The Dadra and Nagar Haveli and Daman and Diu Co - 30th September 2024 - Ministry of Law and Justice

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MINISTRY OF LAW AND JUSTICE (Legislative Department) New Delhi, the 30th September, 2024/Asvina 8, 1946 (Saka) THE DADRA AND NAGAR HAVELI AND DAMAN AND DIU CO-OPERATIVE SOCIETIES REGULATION, 2024 No. 1 of 2024 Promulgated by the President in the Seventy-fifth Year of the Republic of India.

A Regulation for registration, incorporation and management of Co-operative Societies in the Union territory of Dadra and Nagar Haveli and Daman and Diu and to repeal the Maharashtra Co-operative Societies Act, 1960 as applicable to the erstwhile Union territory of Daman and Diu and the Gujarat Co-operative Societies Act, 1961as applicable to the erstwhile Union territory of Dadra and Nagar Haveli and for matters connected therewith or incidental thereto.

In exercise of the powers conferred by article 240 of the Constitution, the

President is pleased to promulgate the following Regulation made by her:—

CHAPTER I PRELIMINARY

1.(1) This Regulation may be called the Dadra and Nagar Haveli and Daman Short title, extent and and Diu Co-operative Societies Regulation, 2024. commencement.

(2)It extends to the whole of the Union territory of the Dadra and Nagar Haveli and Daman and Diu.

(3)It shall come into force on such date, as the Central Government may, by

notification in the Official Gazette, appoint.2 THE GAZETTE OF INDIA EXTRAORDINARY [Part II— Definitions. 2.In this Regulation, unless the context otherwise requires,—

(a)“Administration” means the Administration of the Union territory of Dadra and Nagar Haveli and Daman and Diu;

(b) “Administrator” means the Administrator of the Union territory of Dadra and Nagar Haveli and Daman and Diu, appointed by the President under article 239 of the Constitution;

Explanation.––For the purposes of this clause, the expression “certified auditor” means a person who is authorised by the Registrar under section 90;

(d) “authorised person” means any person duly authorised by the Registrar to take action under the provisions of this Regulation;

(e) “Board” means the Board of Directors or the governing body of a co-operative society, by whatever name called, to which the superintendence, direction and control of the management of the affairs of a society has been entrusted;

(f) “bye-laws” means the registered bye-laws for the time being in force in the Union territory of Dadra and Nagar Haveli and Daman and Diu, and includes amendment of such bye laws;

(g) “central bank” means a co-operative bank, the objects of which include the creation of funds to be loaned to other societies, but does not include the urban co-operative bank;

(h) “Chief Executive Officer” means a Chief Executive Officer or a Manager or a Secretary or any other paid employee of a society appointed under section 70;

(i) “Committee” means the Managing Committee or other governing body of a society to which the direction and control of the management of the affairs of a society is entrusted;

(j) “company" means a company as defined in the Companies Act, 2013 18 of 2013. and includes a banking company, any board, corporation or other corporate body, constituted or established by any Central Act, State Act or Provincial Act for the purpose of development of any industry;

(k) “co-operative bank” means a society registered under this Regulation and carrying on the business of banking as defined in clause (b) of sub-section (1) 10 of 1949. of section 5 of the Banking Regulation Act, 1949;

(l) “co-operative election authority” means an authority constituted by the Administrator under section 74;

(m) “co-operative information officer” means an officer appointed by a society under sub-section (3) of section 37;

(n) “co-operative society” means a society registered or deemed to be registered under the regulations and rules or any other law relating to co-operative societies for the time being in force in the Union territory of Dadra and Nagar Haveli and Daman and Diu;

(o) “custodian” means the custodian of a society to be appointed by the Registrar under section 72;

(p) “Deposit Insurance Corporation” means the Deposit Insurance and Credit Guarantee Corporation established under section 3 of the Deposit 47 of 1961.

Insurance and Credit Guarantee Corporation Act, 1961;Sec. 1] THE GAZETTE OF INDIA EXTRAORDINARY 3

(q)“dividend” means the amount paid, out of the profit of a society, to a member in proportion to the shares held by such member;

(r)“federal society” means a society—

(i) of which not less than five members are themselves societies; and

(ii) in which the voting rights are so regulated that the members which are societies have not less than four-fifths of the total number of votes in the general meeting of such society;

(s)“firm” means a firm registered under the Indian Partnership Act, 1932;

9 of 1932.

(t) “General Body” means the individuals or institutions having membership of respective societies;

(u) “legal heir” means any person, male or female, who is entitled to succeed to the property of an intestate as per the relevant personal succession law for the time being in force in the Union territory;

(v)“Liquidator” means a person appointed as Liquidator under section 115;

(w) “member” means a person joining in an application for the registration of a co-operative society which is subsequently registered or a person duly admitted to membership of a society after registration and includes a nominal, associate or sympathiser member;

(x)“National Bank” means the National Bank for Agriculture and Rural Development established under section 3 of the National Bank for Agriculture 61 of 1981. and Rural Development Act, 1981;

(y) “notification” means the notification published in the Official Gazette and the expression “notified” shall be construed accordingly;

(z) “officer” means a person elected or appointed by a society to any office of such society according to its bye-laws and includes a Chairperson, Vice-chairperson, President, Vice-President, Managing Director, General Manager, Manager, Secretary, Treasurer, Member of the Committee, and any other person elected or appointed under this Regulation, the rules or the bye-laws, to give directions in regard to the business of such society;

(za) “office bearer” means a President, Vice-President, Secretary or Treasurer of a co-operative society and includes any other person to be elected by the Board of any co-operative society;

(zb) “official assignee” means a person or body of persons appointed under sub-section (2) of section 22;

(zc) “Official Gazette” means the Official Gazette of the Union territory of Dadra and Nagar Haveli and Daman and Diu;

(zd) “prescribed” means prescribed by rules made by the Administrator under this Regulation;

(ze) “rebate” means any payment made in cash or kind, out of the profits of a society, to a member or any other person, on the basis of his contribution to the business of the society;

(zf) “Registrar” means a person to be appointed as the Registrar of co-operative societies under this Regulation, and includes—

(i) to the extent of the powers of the Registrar conferred on any other person under this Regulation;

(ii)an Additional Registrar, Joint Registrar, Deputy Registrar and Assistant Registrar;4 THE GAZETTE OF INDIA EXTRAORDINARY [Part II—

(zg) “Reserve Bank” means the Reserve Bank of India constituted under sub-section (1) of section 3 of the Reserve Bank of India Act, 1934; 2 of 1934.

