(iv) manner of keeping accounts;

(v) mobilisation, utilisation and investment of various funds;

(vi) monitoring and management information systems including
statutory returns to be filed;

(vii) such other subjects and matters necessary for the effective


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performance of the Co-operative 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 Co-operatives;

(j) undertake such other functions as may be delegated by the
general body;

(2) The Chairperson 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;

(b) have only a casting vote in the event of equality of votes on any
matters being decided upon by the Board;

(c) exercise such other powers as may be delegated by the board
and specified in the policies framed or resolutions adopted by
the Board.

**23. Elections - (1) The conduct of elections of Directors of a Co-operative**
Society shall be the responsibility of the incumbent Board of the Co-operative
Society.

(2) Election shall be conducted before the expiry of the term of office of
the outgoing Directors in the manner specified in the bye-laws.

(3) Where a Board does not take necessary steps to conduct elections as
specified in the bye-laws before the expiry of the terms or the Directors, of
where there are not Directors remaining on the Board, the Registrar shall at
the request of not less than twenty five members or five per cent of the total
members of the Co-operative Society whichever is less or may suo moto
convene within 30 days a general meeting for appointing an ad-hoc Board for
the specific purpose of conducting elections.

(4) The term of the ad-hoc Board appointed under sub-section(3) shall
not exceed one month over and above the minimum period required under the
bye-laws to conduct elections and the ad-hoc Board shall cease to function as
soon as regular Board is elected in accordance with the bye-laws.

(5) The Director shall hold office for the period for which they are elected
and the newly elected Directors shall assume office at the end of this period.

(6) The Directors may be eligible for reelection, if the bye-laws so provide.

**24. Meetings – (1) The bye-laws of a Co-operative Society shall specify the**
frequency of and manner in which Board and General Body meetings shall be
held, so however the Board shall meet at least once in every three months and
the general body shall meet at least once a year.

(2) The Board shall convene a general meeting within thirty days of
receipt of a requisition for convening a meeting signed by at least one tenth of
members of the Co-operative Society or as provided in the bye-laws 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 with in due time, it shall be competent for the Registrar to convene the
requisitioned or annual general meeting, as the case may be.

(4) Every Co-operative Society shall record in the minutes 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.


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(6) The minutes so recorded shall be signed by the person who chaired
the said meeting.

**25. Staff - All staff of the Co-operative Societies shall be the employees of the**
Co-operative Society and shall be fully accountable to the Co-operative Society
and be appointed, removed and function in accordance with such service
conditions as may be framed by the Board:

Provided that a Co-operative Society may take personnel on deputation
from other agencies including the Government, on such terms as are mutually
agreed upon.

**26. Accounts and Records - (1) Every Co-operative Society shall keep at its**
office, the following accounts, records and documents namely:
(a) a copy of this Act with upto date amendments incorporated;

(b) copies of other laws and regulations to which the Co-operative
Society is subject;

(c)  a copy of its registered bye-laws with amendments made from
time to time;

(d) the minutes book;

(e)  accounts of all sums of money received and expended by the Cooperative Society and their respective purposes;

(f)  accounts of all purchases and sales of goods by the Co-operative
Society;

(g) accounts of all assets and liabilities of the Cooperative Society;

(h) a register showing member-wise patronage of various services
provided by the Co-operative Society;

(i) an upto date register, and a list of all members with voting rights
for the current year prepared within thirty days of closure of the Cooperative Society's financial year;

(j) copies of the audit reports and special audit and/or inquiry
report, if any and compliance reports thereon; and

(k) all such other accounts, records and documents as may to
required by this Act or other laws.

(2) The books of accounts and other records shall be open for perusal by
any Director during business hours.

(3) Copies of the Act, bye-laws, minutes book pertaining to the General
Body meetings, reports and compliance thereon audit, special audit and
inquiry, voters list and such account as relate to a member shall be made
available to any members during business hours at a fee to be decided by the
Board. In the case of a Co-operative Society with unlimited liability, in addition,
a member may also have access to all books of accounts during business
hours, at fee decided by the Board.

**27. Audit – (1) A Co-operative Society may get it accounts audited by a**
Chartered Accountan within the meaning of the Charted Accountants Act,
1949, or by any other Auditor from the office of the Registrar.

(2) The general body of a Co-operative Society shall appoint an auditor by
a resolution which will be valid only until the close of the next succeeding
annual general body meeting.

(3) The remuneration of the auditor shall be fixed with the approval of
the general body.

**28. Special Audit - (1) A Co-operative Society dealing with funds from the**
Government or other external individual or institutions 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.


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(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 Co-operative Society, such costs may be recovered from the Co-operative
Society, or the persons responsible for the mismanagement.

(3) Every special audit shall be completed and the report submitted to
the Registrar within 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 audit to be contrary to law;

(b) the amount of any deficiency, waste or loss which appear 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 be in the
expenditure or in the recovery of money due.

