THE KERALA CO-OPERATIVE SOCIETIES ACT, 1969 (Act 21 of 1969) as on 01.01.2014 Part 3

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 VI

STATE AID TO CO-OPERATIVE SOCIETIES

42. Direct partnership of Government in societies

(1) The Government may subscribe directly to the share capital of a society with limited liability

(2) Notwithstanding any agreement to the contrary, the Government shall not be entitled to a dividend on the shares of any such society at a rate higher than that at which such dividend is payable to any other share-holder of the society.

43. Indirect partnership of Government in societies

The Government may provide moneys to a society for the purchase of shares in other societies with limited liability.

44. Principal State Partnership Fund

(1) An apex society which is provided with moneys by the Government under section 43 shall, with such moneys, establish a fund to be called the “Principal State Partnership Fund”.

(2) An apex society shall utilize the Principal State Partnership Fund for the purpose of—

(a) directly purchasing shares in order societies with limited liability; or

(b) providing moneys to a central society to enable that society to purchase shares in order societies with limited liability (hereinafter in this Chapter referred to as primary societies); or

(c) making payments to the Government in accordance with the provisions of this Chapter, and for no other purpose

45. Subsidiary State Partnership Fund

(1) A central society which is provided with moneys by an apex society from the Principal State Partnership Fund shall, with such moneys, establish a fund to be called the ‘Subsidiary State Partnership Fund’.

(2) A central society shall utilize the Subsidiary State Partnership Fund for the purpose of—

(a) purchasing shares in primary societies; or

(b) making payments to the apex society in accordance with the provisions of this Chapter and for no other purpose.

46. Approval of Government for purchase of shares

No shares in a society shall be purchased from the moneys in the Principal State Partnership Fund or the Subsidiary State Partnership Fund except with the previous approval in writing of the Government.

47. Liability to be limited in respect of certain shares

Where any shares in a society are purchased by—

(a) the Government; or

(b) the apex society or a central society from the Principal State Partnership Fund or the Subsidiary State Partnership Fund, as the case may be, the liability in respect of such shares shall, in the event of the society being wound up, be limited to the amount paid in respect of such shares.

48. Restrictions on amount of dividend

An apex society which has purchased shares in other societies from the moneys in the Principal State Partnership Fund and a central society which has purchased shares in primary societies from the moneys in the Subsidiary State Partnership Fund shall be entitled only to such dividend on the said shares as is declared by the society concerned and is payable to other share-holders of that society.

49. Indemnity of apex and central societies

(1) If a society in which shares are purchased from the moneys in the Principal State Partnership Fund is wound up or is dissolved, the Government shall not have any claim against the apex society which purchased the shares in respect of any loss arising from such purchase; but the Government shall be entitled to any moneys received by the apex society in liquidation proceedings or on dissolution, as the case may be.

(2) If a society in which shares are purchased from the money in the Subsidiary State Partnership Fund is wound up or is dissolved neither the Government nor the apex society shall have any claim against the central society which purchased the shares in respect of any loss arising from such purchase; but the apex society shall be entitled to any moneys received by the central society in liquidation proceedings or on dissolution, as the case may be, and such moneys shall be credited to the Principal State Partnership Fund.

50. Disposal of share capital and dividend, etc.

(1) All moneys received by an apex society in respect of shares of other societies purchased from moneys in the Principal State Partnership Fund on redemption of such share or by way of dividends or otherwise shall be credited to that Fund.

(2) All moneys received by a central society in respect of shares of primary societies purchased from the moneys in the Subsidiary State Partnership Fund on redemption of such shares or by way of dividends or otherwise, shall in the first instance be credited to that fund and then transferred to the apex society which shall credit them to the Principal State Partnership Fund..

(3) All moneys referred to in sub-section (1) or sub-section (2) shall, notwithstanding that the shares stand in the name of the apex society or in the central society, as the case may be, be paid to the Government.

(4) Save as provided in sub-section (3), the Government shall not be entitled to any other return on the moneys provided by it to an apex society under section 43.

(5) Any amount to the credit of the Principal State Partnership Fund or the Subsidiary State Partnership Fund and the investments thereof shall not form part of the assets or liabilities of the apex society or central society, as the case may be. The balance sheet of any such society shall separately show the amounts to the credit of the Principal State Partnership Fund or the Subsidiary State Partnership Fund or the investments thereof, as the case may be.

51. Disposal of Principal State Partnership Fund and Subsidiary State

Partnership Fund on winding up of apex or central society

(1) If an apex society which has established a Principal State Partnership Fund is wound up or is dissolved, all moneys to the credit of, or payable to, that fund shall be paid to the Government.

(2) If a central society which has established a Subsidiary State Partnership Fund is wound up or is dissolved, all moneys to the credit of, or payable to, that fund shall be credited or paid, as the case may be, to the Principal State Partnership Fund from which it received moneys under clause (b) of sub-section (2) of section 44.

52. Agreement by Government and apex societies

Subject to the foregoing provisions of this Chapter,-

(a) the Government may enter into an agreement with an apex society setting out the terms and conditions on which it shall provide moneys to the apex society for the purpose specified in section 43;

(b) an apex society may, with the previous approval of the Government, enter into an agreement with a central society, setting out the terms and conditions on which it shall provide moneys to that society from the Principal State Partnership Fund for the purpose specified in clause (b) of sub-section (2) of section 44.

