WINDING UP OF CO-OPERATIVE SOCIETIES
1. Before passing the order under section 63, the Registrar shall give an opportunity to the society to show cause against the proposed order. The show cause notice shall be sent to the President of the Society as its registered address under registered post. The service of this notice will be complete after 48 hours of the posting of the letter properly addressed and pre-paid, containing the notice. The notice shall state the grounds on which the order under section63 is proposed to be made.
2. After considering the reply from the Society which shall be supported by the resolution its committee, or if no reply is received by the Registrar within fifteen days of the service of the notice under sub-rule (1), he Shall proceed to pass the order under section 63.
3. The order passed under section 63 and sub-section (1) of section 66 shall be communicated to the President of the society in the manner specified under sub-section (4) of section 63, at the registered address of the Society. The communication will be complete as soon as the letter containing the order is so posted.
4. The order referred to in sub-rule (3) shall also be published in the official Gazettee.
5. The order referred to in sub-rule (3) shall take effect from the date of order notwithstanding whether or not it is published in the official Gazette and shall operate in favour of all creditors, contributories, debtors and any other persons, having custody, possession and control over any asset or record of the society.
1. Where a liquidator is appointed under sub-section (1) of section 66, the Registrar may limit or restrict his powers by order appointing him or by subsequent order but, otherwise, he shall have the same powers as a liquidator is given in the Act.
2. The Registrar may remove the liquidator at any time without assigning any reasons and may appoint another liquidator. The liquidator on his removal shall hand over all the property, documents, record etc. relating to the society under liquidation to his successor or to any person nominated by the Registrar in this respect. A charge report to be signed by the relieved and relieving officer shall be drawn and a copy of the same duly signed shall be forwarded to the Registrar.
3. The liquidator shall be described by the style liquidator of particular society in respect of which he acts and not by his individual name.
1. The liquidator shall, as soon as the order of winding up of a co-operative society takes effect, publish by such means as he may think proper, a notice requiring all claims against the co-operative society, the winding up of which has been ordered to be submitted to him within one month of the publication of the notice. All liabilities recorded in the account book of a co-operative society shall be deemed if so facto have been duly submitted to him und«r this sub-rule.
2. The liquidator may fix time within which the creditors are to prove their debts or claims. If no claim is made within two months of the date of order of winding up, the liquidator may refuse to entertain such claims.
3. The liquidator soon after his appointment shall take charge of the books of accounts and other documents of the society and all its assets. There shall be prepared immediately on the relevant date a statement as to affairs of the society containing the following particulars:-
(a) the assets of the society stating separately the case balance in hand and at the Bank, if any, and the negotiable securities, if any, held by the society;
(b) its debts and liabilities;
(c) the names and addresses and occupation of its creditors stating separately the amount of secured and unsecured debts and in the case of secured debts, particulars of the securities given; '
(d) the debts due to the society and the names, residences and occupations of the persons from whom they are due and amount due; and
(e) such other information as may be called by the Registrar.
4. The statement required to be prepared under sub-rule (3) shall be made on the basis of the record of the society. audit reports, and on the basis of the statements made by the members of the committee at the relevant date or by the person who is at that date, the Manager, Secretary or Treasurer or other officer of the Society. The liquidator shall examine them on oath. This statement shall be submitted by the liquidator to the Registrar within twenty one days of the date of his appointment or within such extended time not exceeding three months from the date of the said order.
5. The liquidator shall, after setting the assets and liabilities of the co-operative society as they stood on the date on which the order for winding up is made, proceed next to determine the contribution to be made by each of its members or by the estates of nominees, heirs or legal representatives of deceased members or by any officers or former officers to the assets of the society under clauses (b) and (c) of sub-section (2) of section 67. Should necessity arise, he may make a subsidiary order regarding such contributions and such order shall be enforceable in the same manner as the Original order.
6. As soon as-practicable after orders under sub-rule (5) have been passed, the liquidator shall settle a list of contributions with powers to rectify the membership register in pursuance of any order which may be passed by the arbitrator or the Registrar in accordance with the provision of the Act and the rules, and shall cause the assets to be collected.
7. In setting the/list referred to in sub-rule (6) the liquidator shall distinguish between those who are contributories in their own rights and those who are contributories as being representatives of or liable for the debts of others.