(zh) “reserve fund” means a fund to be maintained by the society under

section 59;

(zi) “rules” means the rules made under this Regulation;

(zj) “Schedule” means the Schedule annexed to this Regulation;

(zk) “society” means a co-operative society registered, or deemed to be registered, under this Regulation;

(zl) “society with limited liability” means a society having the liability of its members limited by its bye-laws;

(zm) “Tribunal” means the Union territory Co-operative Tribunal constituted under section 132;

(zn) “Union territory” means the Union territory of Dadra and Nagar Haveli and Daman and Diu.

CHAPTER II REGISTRAR AND REGISTRATION Registrar and 3.(1) For carrying out the purposes of this Regulation, the Administrator shall officers and appoint a person to be called the Registrar of co-operative societies for the Union their powers.

territory.

(2) To assist the Registrar in his functions under this Regulation, the Administrator may appoint such number of Additional Registrars, Joint Registrars, Deputy Registrars, Assistant Registrars and other persons with such designations as it may think fit.

(3)The Administrator may, by general or special order in writing and for the reasons mentioned therein, confer on a person or persons appointed under sub-section (2) all or any of the powers of the Registrar under this Regulation.

(4)Every person appointed under sub-section (2) shall work under the general guidance, superintendence and control of the Registrar.

Societies which 4. A society established for,— may be registered. (i) promotion of the economic interests or general welfare of its members, or of the public, in accordance with such co-operative principles as specified in the Schedule; or

(ii)facilitating the operations of any such society,

may be registered under this Regulation:

Provided that, no society shall be registered, if it is likely to be economically unsound, or the registration of which may have an adverse effect upon any other society, or it is opposed to, or its working is likely to be in contravention of public policy or which may have an adverse effect on development of the co-operative movement, or the registration of which may be contrary to the policy directives which the Union territory Administration may, from time to time, issue.

Registration 5. A society to be registered under this Regulation may be registered with with limited limited liability. liability.

Explanation.––For the purposes of this section, the expression “limited liability” shall denote the same as is referred to in the Companies Act, 2013.

18 of 2013.Sec. 1] THE GAZETTE OF INDIA EXTRAORDINARY 5

6. (1) No society, other than a federal society, shall be registered under this Conditions of registration.

Regulation, unless it consists of at least ten persons or such higher number of persons as the Registrar may, having regard to the objects and economic liability of a society and development of the co-operative movement, determine from time to time for a class of societies (each of such persons being a member of a different family), who are qualified to be members under this Regulation, and who reside in

the area of operation of such society:

Provided that the Registrar may specify the norms and conditions for registration of societies or class of societies.

(2)No federal society shall be registered, unless it has at least five societies as its members.

(3)Nothing in this Regulation shall be deemed to affect the registration of any society made before the commencement of this Regulation.

(4)The word “limited” shall be placed at the end of the name of every society which is registered or deemed to be registered under this Regulation.

Explanation.–– For the purposes of this section, the expression “member of a family” means a wife, husband, father, mother, grand-father, grand-mother, step-father, step-mother, son, daughter, step-son, step-daughter, grand-son, grand-daughter, brother, sister, half-brother, half-sister and wife of brother or half-brother.

7. Notwithstanding anything contained in this Regulation, the Administrator Power to exempt may, by special order in writing in each case and for the reasons mentioned therein, societies from conditions as to exempt subject to such conditions, if any, as it may impose, any society from any of registration.

the requirements of this Regulation as to registration of such society.

8.(1) For the purposes of registration of society, an application shall be made Application for to the Registrar in the prescribed form and shall be accompanied by four copies of registration. the proposed bye-laws of the society and the person by whom, or on whose behalf, such application is made, shall furnish such information in regard to the society, as the Registrar may require.

(2)The application shall be signed—

(a) in the case of a society other than a federal society, by at least ten persons (each of such persons being a member of a different family) who are qualified under this Regulation; and

(b)in the case of a federal society, by at least five societies.

(3)No signature to an application on behalf of a society shall be valid unless the person signing it is a member of the Committee of such society, and is authorised by such Committee by resolution to sign on its behalf the application for registration of the society and its bye-laws; and a copy of such resolution is appended to the application.

9.(1) On receipt of an application for registration from a society,— Registration and provisional

(a) if the Registrar is satisfied that the society has complied with the registration. provisions of this Regulation and the rules as to registration and that its bye-laws are not contrary to this Regulation and the rules, he shall register the society and its bye-laws; and

(b) without prejudice to the provisions of clause (a), the Registrar may register a society if the aggregate value of the paid-up capital and provision of reserves alongwith liquidity, exposure and other prudential norms specified in the bye-laws of the proposed society in the business of thrift and credit are in

accordance with such guidelines as may be prescribed:6 THE GAZETTE OF INDIA EXTRAORDINARY [Part II—

Provided that the societies registered before the commencement of this Regulation shall meet such norms within a period of five years from the date

of commencement of this Regulation:

Provided further that if the liquidity, exposure, prudential and other parameters of the credit society do not meet such norms within the period mentioned above, the Registrar shall have powers to issue such directions as

it deems appropriate to such society to take relevant action:

Provided also that in the case of bank, the aggregate value of the paid-up capital and provision of reserves alongwith liquidity norms provided in the bye-laws shall be such as may be laid down by the Reserve Bank from time to time;

(c) if the Registrar is of the opinion that the application complies with the requirements of section 8, but that its bye-laws are not in conformity with the provisions of this Regulation and the rules made thereunder, he may provisionally register the society and by an order in writing permit the society to perform such functions subject to such conditions as he may specify in the order and may also by an order in writing direct the society to amend, within the period prescribed in this behalf, its bye-laws so as to bring them in conformity with this Regulation and the rules made thereunder.

