THE KERALA CO-OPERATIVE SOCIETIES ACT, 1969 (Act 21 of 1969) as on 01.01.2014 Part 2

PLEASE NOTE THAT THIS ACT IS NOT CORRECTLY PROOFREAD WITH ORIGINALS. SO KINDLY MAKE SURE THAT THEY MATCH WITH THE ORIGINALS. DEFECTS IF ANY NOTICED MAY KINDLY BE BROUGHT INTO NOTICE BY WAY OF COMMENT SO THAT WE MAY CORRECT THEM. SUFFICIENT FURTHER NOTES SHALL BE INSERTED IN DUE COURSE.

THE KERALA CO-OPERATIVE SOCIETIES ACT, 1969 (Act 21 of 1969)

CHAPTER IV

MANAGEMENT OF CO-OPERATIVE SOCIETIES

27. Final authority in a society

(1) Subject to the provisions of this Act, the rules and the bye-laws, the final authority of a society shall vest in the general body of its members:

Provided that nothing contained in this sub-section shall affect the exercise by the committee or any officer of a society of any power conferred on such committee or such officer by this Act or the rules or the bye-laws.

(2) Notwithstanding anything contained in sub-section (1), where the area of operation of a society is not less than such area as may be prescribed, or where the society consists of not less than such number of members as may be prescribed, the society may provide by an amendment of its byelaws for the constitution of a smaller body consisting of such number of the members of the society as may be prescribed, elected in accordance with the rules (hereinafter referred to as the representative general body) to exercise all or any of the powers of the general body as may be specified in the bye-laws except the power to conduct election of members of the committee, and any reference, by whatever form of words, in this Act to the general body or a meeting thereof shall, where a representative general body has been constituted under this sub-section, have effect in respect of the powers exercisable by the representative general body as if such reference were a reference to the representative general body or a meeting thereof, as the case may be:

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

(3) The exercise of any power by the representative general body shall be subject to such restrictions and conditions as may be specified in the rules or the bye-laws.

28. Appointment of committee

(1) The general body of a society shall [^6. constitute a committee, for a period [^16. of] [^10. five years]] in accordance with the bye-laws and entrust the management of the affairs of the society to such committee:

[^16. Explanation:—Notwithstanding anything contained in the bye-laws, for the purpose of calculating the term of committee, five years from the date of election will be taken to be the term of the committee.]

Provided that, in the case of a society registered after the commencement of this Act, the persons who have signed the application to register the society may appoint a committee to conduct the affairs of the society for a period of three months from the date of registration or for such further period as the Registrar may consider necessary; but the committee appointed under this proviso shall cease to function as soon as a committee has been constituted in accordance with the bye-laws:

[^4.Provided34 further that where the bye-laws so provide, the Government or the Registrar may nominate all or any of the members of the first committee including the president or chairman, for a period not exceeding [^6.twelve months.]]

[^10. [^14. 2 provisos Omitted]]

[^16. Provided also that in the case of the following type of co-operative societies election shall be conducted on ward basis in accordance with the bye-laws, namely:—

(a) Primary Agricultural Credit Societies/Service Co-operative Banks/ Farmers Service Co-operative Banks/Rural Banks/Regional Banks;

(b) Urban Co-operative Banks;

(c) Urban Co-operative Societies;

(d) Primary Agricultural and Rural Development Banks;

(e) Primary Housing Co-operative Societies.]

[^10. (1A) [^14. Notwithstanding anything contained in the bye-laws of the Society, the number of the members of the committee shall not be less than seven and shall not exceed [^16. Fifteen] in the case of primary Co-operative Societies and [^16. Twenty one] in the case of all other types of co-operative societies.

Provided that in the case of committees of Primary Co-operative Societies constituted prior to the commencement of the Kerala Co-operative Societies (Amendment) Act, 2010 the maximum number of members shall be fifteen.]

[^16. Provided further that this section shall not be applicable to the committees of Primary Co-operative Societies and all other types of co-operative societies constituted prior to the commencement of the Kerala Co-operative Societies ( Amendment) Act, 2013:

Provided also that this section shall not be applicable to the societies where election notification was issued and election procedure was started on the basis of the existing provisions of the Act, prior to the commencement of the Kerala Co-operative Societies (Amendment) Act, 2013]

(1B) Notwithstanding anything contained in the bye-laws of any Federal Co-operative Society, the number of individuals in the society and the Committee thereof shall not exceed twenty five percent of the total number of members in the society or in the Committee, as the case may be [^16. subject to the limit specified in sub-section (1A) of section 28.]]

[^14.(1C) Notwithstanding anything contained in the bye-laws of a Primary Credit Society or an Urban Co-operative Bank, one seat in the committee of each such society shall be reserved for the members having a deposit of ten thousand rupees and above.]

[^15.(1D) Notwithstanding anything contained in this Act or in any judgment, decree or order of any court, the registration of any Primary Co-operative Agricultural and Rural Development Bank without the bifurcation of area, assets and liabilities of the society and the constitution of the committee pursuant to any such registration without such bifurcation shall be void and the Registrar shall appoint Special Officer for each of such societies which were registered without bifurcation of area, assets and liabilities.