8. The liquidator may at any time after his appointment require any contributory for the same being-on the list of contributories, any trustee, banker, agent or officer of the society to pay, deliver, surrender or transfer forthwith to the liquidator any money, property or books 6r paper in his hands to which the society is prima-facie entitled.
9. No contributory for the time being on the list shall be allowed by way of set off any money claimed to be due to him or to the estate he represents, from the society in respect of any independent dealing or contract with the society.
10. All funds in charge of the liquidator shall be deposited in the Financing Bank in the current account to be opened in the name of the society under liquidation which shall be deposited by him in this account within 24 hour of their, receipt. All payments on account of the society shall be made by cheques drawn by the liquidator in favour of the payee. The liquidator may keep with him a cash balance of Rs. 20 to meet petty expenses on liquidation proceedings.
11. Any order passed by the liquidator under clauses (b) and (e) of sub section (2) of section 67 shall be submitted by him to the Registrar for his approval. The Registrar may confirm or modify such order or refer it back to the liquidator for further enquiry or action.
12. Any person untruthfully so stating himself as the creditor or the contributory of the society shall be guilty of the offence under section 182 of the Indian Penal Code. (Act XIV of 1860) and shall on the application of the liquidator be punished accordingly. ,
Subject to the provisions of rule 98 as to the preferential payments, the assets of the society shall be applied in order of priority as given below for payment of the liabilities:-
(1) Pro-rata payment of all outside liabilities.
(2) Pro-rata repayment of loans and deposits of members.
(3) Pro-rata refund of share capital.
(4) Pro-rata payment of dividend on the shares at the rate no exceeding 6-1/4 per cent per annum for the period of liquidation.
In the winding up proceedings, there shall be paid in priority to alt other debts and liabilities of the society under liquidation:-
(a) All Government dues, all revenues, taxes ceases and rates due from the society to the Central Government or to the local authority at the relevant date and having become due and payable within two years next before that date.
(b) All wages or salary of any employee in respect of services rendered to the society and due for a period not exceeding two months within the twelve months next before the relevant date subject to maximum of Rs. 500.
(c) The debts mentioned in the foregoing clause (a) and (b) shall rank equally amongst themselves and be paid in full, unless the assets are insufficient to them, in which case they shall abate in equal proportion.
A creditor of the society under liquidation may apply to the liquidator for payment of interest on any debt due to him from the society up to the date of order of the Registrar, for winding up. The rate at which the interest may be paid shall be in the case of Financing Bank, the contract rate and in any other case the rate which may be fixed by the Registrar, which shall not exceed the contract rate. Provided that if any Surplus assets remain after all the liabilities including the liabilities on shares have been paid off further interest to rate not exceeding contract rate may be allowed by the Registrar to the Creditors from the date mentioned above till the date of repayment of the principal.
If any liability cannot be discharged by the liquidator owing to the whereabouts of the claimant not being known or any other cause, the amount representing such undischarged liabilities shall be deposited in the name of the Registrar with the Financing Bank and shall remain at the disposal of the creditors for a period of three years from the date of winding up order; thereafter this amount shall be treated as surplus amount which shall be utilized in the manner mentioned in rule 105. The Registrar may under special circumstances pay them liabilities claimed even after the stimulated period of three years.
1. The liquidator shall keep such books and accounts as may be laid down by the Registrar or audit officer.
2. The liquidator shall during the tenure of his office but not less' than twice in a year prepare an account of his receipts and payments as Liquidator. A senior auditor shall be appointed by the Registrar as the audit officer who shall audit these accounts on behalf of the Registrar. When accounts are audited by the audit officer one copy shall be kept by the audit officer and the other returned to the liquidator with his report. The liquidator shall produce for purposes of audit all vouchers and accounts and shall furnish such information as may be required by the audit officer. The liquidator shall rectify all irregularities and defects pointed out by the audit officer to his satisfaction and shaft submit to him a rectification report.
3. No audit fee shall be charged for audit of the accounts under this rule.
Whenever it is considered necessary by the liquidator to defend or to institute any legal proceedings for and on behalf of the society under liquidation, he shall approach the Registrar who shall after considering all the facts and circumstances of the case, provide the service of the legal practitioner at the cost of the society under liquidation, if the Registrar or the Government has been imp leaded in such proceedings the cost of defending them by the Registrar or the Government shall also be paid out of the funds of the society. If no funds are available with the liquidator arrangements shall be made at Government expenses but the cost of such arrangements shall be ultimately recovered from the contributories and paid to the Government as preferential debt under clause (a) of sub-rule (1) of rule 98.