(2) When a society has been provisionally registered, the Registrar shall, on its compliance with the order made under clause (b) of sub-section (1), finally register it and its bye-laws and on its failure to comply with the order, cancel its

provisional registration:

Provided that the provisional registration of a society shall not be cancelled unless such society has been given an opportunity of being heard in the matter.

(3) A provisionally registered society shall not be deemed to be a society registered under this Regulation.

(4)On the registration of a society, the Registrar shall issue to it a certificate of registration signed by him within a period of fifteen days from the date of registration.

(5) A certificate of registration issued under sub-section (4) shall be the conclusive evidence that the society mentioned therein is duly registered, unless it is proved that the registration has been cancelled.

(6) If the Registrar refuses to register the society, he shall forthwith communicate his decision with reasons therefor, to the person who has signed first on the application.

(7) The application for registration of a society may be disposed of within a period of three months from the date of its receipt.

10. The Registrar shall maintain a register in the prescribed form of all Register of societies. societies registered or deemed to be registered under this Regulation.

Power of 11. For the purposes of the formation or registration or continuance of a Registrar to society or the admission of a person as a member of a society under this Regulation, decide certain when any question arises whether, a person is an agriculturist or non-agriculturist, questions.

or whether any person is a resident in an island or group of islands, or whether two or more islands shall be considered to form a group, or whether any person belongs to any particular tribe, class or occupation, such question shall be decided by the Registrar.

Classification 12. The Registrar may classify all societies into such classes and in such of societies. manner as he thinks fit and the classification thereof shall be final on the societies.Sec. 1] THE GAZETTE OF INDIA EXTRAORDINARY 7

13. (1) No amendment of the bye-laws of a society shall be valid until Amendment of bye-laws of registered under this Regulation. society.

(2)For the purposes of registration of an amendment of the bye-laws, a copy of the amendment passed, in the manner prescribed, at a general meeting of a society, shall be forwarded to the Registrar.

(3)If the Registrar is satisfied that the amendment so forwarded is not contrary to this Regulation or the rules, he may register the amendment:

Provided that no order refusing to register the amendment shall be passed

except after giving the society an opportunity of being heard in the matter:

Provided further that the application for registration of amendment of bye-laws of a society shall be disposed of within a period of two months from the date of its receipt.

(4) When the Registrar registers an amendment of the bye-laws of a society, he shall issue to the society, the copy of the amendment certified by him within a period of fifteen days from the date of registration of the amendment, which shall be conclusive evidence of its registration.

(5)Where the Registrar refuses to register an amendment of the bye-laws of a society, he shall communicate the order of refusal, together with his reasons therefor within a period of fifteen days, to the society.

14. (1) If it appears to the Registrar that an amendment of the bye-laws of a Power to direct society is necessary or desirable in the interest of such society or any bye-laws of amendment of bye-laws.

the society are inconsistent with the provisions of this Regulation or rules made thereunder and that amendment is necessary in such bye-laws, he may call upon the society, in the manner prescribed, to make the amendment within such time as he may specify.

(2)If the society fails to make the amendment within the time so specified, the Registrar after giving the society an opportunity of being heard and with the prior approval of the Administrator, may register the amendment, and shall thereupon issue to the society a copy thereof certified by him.

(3) With effect from the date of the registration of the amendment in the manner aforesaid, the bye-laws shall be deemed to have been duly amended accordingly and the bye-laws as amended shall be binding on the society and its members.

15. (1) Subject to the provisions of this Regulation and the rules made Change of name. thereunder, a society may, by resolution passed at a general meeting, and with the approval of the Registrar, change its name but such change shall not affect any right or obligation of the society, or of any of its members, or of any of the persons who have ceased to be members and any legal proceedings pending before any person, authority or court may be continued by or against the society, under its new name.

(2)When a society changes its name, the Registrar shall enter the new name in its place in the register of societies, and shall also amend the certificate of registration accordingly.

16. (1) Subject to the provisions of this Regulation and the rules made Change of thereunder, a society may, by passing a resolution and by amending its bye-laws, liability. change the form or extent of its liability.

(2)When a society has passed a resolution to change the form or extent of its liability, it shall give notice thereof in writing to all its members and creditors and, notwithstanding anything in any bye-laws or contract to the contrary, any member or creditor shall, during a period of thirty days from the date of service of such notice upon him, have the option of withdrawing his investment in its shares, and his deposits and loans, and of demanding the payment of his other dues, if any:8 THE GAZETTE OF INDIA EXTRAORDINARY [Part II—

Provided that conversion of society from limited to unlimited liability shall not be permitted in any circumstances.

(3)Any member or creditor who does not exercise his option within the period specified in sub-section (2), shall be deemed to have assented to the change.

(4) An amendment of the bye-laws of a society, changing the form or extent of its liability, shall not be registered or take effect until, either—

(a)all members and creditors have assented, or deemed to have assented, thereto as aforesaid; or

(b) all claims of members and creditors exercising the option, under sub-section (2) have been complied in toto.

Amalgamation, 17. (1) Subject to the provisions of this Regulation and the rules made transfer, thereunder and the previous sanction of the Registrar, a society may, by resolution division or passed by two-thirds majority of the members present and voting at a special general conversion of meeting held for the purpose, decide— societies.

(a)to amalgamate with another society or a society registered under the Multi-State Co-operative Societies Act 2002; 39 of 2002.

(b)to transfer its assets and liabilities, in whole or in part, to any other society;

(c)to divide itself into two or more societies;

(d)to convert itself into another class of society; or

(e)to change its objects.