(5) the Registrar shall, within a period of thirty days from the date of the
receipt of the special audit report communicate copies of the same to,
(a) the applicant-creditor;

(b) the Co-operative Society concerned; and

(c) the Co-operative Tribunal where necessary.

**29. Inquiry -** (1) Every Co-operative Society shall furnish any relevant
information required by the Registrar in order to enable him to satisfy whether
the Co-operative 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
a Federation to which the Co-operative Society concerned is affiliated, or of a
creditor to whom the Co-operative Society is indebted or of not less than one
third of the Directors, or of not less than one tenth of the members, hold an
inquiry or cause an inquiry 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 inquiry shall be completed within a period of one hundred and
twenty dys from the date of ordering the inquiry.

(4) If the inquiry is not completed within the time specify in sub-section
(3) it shall lapse at the end of the said period of the Registrar shall refund to
the applicants, the fee collect from them.

(5) The Registrar shall, within a period of thirty days from the date of the
completion of the enquiry, as specified in sub-section (3) or of the lapse of the
inquiry as specified in sub-section (4), communicate the report of the enquiry
or the reasons for the non-completion of the inquiry, as the case may be,
(a) to the Co-operative Society concerned;

(b) to the applicant Federation, if any;

(c) to the applicant creditor, if any;

(d) to the person designated by the applicant -directors, if any;

(e) to the person designated by the applicant - members, if any;

(f) to any person, on payment of fee fixed by the Registrar; and

(g) to the Co-operative Tribunal where necessary.

(6) the inquiry officer acting under this section shall, among others,


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specifically state the amount of deficiency, waste or loss which appear to have
been caused by the gross negligence or misconduct of any person in the
performance of his duties.

**30. Power to summon and examine persons and documents - (1) The**
person authorised to conduct special audit under section 28 or inquiry under
section 29 shall give the concerned Co-operative Society, not less than fifteen
days notice in writing of the date on which he proposes to commence the
special audit or inquiry:

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 inquiry on the
authority of the Registrar without such notice.

(2) For the purpose of any special audit or inquiry under this Act, the
person conducting such audit or inquiry may,
(a) require in writing the Chairperson or other authority concerned to
produce at the head office of the Co-operative Society such receipts,
vouchers, statements, returns, correspondence, notice or any other
documents as he may consider necessary for the purpose of special
audit or inquiry;

(b) require in writing,
(i) any employee of the Co-operative society or other authority
accountable for or having the custody or control or of such
receipts, vouchers, statements, returns, correspondence; notes
or other documents to appear in person; or

(ii) any person having directly or indirectly any share or interest
in any contract with the Co-operative Society to appear in person
or by an authorised agent; before him at the head office of the
Co-operative 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 Co-operative 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 inquiry 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)….

**31. Action on special audit or inquiry report – On communication of a**
special audit report under sub-section (5) of section 28 or an inquiry report
under sub-section (5) of section 29, to the persons, concerned, the Registrar
may, where the special audit or inquiry report reveals mismanagements on the
part of any or all of the office bearers or Directors, without prejudice to any civil
or criminal proceedings to which they may be liable,
(a) direct the Board to convene a General Body meeting within such
reasonable time as he may specify, to enable him to the notice of the
General Body, either directly or through his nominee, the findings of
the special audit or inquiry report, for necessary action; or

(b) approach the Co-operative Tribunals for necessary action.

**32. Constitution of Tribunals - (1) The Government may for the purposes of**
this Act by notification, constitute as many tribunals as may be necessary for
such area or areas as may be specified in the notification.

(2) The Provisions of section 75 of the Andhra Pradesh Co-operative


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Societies Act, 1964 (Act 7 of 1964) shall, mutatis mutandis apply for the
constitution of co-operative tribunals under this section.

**33. Power of the Tribunal to order recovery - A member, Director or**
Chairperson of the Co-operative Society may and the Registrar shall file a copy
of the report of the Auditor or the Special Auditor or the Inquiry Officer, before
the Tribunal with an application for necessary action against the person on
account of whose conduct the Co-operative 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
incurring or authorising the incurring of such expenditure, or 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 not 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 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 to the order by the Tribunal,
file an appeal against such order in the High Court.

(4) Where an appeal is filed in the High Court under sub-section (3), the
persons who filed the application before the Tribunal or as the case may be, the
Registrar shall be the soler, respondent thereto, and the applicant shall not
make any other person a party to the proceedings.

(5) Every order passed by the Tribunal or an order passed by the High
Court shall be executed in the same manner as a, decree of a Civil Court under
the Code of Civil Procedure, 1908(Central Act 5 of 1908).