(1E) The Special Officer so appointed shall,—

(i) take into custody or bring under his control, the property, effects and actionable claims to which the erstwhile society is or appears to be entitled to and shall take steps as may be necessary or expedient to prevent loss or deterioration of or damage to, such property, effects and claims;

(ii) take such steps for the bifurcation of area, assets and liabilities of the society and also shall take all steps to register new society with the members of the society so bifurcated and constitute the committee;

(iii) such bifurcation shall be completed within a period of one year from the date of commencement of the Kerala Co-operative Societies (Amendment) Ordinance, 2012 (9 of 2012);

(1F) Notwithstanding anything contained in the bye-laws of the District Co-operative Bank, two seats in the committee of each District Co-operative Bank shall be reserved for depositors in the Bank.

(lG) [^16. Notwithstanding anything contained in the bye-laws of a society, the committee in office shall be competent to co-opt two persons or representatives who are having experience in the field of banking, management, finance or specialization in any other field, relating to the objects and activities undertaken by the co-operative society as members of the Board of such society:

Provided that the number of such co-opted members shall not exceed two in addition to maximum limit specified in sub-section (lA):

Provided further that such co-opted members shall not have the right to vote in any election of the co-operative society in their capacity as such member and is not eligible to be elected as office bearers of the board:

Provided also that such co-opted members of a co-operative society shall also be members of the board and such members shall be excluded for the purpose of counting the total number of directors specified in sub-section (lA).]

(1H) Notwithstanding anything contained in the bye-laws of the District Co-operative Bank, at least one seat in respect of each taluk shall be reserved for the representatives of Primary Agricultural Credit Societies in the committee of the District Co-operative Bank.

(1 I) Notwithstanding anything contained in the bye-laws of the District Co-operative Bank, at least four seats in the committee of the District Co-operative Bank shall be reserved for other types of co-operative societies as members in the District Co-operative Bank.]

[^16. (1J) Notwithstanding anything contained in the bye-laws of the society, casual vacancy of an elected member of the committee shall be filled up by nomination out of the same class of members, if the term of office of the board is less than half of its original term.]

(2) Notwithstanding anything contained in any law for the time being in force, a person shall be disqualified for appointment as, or for being, a member of a committee—

(a)   if he is member of the committee of [^14.more than one society of the same type; or]

(b)   if he is member of the committees of [^14.more than two societies of different types]

Provided that nothing contained in this sub-section shall be deemed to disqualify a person for election as, or for being, a delegate of a society

(3) Nothing contained in clause (a) of sub-section (2) shall be deemed to disqualify a member of the committee of a society for appointment as, or for being, a member of the committee of the apex or central society of the same type:

Provided that no member of a committee shall be the president or chairman of more than one society of the same type.

(4) The members of a committee may be paid honorarium at such rates as may be prescribed.

[^4. (5) The quorum for a meeting of a committee shall be such number of members just above fifty per cent of the total number of members of that committee.]

[^3. [^10.28A Reservation for women members and members belonging to Scheduled Castes or Scheduled Tribes in the committee.—

(1) Notwithstanding anything contained in this Acts the rules or the bye-laws, there shall be reserved in the committee of [^6.Amended later] every society, [^14.three of the total seats for women members] and one seat for a member belonging to the Scheduled Castes or the Scheduled Tribes.]

(2) Nothing contained in sub-section (1) shall prevent the women members and members belonging to the Scheduled Castes or Scheduled Tribes from being elected to the non-reserved seats in the committee.]

[^6. [^10.(3) [^14. Where there is no representation of women or members belonging to Scheduled Castes or Scheduled Tribes in the committee of a Society including those of the societies formed exclusively for the benefit of women and for persons belonging to Scheduled Castes or Scheduled Tribes, the Government or the Registrar shall nominate women and persons belonging to Scheduled Castes or Scheduled Tribes to the elected committee from among the members of such societies.]]

(4) A person nominated to the committee of a society or Bank shall have all the powers of a member elected to such committee and shall hold office during the pleasure of the Government or the Registrar, as the case may be.]

[^14.28AA. Reservation for persons with banking experience or professional qualification in the committees of Urban Co-operative Banks.—Notwithstanding anything contained in the bye-laws of any Urban Co-operative Bank, there shall be reserved not less than two seats in the committees of such banks for members who possess experience in banking or professional qualifications:

Provided that this section shall not be applicable to the committees of Urban Cooperative Banks constituted prior to the commencement of the Kerala Co-operative Societies (Amendment) Act, 2010.

Explanation:—For the purpose of this section,—

(i)"members who possess experience in banking" means members who are or were in paid service of a Commercial Bank, State Co-operative Bank, District Co-operative Bank, an Urban Cooperative Bank or a Service Co-operative Bank in the managerial cadre.