(2) Where the amalgamation, transfer, division or conversion referred to in sub-section (1) involves a transfer of the liabilities of a society to any other society, the Registrar shall not sanction the resolution of the society unless he is satisfied that—

(i)the society, after passing such resolution, has given notice thereof in writing to all its members, creditors and other persons whose interests are likely to be affected (hereafter, in this section referred to as “other interested persons”), giving them the option to exercise within one month from the date of the receipt of such notice, of becoming members of any of the new societies, or continuing their membership in the amalgamated or converted society, or of withdrawing their investments in its shares, their deposits and loans and demanding payment of their other dues, if any;

(ii) all the members and creditors and other interested persons have assented to the decision, or are deemed to have assented thereto by having failed to exercise the option within the period specified in clause (i); and

(iii)all claims of members and creditors and other interested persons, who exercise the option within the period specified, have been complied in toto.

(3)Notwithstanding anything contained in the Transfer of Property Act, 1882, 4 of 1882. or the Registration Act, 1908, in the event of division or conversion, the registration 16 of 1908. of the new societies or, as the case may be, of the converted society, and in the event of amalgamation, on the amalgamation the resolution of the societies concerned with amalgamation, shall in each case be sufficient conveyance to vest the assets and liabilities of the original society or amalgamating societies in the new societies or converted or amalgamated society, as the case may be.

(4)The amalgamation, transfer, division or conversion made under this section shall not affect any right or obligation of the societies so amalgamated, or of the society so divided or converted, or of the transferee, or render defective, any legal proceedings which might have been continued or commenced by or against the societies which have been amalgamated or divided or converted and accordingly such legal proceedings may be continued or commenced by or against the amalgamated society, the converted society, the new societies or the transferee, as the case may be.Sec. 1] THE GAZETTE OF INDIA EXTRAORDINARY 9

18.(1) Where the Registrar is satisfied that it is essential in the public interest or Power to direct amalgamation in the interest of co-operative movement, or for the purpose of securing proper and re-organisation management of any society that two or more societies should be amalgamated or that of societies in any society should be re-organised, then, notwithstanding anything contained in public interest,

section 17 and subject to the provisions of this section, the Registrar may, after etc. consulting such federal society as may be notified in this behalf by the Administrator, by order published in the Official Gazette, provide for the amalgamation of these societies into a single society or, as the case may be, for the re-organisation of that society, with such constitution, property rights, interests and authorities, and such liabilities, duties and obligations as may be specified in the order:

Provided that in case of a co-operative society carrying on the business of banking, the amalgamation and re-organisation, shall be subject to the guidelines issued by the Reserve Bank in this regard from time to time.

(2)The order referred to in sub-section (1) may also provide for—

(a) the constitution of the Committee of Management or any other Committees of the new amalgamated or re-organised society;

(b) the persons who shall be, or continue to be, the officers of such society; and

(3)No order shall be made under this section unless,—

(a)a copy of the draft of the proposed order has been sent to the society or each of the societies concerned;

(b)the Registrar has considered suggestions and objections if any received either from the society or from any member or class of members thereof or from any creditor or class of creditors within such period (not being less than one month from the date on which the copy of the order as aforesaid was received by the society) as the Registrar may fix in that behalf, and has, if necessary, modified the same in the light of such suggestions and objections.

(4) The order referred to in sub-section (1) may contain such incidental, consequential and supplemental provisions as may, in the opinion of the Registrar, be necessary to give effect to the amalgamation or re-organisation.

(5) Every member of the societies so amalgamated, shall be deemed to be a member of the new amalgamated society, and every member of the society so re-organised shall be deemed to be a member of the new re-organised society and such members shall have all rights, privileges and liabilities of the members of the

concerned new societies:

Provided that any member of the new society so amalgamated, or re-organised may, within such period and in such manner as may be prescribed, resign his membership of the new society and on such resignation, he shall be entitled to withdraw his share and any other dues and interest in the society.

(6)On the issue of an order under sub-section (1) in respect of any societies or society, notwithstanding anything contained in any other law for the time being in force in the Union territory, all the assets, rights and liabilities of the amalgamating societies, or, as the case may be, the original society which is re-organised shall stand transferred to, and vest in, the new amalgamated society, or, as the case may be, the new re-organised society.10 THE GAZETTE OF INDIA EXTRAORDINARY [Part II—

(7)The provisions of sub-sections (3) and (4) of section 17 and section 19 shall apply in relation to the amalgamation or re-organisation of the societies under this

section as if—

(i)the order of amalgamation was a resolution of societies concerned with amalgamation; and

(ii)the original society was re-organised under section 17.

Cancellation of 19.Where two or more societies have been amalgamated, or a society has been registration of divided or converted, the registration of such societies or society, as the case may be, amalgamated, shall be cancelled on the date of registration of the new society or societies so formed.

divided or converted societies.

Re-construction 20.Where a compromise or arrangement is proposed— of societies.

(a)between a society and its creditors; or

(b)between a society and its members, the Registrar may, on the application of the society or of any member or of any creditor of the society, or in the case of a society which is being wound up, of the Liquidator,

order reconstruction of the society in such manner as may be prescribed.

Cancellation of 21.(1) The Registrar shall make an order cancelling the registration of a society, registration. if it transfers the whole of its assets and liabilities to another society, or amalgamates with another society, or divides itself into two or more societies, or if its affairs are wound up or it has not commenced business within a reasonable time of its registration

or has ceased to function:

Provided that the registration of a society shall not be cancelled, unless such society has been given an opportunity of being heard in the matter.

(2) An order made under sub-section (1) shall be published in the Official Gazette.

(3)The society shall, from the date of such order of cancellation, be deemed to be dissolved and shall cease to exist as a corporate body.