**34. Filling of returns - (1) Every year, within thirty days of the conduct of the**
annual general meeting, every Co-operative Society shall file the following with
the Registrar, namely :

(a) annual report of its activities;

(b) annual audited statement of accounts with auditor's reports;

(c) list of members as at the close of the year under reporting with
services provided to each member;

(d) statement on the disposal of surplus or on the allocation of
deficit;

(e) list of names of Directors, their addresses and their terms of
office; and

(f) compliance reports relating to audit, special audit and inquiry, if
any;

**35. Rights and privileges - A Co-operative Society shall have all the rights and**
privileges available to Co-operative Societies under Chapter-V of the Andhra


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Pradesh Co-operative Societies Act, 1964 (Act 7 of 1964) and the corresponding
rules, to the extent that they are not inconsistent with the provisions of this
Act.

**36. Execution of decisions, decrees and orders - In regard to execution of**
decisions, decrees and orders, all the provisions of Chapter-X of the Andhra
Pradesh Co-operative Societies Act, 1964 shall mutatis mutandis apply to Cooperative Societies registered under this Act, such however, that all references
to the Registrar in the said Act shall be construed to be a reference to the Cooperative Tribunal in their application to Co-operative Societies registered
under this Act.

1[36A. **Application of Chapter XIII-A of the Andhra Pradesh Co-operative**
**Societies Act, 1964- The provisions of Chapter XIII-A containing Sections**
115-A and 115-B of the Andhra Pradesh Co-operative Societies Act, 1964 shall
mutatis, mutandis apply to all Co-operative Banks.

**Explanation: - For the purposes of this section a "Co-operative Bank”**
means a society registered under this Act, which is doing the business of
Banking as defined in clause (b) of sub-section (1) of Section 5 of the Banking
Regulation Act, 1949 (Central Act 10 of 1949).]

**37.** **Settlement of disputes -** (1) If any dispute arises touching the
constitution, management or business of a Co-operative Society, and matters
connected therewith or incidental thereto,
(a) among members, past members or persons claiming through
members, past members and deceased members; or

(b) between member, past member or a person claiming through a
member, past member or deceased member and the Co-operative
Society, its Board, Director, office-bearer or liquidator, past or
present; or

(c)  between the Co-operative Society or its Board and any past
Board, Director, office bearer, or the nominee, heirs, or legal
representative of any deceased Director, deceased officer, of the Cooperative Society; or

(d) between the Co-operative Society and any other Co-operative
Society; or

(e)  between the promoter of a Co-operative Society and the Registrar,
or a Co-operative Society and the Registrar; or

(f)  between a Co-operative Society and liquidator of and other Cooperative Society, between the liquidators of two or more Co-operative
Societies;

Such disputes may be referred to the Co-operative 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 Co-operative Society may be
referred to the Co-operative Tribunal for decision.

**38. Offence and penalties - (1) It shall be an offence under this Act, if a Co-**
operative 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 Co-operative Society is by

1. Inserted along with the marginal heading by Act No.29 of 1998, Section 2.


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this Act or under its bye-laws required to give, send, do or allow
to be done;

(b) wilfully 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; or

(c) makes a return, or wilfully furnishes information, in any
respect false or insufficient.

(2) It shall be an offence under this Act, if any person or Co-operative
Society contravenes the provisions of a Cooperative Society.

(3) An offence by a Co-operative Society shall be deemed to have been
also committed by each office-bearer of the Co-operative Society bound by the
bye-laws thereof to fulfil the duties whereof the offence is a breach, or if there is
no such office-bearer then by each of the Director, unless the office-bearer or
Director proves to have attempted to prevent the commission of the offence.

(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 ten
thousand rupees 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 Co-operative Society, he shall be punishable under the relevant
provisions of the Indian Penal Code, 1860. (Central Act 45 of 1860).

**39. Dissolution by members - (1) A Co-operative 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 federations 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 a 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 Co-operative Society by registered post.

(4) The authorisation approved in pursuance of subsection (1) is required
to set out the following, namely:
(a) the assets and liabilities of the Co-operative Society;

(b) the claim of creditors, and collaborators and protected
shareholders;

(c) the number of members;

(d) the nature and extent of the member's 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 Co-operative
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 Co-operative Society is located.

(6) The Registrar may require from the Co-operative Society, the
liquidator appointed by the Co-operative Society or any other person who is
required to furnish information, a periodical return showing:

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(a) the progress of dissolution;

(b) the distribution of any undistributed surplus or reserve; and

(c) any other relevant information that if may require.

**40. Dissolution by Tribunal - (1) The Registrar or an interested person may,**
after giving the Co-operative Society ninety days notice of the proposed
application apply to the Tribunal for an order dissolving the Co-operative
Society, where he has reasonable cause to believe that the Co-operative Society
has no right to be or to continue to be recognised as a Co-operative Society,
because it,
(a)  obtained its registration by fraud or mistakes;

(b)  is serving illegal purposes;

(c) has willfully, after notice by the Registrar, violation any of the
provisions of this Act or its bye-laws;

(d) is no longer operating in accordance with principal of Cooperation and the provisions of this Act;

(e) has not commenced business within two years of the date of
registration;

(f)  has not carried on business for the past two consecutive years .