(ii)"professional qualifications" means membership in the Institute of Chartered Accountants of India or Masters Degree in Business Administration or Membership in the Institute of Cost and Works Accountants of India or Masters Degree in Commerce with experience in banking or experience in the inspection or audit of banks, including Co-operative Bank.]

[^11.[^14.28AB] Election and Removal of President, Vice President, etc.--(1) A committee constituted under sub-section (1) of section 28 shall elect from themselves a President, a Vice-President, a Treasurer or any other officer, by whatever name he is designated, in the manner as may be prescribed.

(2) A committee shall remove from office the President, Vice-President or the Treasurer or any other officer of the committee if a motion expressing want of confidence in any or all of them is carried with the support of the majority of the members of such committee in accordance with the procedure as may be prescribed.]

[^10. 28B State Co-operative Election Commission

(1) [^16.Notwithstanding anything contained in this Act or in the Rules, the Government shall by notification in the Gazette, constitute a State Cooperative Election Commission for the superintendence, direction and control of the preparation of electoral rolls and for the conduct of all elections to cooperative societies including election to the President/Vice President and Representative General Body]

[^16. Omitted]

(2) [^16.The State Co-operative Election Commission shall consist of not more than three members, one among them shall be the State Chief Co-operative Election Commissioner and others shall be Commissioners. The State Chief Co-operative Election Commissioner shall be an officer not below the rank of Special Secretary to Government. The Commissioners shall be persons, who are or have been officers of the Department of Co-operation, not below the rank of Additional Registrar of Co-operative Societies. The appointment of State Chief Co-operative Election Commissioner and the Commissioners shall be for a period of five years from the date of assumption of office or sixty two years, whichever is earlier:

Provided that, in the case of officers in service, the Chief Election Commissioner and the Commissioners shall vacate their offices on their date of superannuation:

Provided further that

(i) the State Co-operative Election Commission shall in consultation with the Registrar have power to fix, alter or revise the maximum and minimum limit of election expenses to be spent by different classes of societies by special or general order;

(ii) the Election Commission may fix fee or cost for election process, in accordance with rules made in this behalf;

(iii) the procedure for payment of election fee or cost shall be such, as may be prescribed.]

(3) The State Co-operative Election Commission shall, in consultation with the Government [^14.and the Registrar] designate or nominate officers and employees of the Government to assist the Commission in the conduct of election to the committee [^14.and Representative General Bodies] of such society.

(4) Subject to the provisions of this Act, the Government may, by rule, make provision with respect to all matters relating to, or in connection with elections to the committee [^14. and Representative General Bodies] of a society.]

29. Annual general body meeting

(1) A general body meeting of a society shall be held [^16. within a period of six months of close of the financial year] for the purpose of-

(a) approval of the budget with reference to the programme of the activities of the society prepared by the committee for the ensuing year;

(b) election, if any, in the prescribed manner of the members of the committee other than nominated members;

(c)    consideration of the audit report [^16.and the report and follow up action of the committee thereon] and the annual report;

[^16.(ca) review of operational deficit/loss, if any, and programme to reduce such deficit;

(cb) approval of the programme of activities of the society prepared by the committee for the ensuing year;

(cc) review of annual report and accounts of any subsidiary organization, if any;

(cd) amendment of bye-laws;

(ce) declaration regarding date of holding of its general body meeting and conduct of elections when due; and

(cf) any other information required by the Registrar in pursuance of the provisions of the Act:]

(d) disposal of the net profit; and

(e) consideration of any other matter which may be brought forward in accordance with the bye-laws.

(2) The Registrar or any other person deputed by him shall have the right to attend the committee or general body meeting of any society.

[^16.(3) Where the board of a co-operative society fails to convene the annual general meeting within the period specified in sub-section (1), the Registrar or the person authorized by him in this behalf shall be competent to convene such annual general meeting within a period of ninety days from the date of expiry of the period mentioned in sub-section (1) and the expenditure incurred on such meeting shall be borne by the co-operative society.

(4) Members of the Board who, in the opinion of the Registrar, were responsible for not convening the annual general meeting within the stipulated period shall be disqualified for one term for being elected as committee members and to continue as members of a society in addition to being liable for any other provisions under this Act:

Provided that the Registrar shall, before passing order under this subsection, afford a reasonable opportunity of being heard to each such person, who in his opinion were responsible for not convening the annual general meeting within the specified period.

(5) A notice of the general meeting stating the place, date and hour of the meeting together with the agenda shall be given to every member, as may be prescribed.]

30. Special general body meetings

(1) The committee of a society may, at any time, call a special general body meeting of the society and shall call such meeting within one month after receipt of a requisition in writing from the Registrar or from such number of members or a proportion of the total number of members, as may be prescribed.

(2) If a special general body meeting of a society is not called in accordance with the requisition referred to in Sub-section (1), the Registrar or any person authorized by him in this behalf shall have power to call such meeting and that meeting shall be deemed to be meeting called by the committee.