De-registration 22. (1) If the Registrar is satisfied that any society is registered on of societies. mis-representation made by applicants, or where the work of the society is completed or exhausted or the purposes for which the society has been registered are not served, or any primary agricultural co-operative credit society using the word “bank”, “banking”, “banker” or any other derivative of the word “bank” in its name, he may, after giving an opportunity of being heard to the society, de-register the society.

(2)When a society is de-registered under the provisions of sub-section (1), the Registrar may, notwithstanding anything contained in this Regulation or any other law for the time being in force in the Union territory, make such incidental and consequential orders including appointment of Official Assignee as the circumstances may require.

(3)Subject to the provisions of this Regulation and the rules made thereunder, the Official Assignee shall realise the assets and liquidate the liabilities within a period of one year from the date he takes over the charge of property, assets, books, records and other documents, which period may, at the discretion of the Registrar, be extended from time to time, so however, that the total period does not exceed three years in the aggregate.

(4) The Official Assignee shall be paid such remuneration and allowances as may be prescribed and he shall not be entitled to any remuneration whatever beyond the prescribed remuneration or allowances.Sec. 1] THE GAZETTE OF INDIA EXTRAORDINARY 11

23.(1) Any two or more societies may, with the prior approval of the Registrar, Partnership of by resolution passed by three-fourths majority of the members present and voting at a societies. general meeting of each such society, enter into partnership for carrying out any

specific business or businesses:

Provided that each member of each society has had clear ten days written notice of the resolution, and the date of the meeting.

9 of 1932. (2) Nothing contained in the Indian Partnership Act, 1932 and Companies 18 of 2013. Act, 2013 shall apply to such partnership.

24. (1) Any society or societies may, with the prior approval of the Collaboration by Administrator and subject to such terms and conditions as the Administrator may societies. impose, and in such manner as may be prescribed, enter into collaboration with any undertaking or any other undertaking approved by the Administrator for carrying on any specific business or businesses, including industrial investment, financial aid or marketing and management expertise.

(2) Before approving any such scheme of collaboration by any society or societies under sub-section (1), the Administrator shall have due regard to the following matters, namely:—

(a)that the scheme is economically viable;

(b) that it can be implemented without, in any way, eroding the co-operative character of the society or the societies concerned; and

(c)that the scheme is in furtherance of the interests of the members of the society or societies concerned, or is in the public interest, and in the interest of the co-operative movement in general.

CHAPTER III MEMBERS AND THEIR RIGHTS AND LIABILITIES

25.(1) Subject to the provisions of section 28, no person shall be admitted as a Person who may member of a society unless such person is,— become member.

(a)an individual, who is competent to contract under the provisions of the 9 of 1872. Indian Contract Act, 1872;

(b)a firm, company, any Government company as defined in clause (45) 18 of 2013. of section 2 of the Companies Act, 2013, or any other body corporate constituted under any law for the time being in force in the Union territory;

(c)a society registered, or deemed to be registered, under this Regulation;

(d)the Central Government;

(e)the Administrator;

(f)a local authority;

(g)a public trust registered or deemed to have been registered under any other law for the time being in force in the Union territory;

(h)the depositor or the financial service user;

(i) a group of the individuals eligible under clause (a), whether incorporated or not and whether established or not by or under any law for the

time being in force in the Union territory:

Provided that the provisions of clause (a) shall not apply to an individual seeking admission to a society exclusively formed for the benefit of students of a school or a

college:12 THE GAZETTE OF INDIA EXTRAORDINARY [Part II—

Provided further that subject to such terms and conditions as may be laid down by the Administrator by general or special order in writing, a firm or company may be admitted as a member only of a society which is a federal or urban society or which

conducts or intends to conduct an industrial undertaking:

Provided also that any firm or company, which is immediately before the commencement of this Regulation a member of a society deemed to be registered under this Regulation, shall have, subject to the other provisions of this Regulation, the right to continue to be such member on and after such commencement.

Explanation.—For the purposes of this section, the expression an “urban society” means a society the business of which mainly falls within the limits of a municipal corporation, municipality, cantonment or notified area committee.

(2)Every person seeking admission as a member of a society, if duly qualified for membership of such society under the provisions of this Regulation, the rules and the bye-laws of the society may make an application to the society for membership and the society shall take decision on the application and shall communicate the decision within a period of three months from the date of the receipt of the application.

(3) If the society does not communicate any decision to the applicant within three months from the date of receipt of such application, the applicant shall be deemed to have been admitted as a member of the society.

(4) If any question arises whether a person has become a deemed member or otherwise, the same shall be decided by the Registrar after giving a reasonable opportunity of being heard to all the concerned parties.

(5) Notwithstanding anything contained in sub-section (1), the Administrator may, having regard to the fact that the interest of any person or class of persons engaged in or carrying on any profession, business or employment conflicts or is likely to conflict with the objects of any society or class of societies, by general or special

order published in the Official Gazette, declare that such person or such class of persons shall be disqualified from being admitted, or for continuing, as members or shall be eligible for membership only to a limited extent, of any society or class of societies, so long as such person or persons are engaged in or carry on that profession, business, or employment, and the question whether a person is or is not so engaged in or carrying on any profession, business or employment or whether a person belongs or does not belong to such class of person as declared under this sub-section and has or has not incurred a disqualification under this sub-section shall be decided by the Registrar under section 11.

(6)Where the Registrar has decided under section 11 that a person has incurred a disqualification, he may, after conducting enquiry, by order, remove such person from the membership of the society and such person shall cease to be a member of the society.

Removal from 26. (1) Where a person becomes a member of any society on his making a membership in declaration as required by the bye-laws of the society or otherwise and such certain declaration is found to be false, then such person shall be disqualified to continue as a circumstances.

member of the society.

(2) Where a person continues as a member of the society notwithstanding the disqualification incurred by him under sub-section (5) of section 25 or under sub-section (1), he shall be removed from the society by the Registrar:

Provided that the Registrar shall, before making an order of removal give the person an opportunity of being heard.Sec. 1] THE GAZETTE OF INDIA EXTRAORDINARY 13

27. (1) No society shall without a sufficient cause, refuse admission to Open membership. membership to any person duly qualified under the provisions of this Regulation and its bye-laws.