The liquidator shall make a report to the Registrar for purposes of taking action under section 59 where in his opinion, any fraud has been committed by any person in the promotion, rgnisation.registr8tion or management of the society under liquidation in relation to the society since its registration or any deficiency in the assets of the society has been caused by the breach of trust, or willful negligence or by retaining any money or other property belonging to the society. This report shall be submitted to the Registrar as soon as practicable after preparation of the statement referred to in sub-rule (3) of rule 96. On receipt of this report, the Registrar shall proceed to take action under section 59.
1. Any transfer of shares in a society under liquidation made within six months next before the relevant date except transfer of shares to the deceased members, heirs or nominee, shall be void and not binding upon the liquidator notwithstanding anything contained in the Act; rules or the bye-laws of the society.
2. Any transfer of property, movable or immovable delivery of goods, payment, execution or other acts relating to property made taken or done by or against a co-operative society within six months next before the relevant date, which, had it been made, taken or done by or against an individual within three months before the presentation of an insolvency petition on which he is adjudged insolvent, would be deemed in his insolvency a fraudulent preference, shall in the event of the co-operative society being wound up, be deemed a fraudulent preference of its creditors and contributories and be invalid accordingly.
105. Termination of Liquidation Proceedings
The winding up proceedings of a society shall be closed within one year from the date of the order of the winding up, unless the Registrar extends the period.
Provided that the Registrar shall not grant any extension for a period exceeding six months at a time and three years in the aggregate, and shall immediately after the expiry of three years from the date of the order for winding up of the society, deem, that the liquidation proceedings have been terminated if there are no central amounts due to the Governments or the Financing Bank by the society and pass an order terminating the liquidation proceedings.
Explanation - : In the case of co-operative society which is under liquidation at the time of commencement of the Act, the order for winding up of the society shall be deemed for the purpose of this rule to have been passed on the date of such commencement.
2. Notwithstanding anything contained in the foregoing sub-rule the Registrar shall terminate the liquidation proceedings on receipt of the final report from the liquidator. The final report of the liquidator shall state that the liquidation proceedings of the society have been closed, and how the winding up has been conducted and the property and the claims of the society have been disposed of and shall include a statement showing a summary of the account of the winding up including the cost of liquidation, the amount (if any) standing to the credit of the society in liquidation, after paying off its liabilities including the share or interest of members, and suggest how the surplus should be utilised.
3. The liquidator before submitting the final report may call a meeting of general body of the society and place the report before it if permitted by the Registrar. .
The surplus assets, as shown in the final report of the liquidator of a society which has been wound up, may either be divided by the Registrar, with the previous sanction of the Lt. Governor, amongst its members in such manner as may be prescribed or be devoted to any object or objects provided in the bye-law of the society, if they specify that such surplus shall be utilised for the particular purpose or may be utilised for both the purposes. Where the surplus is not so divided amongst the members and the society has no such bye-laws, the surplus shall vest in the Registrar, who shall hold it in-trust and shall transfer it to the reserve fund of a new society registered with a similar object, and serving more or less an area which the society to which the surplus belonged was serving if considered feasible and advisable by the Registrar.
Provided that, where no such society exists or is registered within three years of the cancellation of registration of the society whose surplus is vested in the Registrar, or where the Registrar does not think it desirable and feasible to do so, the Registrar may distribute the surplus, in the manner he thinks, best, among any or all of the following:-
(a) An object of public utility and of local interest as may be recommended by the members in general meeting.
(b) A federal society with similar objects to which the society of which registration has been cancelled, was eligible for affiliation, or where no federal society exists, the State federal society which may be notified in this behalf by the State Government and
(c) any charitable purpose as defined in section 2 of the Charitable Endowments Act, 1890.
The expression “relevant date” as appearing in this chapter shall mean the date of order of winding up made under sub-section (1) of section 63.
All the books and records of a co-operative society whose registration has been cancelled may be destroyed under the orders of the Registrar after the expiry of a period of three years from the date of cancellation.
The order made by the Registrar under sub-section (1) of section 69 shall also be published in the official Gazette.