(3) Notwithstanding anything contained in sub-section (1) or sub-section (2), the Registrar or any person authorized by him in this behalf may at any time, call a special general body meeting of the society in such manner and at such time and place within the area of its operation as he may direct and such meeting shall be deemed to be a meeting called by the committee.

(4) Notwithstanding anything contained in the bye-laws of a society, the Registrar or any person authorized by him in this behalf may, at any time summon a meeting of the committee of the society and that meeting shall be deemed to be a meeting called in accordance with the bye-laws of the society and shall have power to transact all business which can be transacted at a meeting of the committee under the bye-laws of the society and such other business as is specially mentioned in the requisition made by the Registrar or the person authorized.

(5) The Registrar or any other person deputed by him shall have the right to attend the committee or general body meeting of any society convened in accordance with the provisions of this section.

31 [^4. Nominees of Government on committee of an apex or a central society.-

(1) Where the Government,--

(a) have subscribed to the share capital of an apex or a central society; or

(b) have assisted indirectly in the formation or augmentation of the share capital of an apex or a central society; or

(c) have guaranteed the repayment of principal and payment of interest on debentures issued by an apex or a central society; or

(d) have guaranteed the repayment of principal and payment of interest on loans and advances to an apex or a central society, [^16. the government or any other authority shall have the right to nominate not more than two persons to the committee of an Assisted Apex or Central Society]

(2) A person nominated to the committee of an apex or a central society under sub-section (1) shall hold office during the pleasure of the Government or the specified authority, as the case may be.

[^16.(2A) The person nominated under sub-section (1) shall not be eligible to hold the office of the president/chairman or vice-president/vice-chairman of the Apex or Central Society nor will be eligible for being sent as the delegate of the Apex or Central Society.]

(3) A person nominated to the committee of an apex or a central society under sub-section (1) shall not take part in the discussion of any no- confidence motion or vote on any such motion.

(4) [^16. Omitted]]

32. Supersession of committee

[^10.(1) If the Registrar, after an inquiry by himself or through his subordinates or on a report of the financing bank, or the Vigilance, and Anticorruption Bureau of the Government or the Vigilance Officer or otherwise, is satisfied that the committee of any society,-

(a) persistently makes default or is negligent in the performance of the duties imposed on it by this Act or the rules or the bye-laws or does anything which is prejudicial to the interests of the society; or

(b) wilfully disobeys or fails to comply with any lawful order or direction issued under this Act or the rules; or

(c) makes any payment contrary to this Act or the rules or the byelaws or causes any loss or damage to the assets of the society, by breach of trust or wilful negligence; or

(d) [^14.misappropriates or destroys or tampers with the records or causes the destruction of records to cover up any misconduct or malpractice, he may, after giving the committee an opportunity to state its objections, if any, by order in writing, remove the committee and appoint in its place, one administrator or an administrative committee consisting of not more than three individuals, one among them as convener, who need not be members of the society, to manage the affairs of the society for a period not exceeding six months. [^16.Omitted)

[^16.Provided that in the case of co-operative society, carrying on the business of banking, the provisions of the Banking Regulation Act, 1949(Central Act 10 of 1949) shall also apply:

Provided further that in the case of a co-operative society, carrying on the business of Banking, appointment of administrator/administrative committee shall not exceed one year in the aggregate:

Provided also that the board of a co-operative society shall not be superseded or kept under suspension where there is no Government share holding or loan or financial assistance or any guarantee by the Government or any Board or Institutions constituted by the Government.]

Explanation:—A notice and an order given as per this clause to the President, in his absence to the Vice President or any committee member who is holding charge of President or Vice President or to the Chief Executive of a society shall be treated as an order given to the committee of the society.

(e) Every member of the committee superseded under this section shall from the date of order of such supersession stand disqualified to contest in the election to or to be nominated to the committee of any Society or to be appointed as an administrator in any society for two consecutive terms.]]

(2) The Registrar shall consult the financing bank and circle co-operative union or State Co-operative Union, as the case may be, before passing an order under sub-section (1).

(3) Notwithstanding anything contained in sub-section (1) or sub-section (2) it shall not be necessary to give an opportunity to the committee to state its objections and to consult the Unions and financing banks, in cases where the Registrar is of the opinion that it is not reasonably practicable to do so, subject however to the condition that in such cases, the period of supersession shall generally be for six months and in case a new committee cannot be constituted or enter upon office in accordance with the bye-laws of the society within the period of supersession the period may be extended for a further period not exceeding six months—

(a) in the case of a Co-operative society only after consulting the circle co-operative union concerned; and

(b) in the case of an Apex Society or a Central Society only after consulting the State Co-operative Union.

(4) The committee or administrator or administrators so appointed shall, subject to the control of the Registrar and to such instructions as he may from time to time give [^10.have power to exercise all or any of the powers and functions,] of the committee or of any officer of the society and take all such action as may be required in the interests of the society.

(5) The committee or administrator or administrators shall, before the expiry of its or his or their terms of office, arrange for the constitution of a new committee in accordance with the bye-laws of the society.