(2)Where a society refuses to issue or accept the application for membership from an eligible person for admission as a member, or the payment made by him in respect of membership, such person may tender an application in such form as may be prescribed together with payment in respect of membership, if any, to the Registrar, who shall forward the application and the amount, if any, so paid, to the society concerned within a period of thirty days from the date of receipt of such application and the amount and thereupon, if the society fails to communicate any decision to the applicant within a period of three months from the date of receipt of such application and the amount by the society, the applicant shall be deemed to have become a member of such society.

(3) If any question arises whether a person has become a deemed member or otherwise, the same shall be decided by the Registrar after giving him an opportunity of being heard.

(4)Any person aggrieved by the decision of a society, refusing him admission to its membership, may prefer an appeal to the Registrar within a period of two months from the date of the decision of the society and every such appeal, as far as possible, be disposed of by the Registrar within a period of three months from the date of its receipt and the decision of the Registrar in appeal shall be final.

28.(1) Notwithstanding anything contained in section 25, a society of such class Nominal, as may be prescribed may admit any person as a nominal, associate, or sympathiser associate and sympathiser

member: member.

Provided that the total number of associate and sympathiser members in a society shall not exceed ten per cent. of the total number of members thereof.

(2) A nominal, associate or sympathiser member shall not be entitled to any share, in any form whatsoever, in the assets or profits of the society:

Provided that subject to the provisions of sub-section (7) of section 32, a nominal, associate or sympathiser member shall have such rights and privileges of a member and be subject to such liabilities of a member, as may be specified in the bye-laws of the society:

Provided further that the nominal or associate or sympathiser member may be issued non-voting shares which may not confer any interest in the management of the society including right to vote, to be elected as a member of the Managing Committee

or participate in the general body meetings:

Provided also that in case of co-operative bank, such shares shall be issued in accordance with the instructions issued by the Reserve Bank in this regard from time to time.

29.A person shall cease to be a member of a society on his resignation from the Cessation of membership. membership thereof being tendered in writing to the society and accepted by the society or on the transfer of the whole of his share or interest in the society to another member, or on his death, or removal or expulsion from the society:

Provided that, the resignation of a person from the membership of a society, if such member is not in debt to the society or is not a surety for an unpaid debt due to the society, shall unless it is accepted earlier be deemed to have been accepted on the expiry of one month from the date of tendering his resignation in writing to the society.

30. A member shall be entitled to exercise such rights as provided in this No rights of Regulation and rules made thereunder and bye-laws: membership to be exercised till due payments are made.14 THE GAZETTE OF INDIA EXTRAORDINARY [Part II—

Provided that, no member shall exercise the rights, until he has made such payment to the society in respect of membership, or acquired such interest in the society, as may be prescribed and specified under the bye-laws of the society, from

time to time:

Provided further that, in case of increase in minimum contribution of member in share capital to exercise right of membership, the society shall give due notice of demand to the members and reasonable period to comply with.

Duties of 31.It shall be the duty of every member of a society,— member.

(a) to attend at least, one general body meeting within a consecutive period

of five years:

Provided that, nothing in this clause shall apply to the member whose absence has been condoned by the general body of the society;

(b) to utilise minimum level of services at least once in a period of five consecutive years as specified in the bye-laws of the society:

Provided that a member who does not attend at least one meeting of the general body and does not utilise minimum level of services at least once in a period of five consecutive years, as specified in the bye-laws of such society shall be classified as a non-active member:

Provided further that when a society classifies a member as a non-active member, the society shall communicate such classification in such manner as may be prescribed to the concerned member within a period of thirty days from the date of

close of the financial year:

Provided also that a non-active member who does not attend at least one meeting of the general body and does not utilise minimum level of services as specified in the bye-laws, in next five years from the date of classification as a non-active member,

shall have no right to vote:

Provided also that a member classified as a non-active member shall, on fulfilment of the eligibility criteria as provided in this section be entitled to be re-classified as an active member:

Provided also that, if a question of a member being active or non-active arises, an appeal shall lie to the Registrar within a period of sixty days from the date of communication of such classification and his decision shall be final.

Voting powers 32.(1) No member of any society shall have more than one vote and the right of member. to vote shall be exercised personally, and not by proxy:

Provided that in the case of an equality of votes, the Chairperson shall have a casting vote.

(2)Where a share of a society is held jointly by more than one person, each such person shall have, in the absence of preceding person or persons, a right to vote:

Provided that such person shall be present and not be a minor:

Provided further that where the manner of voting is by ballot, all the joint holders of the share may appoint one of them to vote on their behalf in the affairs of the society.Sec. 1] THE GAZETTE OF INDIA EXTRAORDINARY 15

(3)A society which has invested any part of its funds in the shares of another society, may appoint one of its members to vote on its behalf in the affairs of that other society, and accordingly such member shall have the right to vote on behalf of the first

society:

Provided that the first society shall not appoint any of its members who is also its paid employee.

(4) A company or any other body corporate constituted under any law for the time being in force in the Union territory which has invested any part of its funds in the shares of a society may appoint any one of its directors or officers to vote on its behalf in the affairs of such society and accordingly such director or officer shall have the right to vote on behalf of the company or the body corporate, as the case may be.

(5)Where a firm has invested any part of its funds in the shares of a society, any of its partners appointed by the firm shall be entitled to vote in the affairs of the society on behalf of the firm.

(6)A local authority or public trust which has invested any part of its funds in the shares of a society may appoint any of its members or trustees to vote on its behalf in the affairs of that society and accordingly, such person shall have the right to vote on behalf of the local authority or the public trust, as the case may be.

(7)No nominal or sympathiser member shall have the right to vote and shall not be eligible to be a member of a Committee or being appointed as a representative of the society on any other society.