(2) Where an interested person applies in pursuance of the section, he
shall give the Registrar notice of his application and the Registrar is entitled to
appear and be heard in person or counsel.

(3) Where the Tribunal receives an application in pursuance of this
section it may, after giving a reasonable opportunity to the Co-operative Society
to state its cases order that Co-Operative Society be dissolved or liquidated and
dissolved under the supervision of the Registrar.

(4) Where the Registrar receives an order made in pursuance of subsection (3), he shall,
(a) Where the order is to dissolve the Co-operative Society issue a
certificate of dissolution; or

(b)  Where the order is to liquidate and Co-operative Society under
the supervision of the Registrar, publish a notice in a newspaper
published or distributed in the district in which he registered office of
Co-operative Society is situated.

**41. Appointment of liquidator - (1) Where a Co-operative Society is to be**
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
Co-operative Society; or

(b) where he is satisfied that the Co-operative Society has no assets
and liabilities issue a certificate of dissolution.

(2) The appointing authority shall fix the payment to the liquidator for his
services.

**42. Duties of Liquidator - On his appointment, a liquidator shall,-**

(a) immediately give notice of his appointment,
(i) in the case of liquidator not appointed by the Registrar, to the
Registrar; and

(ii) to each claimant and creditor known to the liquidator;

(b) immediately published notice of his appointment once a week for
two consecutive weeks in a newspaper published, distributed in the
district where the Co-operative Society has registered office and take


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reasonable steps to give notice of the liquidation in every jurisdiction
where the Co-operative Society carries on business;

(c) place in the notice mentioned in clauses (a) and (b) a provision
requiring any person,
(i) indebted to the Co-operative Society, to render an account
and pay to the liquidator at the time and place specified any
amount owing;

(ii) possessing property of the Co-operative Society to deliver it to
the liquidator at the time and place specified; and

(iii) having a claim against the Co-operative Society whether
liquidator unliquidated, future or contingent, to present
particulars of the claim in writing to the liquidator not later than
sixty days after the first publication of the notice;

(d) take into custody and control the property of the Co-operative
Society;

(e) open and maintain a trust account for the money of the Cooperative Society;

(f) keep accounts of the moneys of the Co-operative Society received
and paid out by him;

(g) maintain separate lists of the members, creditors and other
persons having claims against the Co-operative Society;

(h) where at any time he determines that the Co-operative Society is
unable to pay or adequately provide for the discharge of its
obligations, apply to the Registrar for directions; and

(i) deliver to the Registrar, periodically as the Registrar may require,
financial statements of the Co-operative Society in any form that the
liquidator considers proper or that the Registrar may require.

**43. Powers of liquidators - (1) The liquidator may,-**

(a) retain lawyers, accountants, engineers, appraiser 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 Co-operative
Society;

(c) carry on the business of the Co-operative Society as required for
an orderly liquidation;

(d) shall by public auction any property of the Co-operative Society;

(e) do all acts and execute any documents in the name and on behalf
of the Co-operative Society;

(f) borrow money on the security of the property of the Co-operative
Society;

(g) settle or compromise any claims by or against the Co-operative
Society; and

(h) do all other things that he considers necessary for the liquidation
of the Co-operative Society and distribution of its property.

(2) Where a liquidator has reason to believe that any person has in his
possession or under his control or has concealed, withheld or misappropriated
any property of the Co-operative Society, he may apply to the special court for
an order requiring that person to appear before the court at the time and
placed, designated in the order and to be examined.

(3) Where the examination mentioned in sub-section (2) discloses that a
person has concealed, withheld or misappropriated property of the Cooperative Society, the special court may order that person to restore the


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property or pay compensation to the liquidator on behalf of the Co-operative
Society.

(4) No liquidator shall purchase, directly or indirectly, an part of the
stock-in-trade, debts or assets of the Co-operative Society.

**44. Final Accounts - (1) A liquidator shall pay the cost of liquidation out of the**
property of the Co-operative Society and shall Pay or make adequate provision
for all claims against the Co-operative Society.

(2) After paying or making adequate provision for all claims against the
Co-operative 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 Co-operative Society in accordance with the byelaws.

(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 Co-operative Society; and

(b) discharge the liquidator.

(4) Where the Registrar discharges a liquidator in pursuance of subsection (3), he shall issue a certificate of dissolution.

(5) The Co-operative Society ceases to exist on the date shown in the
certificate of dissolution which shall not be later than three years after the
appointment of the liquidator.

**45. 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.

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