(6) Every order made by the Registrar under sub-section (1) shall be communicated to the circle co-operative union.

33. Appointment of new committee or administrator on failure to constitute committee, etc.

(1) Where the term of office of a committee has expired and new commit has not been constituted, or [^1.where a no-confidence motion is passed by the general body against the existing committee or where the existing committee resigns enbloc or where vacancies occur in the committee either by resignation or otherwise and the number of remaining members cannot constitute the quorum for the meeting of the committee, or where the committee failed to hold its regular meeting consecutively for six months or where the Registrar is satisfied,]

(a) that a new committee cannot be constituted before the expiry of the term of office of the existing committee; or

[^16.(aa) there is stalemate in the constitution or functions of the committee]

(b) [^14.that a new committee is prevented from entering upon office or a new committee fails to enter upon office, on the date on which the term of office of the existing committee expires, the Registrar may, either suo motu or on the application of any member of the society, after intimating the Circle Co-operative Union, appoint one administrator or an administrative committee consisting of not more than three individuals, [^17.who need not be members of the society, one among them as convener,] to manage the affairs of the society, for a period not exceeding six months as may be specified in the order, which period may, at the discretion of the Registrar and for reasons to be recorded in writing, be extended, from time to time, so, however, that the aggregate period shall not, in any case, exceed one year or till a new committee enters upon office, whichever is earlier.]]

Provided that before making such order, the Registrar shall publish a notice on the notice board of the head office of the society inviting objections to the making of the order within a period specified in the notice and consider such objections.

Provided further that it shall not be necessary to publish such notice in cases where the Registrar is satisfied that it is not reasonably practicable to do so.

[^6.Provided50 also that, where a committee, administrator or administrators, as the case may be, is in office at the commencement of the Kerala Co-operative Societies (Amendment) Act 1992, the Registrar may extend the term of such committee administrator or administrators, as the case may be, for a further period not exceeding one year from the date of such commencement.]

[^1.Explanation51.-For the purposes of this sub-section a tender or resignation by a member of the committee shall have the effect of terminating his membership from the committee.]

[^7.(1A) Notwithstanding anything contained in sub-section (1), where on receipt of a report from the Registrar, the Government are satisfied that a new committee cannot be constituted or cannot enter upon office of the society before the expiry of the term of office of the [^17.administrator or administrative committee], as the case may be, appointed by the Registrar under sub section (1) and that it is necessary in the public interest to manage the affairs of the society and to enable a new elected committee to enter upon office, the Government may, by notification in the Gazette, for reasons to be recorded, permit the Registrar to extend the terms of the said [^17.administrator or administrative committee], as the case may be, for a further period not exceeding one year in the aggregate or till a new committee enters upon office, whichever is earlier.]

(2) The [^17.administrator or administrative committee] appointed under [^7.subsection (1)53 and (1A)] shall, subject to the control of the Registrar and to such instructions as he may from time to time give, [^10.have power to exercise all or any of the powers and functions] of the committee or of any officer of the society and take all such action as may be required in the interests of the society.

(3) The [^17.administrator or administrative committee] shall arrange for the constitution of a new committee or for the entering upon office of the new committee, as the case may be.

34. Securing possession of records, etc.

(1) If the committee of a society is reconstituted at a general meeting of the society or the committee of a society is removed by the Registrar under section 32 or a new committee or administrator or administrators is or are appointed under section 33 or if the society is ordered to be wound up under section 71 and the outgoing members of the committee refuse to hand over charge of the records and property of the society to the new committee or administrator or administrators or the liquidator, as the case may be, or if an outgoing president or secretary who is the custodian of the records and property of a society refuses to hand over charge of the records and property of the society to his successor, the new committee or administrator or administrators or the liquidator, or the president or secretary may with the previous sanction of the Registrar apply to the Magistrate within whose jurisdiction the society functions, for securing the records and properties of the society.

(2) On receipt of an application under sub-section (1), the Magistrate may, by a warrant, authorize any Police Officer, not below the rank of Sub-Inspector, to enter and search any place where the records and the property of the society are kept or are believed to be kept and to seize such records and property, and the records and property so seized shall be handed over to the new committee or administrator or administrators or the liquidator or the president or secretary, as the case may be.

(3) Where the Registrar or any other officer not below the rank of Assistant Registrar of Co-operative Societies authorized by him in this behalf in the course of audit, inspection, inquiry or supervision is of opinion that there is room to suspect gross negligence of duties, misappropriation or misuse of funds of the society or irregularity in recording proceedings or keeping accounts or books or is satisfied that the records, registers or the account books of a society are likely to be tampered with or destroyed and the funds and property of a society are likely to be misappropriated or misapplied, he shall have power to take possession of any or all of the books, registers, securities or documents, cash in hand or account-books of the society and remove such seized records and property and to deal with them in any manner as may be directed by the Registrar.