(8)The person who has committed a default and remains as such defaulter for a period of one year from the due date of repayment of such loan or interest or instalment shall not be entitled to vote as a member of a society till all repayments are made.

(9) No person shall exercise the right to vote at an election of a member of a Committee in a financial year, unless he is a member of the society for the whole of

the financial year preceding the financial year in which the election is being held:

Provided that no member society of a federal society shall exercise the right to vote at an election of a member of a Committee unless such society has its last accounts audited in class A, B or C.

(10)Nothing in sub-section (9) shall apply to the first election of a Committee to be held immediately after the registration of a society.

(11)The voting rights of individual members of a federal society shall be such as may be regulated by the rules and bye-laws of the society.

33.No member of any society, other than the Administrator of a society shall Restrictions on holding of hold more than such portion, not exceeding one-fifth of the total share capital of the shares.

society:

Provided that the Administrator may, by notification, specify in respect of any class of societies, a higher maximum than one-fifth of the share capital.

34.(1) Subject to the provisions of section 33 and sub-section (2), a transfer of, Restrictions on transfer of or charge on, the share or interest of a member in the capital of a society shall be shares or subject to such conditions as may be prescribed. interest.

(2) A member shall not transfer any share held by him, or his interest in the capital or property of any society, or any part thereof, unless,—16 THE GAZETTE OF INDIA EXTRAORDINARY [Part II—

(a)he has held such share or interest for not less than one year; (7) A person under any such disability referred to in sub-section (6) shall, on his disability ceasing, furnish to the society a declaration of his willingness to

(b) the transfer or charge is made to the society, or to a member of become a member and on receipt of such declaration, the society, the society, or to a person whose application for membership has been notwithstanding anything contained in this section may, and if it is a accepted by the society; and co-operative housing society, admit him as a member, if he is not otherwise

(c)the Committee has approved such transfer. disqualified and a person so admitted shall become entitled to all the rights and privileges of a member subject to liabilities like any other member of the

(3) Notwithstanding anything contained in sub-sections (1) and (2), where society. a member is allowed to resign, or is expelled, or ceases to be a member on account of his being disqualified by this Regulation or by the rules made 36. The share or interest of a member in the capital of a society, or in the Share or interest thereunder or by the bye-laws of the society, the society may acquire the share loan stock issued by a housing society, or in the funds raised by a society from not liable to attachment.

or interest of such member in the share capital by paying for it at the value its members by way of savings deposits shall not be liable to attachment or sale

determined in the manner prescribed: under any decree or order of a court for or in respect of any debt or liability incurred by the member and accordingly, neither a Receiver under the

Provided that the total payment of share capital of a society in any 31 of 2016. Insolvency and Bankruptcy Code, 2016, nor any such person or authority under financial year for such purposes does not exceed ten per cent. of the paid-up any corresponding law for the time being in force in the Union territory, shall be share capital of the society on the last day of the immediately preceding entitled to or have any claim on, such share or interest.

financial year.

37.(1) Every member of a society shall be entitled to inspect, free of cost, Rights of

Explanation.––For the purposes of this sub-section, the expression at the society's office during office hours, or any time fixed for the purpose by members to see “financial year” means the year ending on the 31st day of March or, in the case books, etc.

the society, the Regulation, the rules, and the bye-laws, the last audited annual of any society or class of societies the accounts of which are with the previous balance sheet, annual audit report, the profit and loss account, a list of the sanction of the Registrar balanced on any other day, the year ending on such day.

members of the Committee, a register of members, the minutes of general

(4) Where the Administrator is a member of a society, the restrictions meetings, and those portions of the books and records in which his transactions contained in this section shall not apply and that Administrator may, with the society have been recorded.

notwithstanding anything contained in this Regulation, withdraw from the

(2) A society shall furnish to a member, on request in writing and on society its share capital at any time, after giving to the society notice thereof of payment of such fees as may be prescribed therefore, a copy of any of the not less than three months.

documents mentioned in sub-section (1).

Transfer of 35. (1) On the death of a member of a society, the society shall subject to

(3) A society shall appoint any officer or officers as it deems fit as interest on death the provisions of sub-section (2), transfer his share or interest in the society to a of member. Co-operative Information Officer, for the purpose of discharging the functions person or persons nominated by such member in accordance with the rules or, in as provided under sub-sections (1) and (2).

the absence of such nomination to such person as may appear to the Committee to be the heir or legal representative of such member. (4) The Co-operative Information Officer shall, within a period of thirty days from the date of receipt of application, either provide the information or

(2) No such transfer shall be made unless such nominee, heir or legal reject the application specifying the reason therefor. representative, as the case may be, is duly admitted as a member of the society.

(5) Any member of the society whose application has been rejected may

(3) Notwithstanding anything contained in sub-section (2), any such prefer an appeal to the Co-operative Ombudsman within a period of one month nominee, heir or legal representative, as the case may be, may require the from the date of such rejection and his decision shall be final.

society to pay to him the amount equivalent to the value of the share or interest of the deceased member, in such manner as may be prescribed. 38. (1) Where a person has ceased to be a member of a society under Liability of

section 29,–– person who has

(4) A society may pay all other monies due to the deceased member from ceased to be the society to such nominee, heir or legal representative, as the case may be. (a) his liability in respect of any debt due by him to the society and member.

in respect of any outstanding demand owing to the society by him shall

(5) All transfers and payments duly made by a society in accordance with continue as if he had not ceased to be a member; and the provisions of this section, shall be valid and effectual against any demand made upon the society by any other person. (b)his liability for the debts of the society as they stood immediately before the date of such cessation shall, save as otherwise provided in

(6) Nothing in the foregoing provisions of this section or section 25 shall sub-section (2), continue for a period of three years from such date, as if he be construed to prevent a minor or a person of unsound mind from acquiring by

had not ceased to be a member: inheritance or otherwise, any share or interest of a deceased member of a society, but his liability in consequence of such acquisition shall be limited to Provided that the liability shall be attached to the estate of such person, if his interest in the shares of the society and the unpaid dividends as also the loan, such cessation was due to his death or such person dies after his ceasing to be a stock, bonds, if any, and the interest earned on them which is unpaid and he member.

shall not have the right of voting.Sec. 1] THE GAZETTE OF INDIA EXTRAORDINARY 17

or interest of such member in the share capital by paying for it at the value its members by way of savings deposits shall not be liable to attachment or sale

determined in the manner prescribed: under any decree or order of a court for or in respect of any debt or liability incurred by the member and accordingly, neither a Receiver under the

financial year.