(4) The Registrar or other officer seizing the records and property of a society under sub-section (3) shall prepare an inventory of the records and property seized in duplicate with his signature and require the officer, employee or member of the society from whose custody the records and property are seized to affix his signature in witness thereof and, if such officer or employee or member refuses to sign, then the Registrar or other officer seizing the records and property shall cause two or more persons to sign the inventory as witnesses to the correctness thereof. A copy of the inventory prepared under this section shall be delivered to the officer, employee or member of the society from whose custody the records and property were seized.

CHAPTER V

PRIVILEGES OF CO-OPERATIVE SOCIETIES

35. First charge of society on certain assets

(1) Notwithstanding anything contained in any law for the time being in force, but subject to any prior claim of the Government in respect of land revenue or any money recoverable as land revenue, any debt or outstanding demand owing to a society by any member or past member or deceased member shall be a first charge-

(a) upon the crops or other agricultural produce of such member for the raising of which the loan was taken from the society by such member; and

(b) upon any cattle, fodder for cattle, agricultural or industrial implements or machinery, or raw materials for manufacture supplied, or purchased in whole or in part out of any loan given, by the society, or on any article manufactured from raw materials so supplied or purchased

(2) No person shall transfer any property which is subject to a charge under sub-section (1) except with the previous permission in writing of the society which holds the charge.

(3) Notwithstanding anything contained in any law for the time being in force, any transfer of property made in contravention of the provisions of subsection (2) shall be void.

(4) The charges created under sub-section (1) shall be available as against any claim of the Government arising from any loan granted by them after the grant of the loan by the society.

36. Charge on land owned or held by members borrowing loans from certain societies

Notwithstanding anything contained in this Act or any other law for the time being in force,-

(i) a member who makes an application for a loan to a society of which the majority of the members are agriculturists shall, if he owns any land or holds any land as a tenant entitled to fixity of tenure, make a declaration in the prescribed form, which shall state that the applicant thereby creates a charge on the land owned by him or on his interest in the land held by him as tenant and specified therein, for the payment of the amount of the loan which the society may make to the member on the application and future loans, if any, that may be made to him, from time to time, by the society together with interest on such loan or loans;

(ii) a declaration made under clause (i) may be varied or cancelled at any time by the member, with the previous written permission of the society in favour of which such charge has been created;

(iii) no member shall alienate the whole or any part of the land or his interest in the land specified in the declaration made under clause (i) or varied under clause (ii) until the whole amount borrowed by the member together with interest thereon is paid to the society in full:

Provided that standing crops on any such land may be alienated with the previous permission in writing of the society:

Provided further that it shall be lawful to a member to mortgage such land or any part thereof in favour of the Government or a Land Mortgage Bank:

Provided also that if a part of the amount borrowed by a member is paid, the society with the approval of the financing bank to which it may be indebted may, on an application from the member, release from the charge created by the declaration made under clause (i) or varied under clause (ii) such part of the land or of the interest in land specified in the declaration as it may deem proper, with due regard to the security of the balance of the amount of loan outstanding from the member;

(iv) any alienation made in contravention of clause (iii) shall be null and void;

(v) subject to the claims of the Government in respect of basic tax or any money recoverable as land revenue and to the claims of the Government or the Land Mortgage Bank in respect of any money payable under a mortgage in favour of the Government or the Land Mortgage Bank and to the prior claims of any person in whose favour alienation of the land or interest in land specified in the declaration made under clause (i) or varied under clause (ii) has been effected and duly registered, before the date of the grant of the loan by the society, there shall be a first charge in favour of the society on such land or interest for and to the extent of the dues owing by him on account of the loan;

(vi) a declaration made under clause or any variation or cancellation thereof under clause or any release under the third proviso to clause shall be sent by the society, by registered post, to the sub registrar having jurisdiction over the area in which the land is situate, and the sub registrar shall register such declaration or variation or cancellation or release and issue a copy thereof to the society.

(vii) Any declaration made under clause (i) or any variation or cancellation thereof under clause (ii) or any release under the third proviso to clause (iii), which has not been registered under clause (vi) shall be null and void.

Explanation.-In this section-

(a) “basic tax” means the tax imposed under the provisions of the Kerala Land Tax Act, 1961 (13 of 1961);

(b) “Land Mortgage Bank” means the Kerala Co-operative Central Land Mortgage Bank, Limited, or a primary mortgage bank as defined in the Kerala Co-operative Land Mortgage Banks Act, 1960 (1 of 1960)

[^12.36A Charge on movable or immovable property of borrower by creating Gehan

Notwithstanding anything contained in any other provisions of this Act, charge on movable or immovable property of a borrower in favour of the State C-operative Bank or a District Co-operative Bank or a Primary Agricultural Credit Society or a Primary Housing Society [^14.or an Urban Cooperative Bank or any Primary Co-operative Societies dealing with credit activities] may be created by Gehan in respect of which the provisions of sections 10 to 15 (both inclusive) of the Kerala State Co-operative Agricultural and Rural Development Banks Act, 1984 (20 of 1984), as amended from time to time, shall apply with the modification of substituting the words “State Co-operative Bank or District Co-operative Banks”, “Primary Agricultural Credit Society or Primary Housing Society”, [^14.or an Urban Cooperative Bank or any Primary Co-operative Societies dealing with credit activities] “Society” and “said Bank or Society”, respectively, for the words “Agricultural and Rural Development Bank”, “primary bank”, “bank” and “said banks” occurring in the said sections.

Explanation.-For the purposes of this section, Gehan means a special charge on movable or immovable property, in favour of the State Co-operative Bank or a District Co-operative Bank or a Primary Agricultural Credit Society or a Primary Housing Society [^14. or an Urban Cooperative Bank or any Primary Co-operative Societies dealing with credit activities]  by a mere declaration in writing by the borrower, for securing the payment of money advanced or to be advanced by way of loan, which will have all the characteristics of a valid mortgage.”.]

37. Deduction from salary to meet society’s claim in certain cases

(1) Notwithstanding anything contained in any law for the time being in force, a member of a society may execute an agreement in favour of the society providing that his employer or the officer disbursing his salary or wages shall be competent to deduct from the salary or wages payable to him by the employer, such amount as may be specified in the agreement and to pay the amount so deducted to the society in satisfaction of any debt or other demand owing by the member to the society.

(2). On the execution of such an agreement, the employer or the officer disbursing the salary or wages of any such member as is referred to in subsection (1) shall, if so required by the society by requisition in writing and so long as such debt or demand or any part of it remains unpaid, make the deduction in accordance with the agreement and pay the amounts so deducted to the society within seven days from the date of the deduction.

[^14.Provided that this sub-section shall not apply if the employees, whose salary is to be

deducted, are not informed at least thirty days in advance, by notice duly acknowledged,

about the dues on loan or award amount]

38. Charges and set-off in respect of shares or interest of members in the capital of a society

A society shall have a charge upon the share or interest in the capital and on the deposits of a member or past member or deceased member and on any dividend, bonus or profits payable to a member or past member or the estate of a deceased member in respect of any debt or outstanding demand owing to the society and may set-off any sum credited or payable to a member, past member or the estate of a deceased member in or towards payment of any such debt or outstanding demand:

Provided that no financing bank to which a society is affiliated shall have a charge upon any sum invested in the financing bank as reserve fund by the society if the bank is not the sole creditor of the society, or be entitled to set-off any such sum credited or payable to the society towards any debt due from such society.

39. Shares or interest or reserve fund not liable to attachment

(1) Subject to the provisions of section 38, the share or interest of a member in the capital of a society shall not be liable to attachment or sale under any decree or order of a court in respect of any debt or liability incurred by him and a receiver under any law relating to in-solvency shall not be entitled to, or have any claim on, such share or interest.

(2) The reserve fund of s society invested by such society in accordance with the provisions of section 57 shall not be liable to attachment under any decree or order of a court in respect of any debt or liability incurred by the society.

40. Exemption from certain taxes, fees and duties

(1) The Government may, by notification in the Gazette, remit in respect of any class of societies.—

(a) the stamp duty chargeable under the Kerala Stamp Act, 1959 (17 of 1959), in respect of any instrument executed by or on behalf of a society or by an officer or member thereof and relating to the business of such society, or any class of such instruments or in respect of any award or order made under the Act, in cases where, but for such remission the society, officer or member, as the case may be, would be liable to pay such stamp duty;

(b) any fee payable under any law for the time being in force relating to the registration of documents or court fees.

(2) The Government may, by notification in the Gazette exempt any class of societies from taxes on—

(a) agricultural income;

(b) sale or purchase of goods; and

(c) professions, trades, callings and employments.

41. Exemption from compulsory registration of instruments

Nothing in clauses (b) and (c) of sub-section (1) of section 17 of the Indian Registration Act, 1908 (Central Act 16 of 1908), or sections 54 and 59 of the Transfer of Property Act, 1882 (Central Act 4 of 1882), shall apply to-

(a) any instrument relating to shares in a society, notwithstanding that the assets of the society consist in whole or in part of immovable property; or (b) any debentures issued by any such society and not creating, declaring, assigning, limiting or extinguishing any right, title or interest to or in immovable property, except in so far as it entitles the holder to the security afforded by a registered instrument whereby the society has mortgaged, conveyed or otherwise transferred the whole or part of its immovable property or any interest therein to trustees upon trust for the benefit of the holders of such debentures; or

(c) any endorsement upon or transfer of any debenture issued by any such society.

 

NOTES

* This Act came into force on 15.05.1969 by Notification No. 24314/C3/69 AD dated 12.05.1969 and was published in Kerala Gazette Extraordinary No. 102 dated 11.04.1969. The Bill was published in Kerala Gazette Extraordinary No. 94 dated 13.06.1967. The report of the select committee was published in Kerala Gazette Extraordinary No. 20 dated 22.01.1968.