37.(1) Every member of a society shall be entitled to inspect, free of cost, Rights of

members of the Committee, a register of members, the minutes of general

notwithstanding anything contained in this Regulation, withdraw from the

documents mentioned in sub-section (1).

Transfer of 35. (1) On the death of a member of a society, the society shall subject to

(5) Any member of the society whose application has been rejected may

section 29,–– person who has

in respect of any outstanding demand owing to the society by him shall

shall not have the right of voting.18 THE GAZETTE OF INDIA EXTRAORDINARY [Part II—

(2)Where a society is ordered to be wound up under any provisions of this (c)the date on which each person was admitted as a member;

Regulation, then the liability of a person under clause (b) of sub-section (1), who

(d)the date on which any person ceased to be a member; and has ceased to be a member thereof within three years immediately preceding the date of order of winding up, shall continue, until the entire liquidation (e)such other particulars as may be prescribed:

proceedings are completed.

Provided that where a society has by or under this Regulation, permitted a Insolvency of 39.Notwithstanding anything contained in the Insolvency and Bankruptcy member to transfer his share or interest on death to any person, the register shall members. Code, 2016, or any corresponding law for the time being in force in the Union 31 of 2016. also show against the member concerned the name of the person entitled to the territory, the dues of a society from a member, in insolvency proceedings against share or interest of the member, and the date on which the nomination was recorded.

him, shall rank in order of priority next to his dues to the Administration or to a

(2)The register shall be prima facie evidence of the date on which any person local authority. was admitted to membership, and of the date on which he ceased to be a member.

Expulsion of 40.(1) A society may, by resolution passed by three-fourths majority of all members. the members present and voting at a general meeting of members held for the 44. Every society shall keep, at the registered address of the society, a Copy of copy of this Regulation, the rules and bye-laws, and a list of members open to Regulation, etc., purpose, expel a member for acts which are detrimental to the society: to be open to inspection to the public, free of cost, during office hours or any hours fixed by inspection.

Provided that no resolution shall be,— the society therefor.

(i) valid, unless the member concerned is given an opportunity of 45. (1) A copy of any entry in any book, register or list, regularly kept in Admissibility of representing his case to the general body; the course of business and in the possession of a society shall, if duly certified in copy of entry as evidence.

such manner as may be prescribed, be admissible in evidence of the existence of

(ii) effective, unless it is submitted to the Registrar for his approval the entry, the matters and transactions therein recorded in every case where, and

and approved by him: to the same extent to which, the original entry would, if produced, have been

Provided further that the approval or disapproval of the Registrar shall be admissible to prove such matter. communicated to the society within a period of three months from the date of

(2) In the case of such societies as the Administrator may by general or such submission, and in absence of such communication, the resolution shall be special order in writing direct, no officer of a society shall in any legal effective.

proceedings to which the society is not a party, be compelled to produce any of

(2) No member of a society who has been expelled under sub-section (1) the society’s books, the contents of which may be proved under sub-section (1) shall be eligible for re-admission as a member of that society, or for admission as a or to appear as a witness to prove the matters, transactions and accounts therein member of any other society, for a period of two years from the date of such recorded, except by order of the court or a Judge made for special cause.

expulsion:

46.Nothing contained in clauses (b) and (c) of sub-section (1) of section 17 of Exemption from

Provided that the Registrar may, in special circumstances, sanction the 16 of 1908. the Registration Act, 1908 shall, apply— compulsory registration of re-admission or admission, within the said period, of any such member as a

(a) to any instrument relating to shares in a society not being a instruments member of the said society or of any other society, as the case may be. relating to housing society notwithstanding that the assets of the society consist in shares and

CHAPTER IV whole or in part of immovable property; or debentures of society.

INCORPORATION, DUTIES AND PRIVILEGES OF SOCIETIES (b) to any debenture issued by any society and not creating, declaring, assigning, limiting or extinguishing any right, title or interest to Incorporation of 41. A society on its registration shall be a body corporate by the name or in immovable property, except in so far as it entitles the holder to the society. under which it is registered, with perpetual succession and a common seal, and security afforded by a registered instrument whereby the society has with power to acquire, hold and dispose of property, both moveable and mortgaged, conveyed or otherwise transferred the whole or part of its immoveable, to enter into contracts, to institute and defend suits and other legal immovable property, or any interest therein to trustees for the benefit of proceedings, and to do all such things as are necessary for the purpose for which the holders of such debentures; or it is incorporated.

(c) to any endorsement upon, or transfer of, any debenture issued by Address of 42. Every society shall have an address, registered in accordance with the any society. society. rules, to which all notices and communications may be sent and the society shall send notice in writing to the Registrar of any change in the said address, within a 47. The Administrator may, by notification and for the reasons specified Power to period of thirty days thereof. therein, exempt any society or class of societies from— exempt from taxation.

Register of 43. (1) Every society shall keep a register of members, and enter therein (a)the stamp duty with which, under any law relating to stamp duty for members. the following particulars, namely:— the time being in force, instruments executed by or on behalf of a society or by an officer or member thereof, and relating to the business of the society, or any

(a)the name, address and occupation of each member; class of such instruments, or awards of the Registrar or his nominee or Board

(b) in the case of a society having share capital, the share held by each of nominees under this Regulation, are respectively chargeable; member;Sec. 1] THE GAZETTE OF INDIA EXTRAORDINARY 19