1.  Amended by Act 38 of 1971. Act 38 of 1971 was published in Kerala Gazette Extraordinary No. dated w.e.f. 23.12.1971.

2. Amended by Act 8 of 1974. Act 8 of 1974 was published in Kerala Gazette Extraordinary No. dated w.e.f.. 13.03.1974.

3. Amended by Act 29 of 1986. . Act 29 of 1986 was published in Kerala Gazette Extraordinary No. 1078 dated 28.11.1986 w.e.f. 25.02.1985. Amendments to Sections Sections 2, 28A and 80 shall be deemed to have come into force on the 25 th day of February, 1985, Amendments to sections 69 and 70 shall be deemed to have come into force on the 15 th day of May, 1969, Amendments to sections 88 and 89 shall be deemed to have come into force on the 14 th day of February, 1986 and the remaining provisions of this Act shall come into force on 28.11.1986).

4. Amended by ACT 19 OF 1987. Act No. 19 of 1987 was published in Kerala Gazette Extraordinary No. 711 dated 25.08.1987.

5. Amended by ACT 7 OF 1988. Act 7 of 1988 was published in Kerala Gazette Extraordinary No. 351 dated 21.04.1988 w.e.f. 15.02.1988.

6. Amended by ACT 5 OF 1992. Act 5 of 1992 was published in Kerala Gazette Extraordinary No. 17 dated 12.04.1992 w.e.f. 07.02.1992.

7. Amended by ACT 16 OF 1993.  Act 16 of 1993 was published in Kerala Gazette Extraordinary No. 38 dated 20.08.1993 w.e.f. 06.02.1993.

8. Amended by ACT 6 OF 1995. Act 6 of 1995 was published in Kerala Gazette Extraordinary No. 793 dated 05.08.1995.

8A. Amended by ACT 9 of 1997. Act 9 of 1997 was published in Kerala Gazette No. 42 dated 03.05.1997 w.e.f.

9. Amended by ACT 15 of 1997. Act No. 15 of 1997 was published in Kerala Gazette Extraordinary No. 42 dated 29.12.1997 w.e.f. 03.06.1997.

10. Amended by Act 1 of 2000. Act 1 of 2000 was published in Kerala Gazette Extraordinary No. 1 dated 01.01.2000 w.e.f. 01.01.2000 Sections 13, 16, 17, 18 and 21 of this Act shall come into force on such dates as the Government may by notification in the Gazette appoint; and different dates may be appointed for different provisions of this Act, and the other provisions of this Act shall come into force at once i.e. w.e.f. 01.01.2000. Section 28B was given effect from 07.03.2001 as per SRO 244/2001 published in Kerala Gazette Extraordinary No. 46 dated 07.03.2001. Sections 57A and 57B came into force on 04.07.2000 and 02.01.2001 respectively. Sections 70, 70A and 70B were given effect from 02.01.2003 by SRO 369/2003 published in Kerala Gazette Extraordinary No. 48 dated 12.05.2003. Section 80B was given effect from 25.01.2001 as per SRO 89/2001 published in Kerala Gazette Extraordinary No. 46 dated 29.01.2001.

11. Amended by ACT 3 OF 2002. Act 3 of 2002 was published in Kerala Gazette Extraordinary No. 47 dated 15.07.2002 w.e.f. 04.05.2002.

12. Amended by ACT 16 OF 2004. Act 16 of 2004 was published in Kerala Gazette Extraordinary No. dated 23.06.2004 w.e.f. 23.06.2004.

13. Amended by ACT 9 OF 2009.  Act 9 of 2009 was published in Kerala Gazette Extraordinary No. dated  w.e.f. 11.12.2007.

14. Amended by ACT 7 OF 2010. Act 7 of 2010 was published in Kerala Gazette Notification No. 14953/LegB2/09/Law dated  28.04.2010 w.e.f. 28.04.2010.

15. Amended by ACT 13 OF 2012. Act 13 of 2012 was published in Kerala Gazette Notification No. 1318/LegH2/2012/Law dated  23.07.2012. Amendments to Sections Sections 2(oc) and 2(qc) and 28(1D) to 28(1E) shall be deemed to have come into force on 12.08.2011, Sections 2(ia), 18 and 28(1F) to 28(1I) and the special provisions in respect of the existing DCBs shall be deemed to have come into force on 11.02.2012

16. Amended by ACT 8 OF 2013. Act 8 of 2013 was published in Kerala Gazette Notification No. 816/LegH2/2013/Law dated  14.02.2013 w.e.f. 14.02.2013.

17. Amended by ACT 22 OF 2013. Act 22 of 2013 was published in Kerala Gazette Notification No. 4576/LegH2/2013/Law dated  25.04.2013. Amendments to Sections 56A, 80C, 80D and 80E shall be deemed to have come into force on 30.04.2011, Sections 33, 63(3), 66 and 69A shall be deemed to have come into force on 28.04.2010, Section 63(13) shall be deemed to have come into force on 05.06.2007 and all other Amendments shall be deemed to have come into force on 25.04.2013.