53. Other forms of State aid to societies

Notwithstanding anything contained in any law for the time being in force, the Government may-

(a) give loans or make advances to societies;

(b) guarantee the repayment of principal and payment of interest on debentures issued by a society;

(c) guarantee the repayment of share capital of a society and dividends thereon at such rates as may be specified by the Government.

(d) guarantee the repayment of principal and payment of interest on loans and advances to a society;

(e) guarantee the repayment of deposits received by the society and payment of interest on such deposits; and

(f) give financial assistance in any other form, including subsidies, to any society.

[^14.(g) set off any amount due to Government out of the financial assistances given under this section, in which case the gross amount of assistance before set off shall be treated as the original amount of assistance: 7 Provided that the Government may exempt any society, in eligible cases considering its financial position, from setting off Government dues.]

54. Provisions of sections 43 to 52 to over-ride other laws

The provisions of sections 43 to 52 shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force.

CHAPTER VII

PROPERTIES AND FUNDS OF CO-OPERATIVE SOCIETIES

55. Funds not to be divided

No part of the funds other than the net profits of a society shall be paid by way of bonus or dividend or otherwise distributed among its members:

Provided that a member may be paid such remuneration, allowances or honoraria and on such scale as may be laid down by the bye-laws for any services rendered by him to the society.

56. Disposal of net profit

(1) A society shall, out of its net profits in any year,--

(a) transfer an amount not being less than fifteen per cent of the net profits to the reserve fund; and

(b) credit such portion of the net profits, not exceeding five per cent, as may be prescribed, to the Co-operative Education Fund referred to in clause (xix) of sub-section (2) of section 109.

[^16.(c) ten percent of the net profit to the Co-operative Member Relief Fund as may be prescribed]

(2) The balance of the net profits may be utilized for all or any of the following purposes, namely:-

(a) payment of dividends to members on their paid-up share capital at such rate [^7. not exceeding [^14.twenty five] per cent”] as may be prescribed;

(b) payment of bonus to members on the amount or volume of business done by them with the society, to the extent and the manner specified in the bye-laws;

(c) [^14.seven percent of the net profit to Agricultural Credit Stabilization Fund;

(cc), five percent of the net profit to the professional education fund maintained by the Registrar;]

(d) donations of amounts not exceeding ten per cent of the net profits for any charitable purpose as defined in section 2 of the Charitable Endowments Act, 1890 (Central Act 6 of 1890); and

(a)   [^14.balance of net profit may be utilised for any or all of the purposes specified in the bye-laws of the societies except for payment of bonus to employees.

(3) Notwithstanding anything contained in section 18 of this Act, in the case of District Cooperative Banks the term `member' shall include nominal and associate members, for the purpose of clause (a) of sub-section (2).]

[^17.56A. Disposal of non-banking assets.—The immovable property acquired by a society through a sale by the sale officer or through any legal proceedings for realisation of loan amount shall be disposed of by the society within seven years from the acquisition thereof with the prior sanction of the Registrar]

57. Investment of Funds

A society may invest or deposit its funds—

(a) in Government Savings Bank; or

(b) in any of the securities specified in section 20 of the Indian Trusts Act, 1882 (Central Act 2 of 1882); or

(c) in the shares or securities of any other society approved for the purpose by the Registrar by general or special order; or

(d) in any bank approved for the purpose by the Registrar; or

(e) in any other prescribed manner.

[^10.57A. The Co-operative Development and Welfare Fund

(1) The Government may, by notification in the Gazette, frame a scheme to be called the Co-operative Welfare and Development Scheme for the establishment of a Fund under this Act and there shall be established, as soon as may be after the framing of the scheme, a Fund to be called the Co-operative Development and Welfare Fund, in accordance with the provisions of this Act and the scheme.

(2) [^14.A society shall contribute to the Fund at such rates as may be specified in the scheme.]

(3) There shall be credited to the fund,--

(a) the contribution to be paid by the society under sub-section (2); and

(b) any other amount which, under the provisions of the scheme shall be credited to the Fund.

(4) Subject to the provisions of this Act and the scheme, the Co-operative Development and Welfare Fund shall be utilized for payment of grant or loans to societies for the following purposes namely:-

for the purpose of safeguarding the interests of the societies against any loss or damage to their assets and properties, despite reasonable precautions to prevent such loss or damage;

for utilizing for the developmental activities of the societies; and

for any other purpose, as may be specified in the scheme.

(5) Subject to the provisions of this Act the scheme may provide for the following matters, namely:-

(i) the time and manner in which contribution shall be made to the Fund by the societies;

(ii) the rate of contribution;

(iii) the administration of the Fund;

(iv) the purposes for which the Fund may be utilized for developmental activities of the societies;

(v) the conditions under which the Fund may be expended for payment of reliefs to the societies;

(vi) the manner in which the accounts of the Fund shall be kept; and

(vii) any other matter which is to be provided for in the scheme or which may be necessary or proper for the purpose of implementing the scheme.

57B. Deposit Guarantee Scheme

(1) The Government may, by notification in the Gazette, frame a scheme to be called “the Deposit Guarantee Scheme” specifying the purpose of the scheme and shall be administered in such manner, as may be specified therein.

(2) A society may contribute to the Deposit Guarantee Scheme at such rates as may be provided in the said scheme.

[^16.(3) All societies covered under the Deposit Guarantee Scheme shall enroll and contribute towards the Scheme within six months from the date of commencement of the Kerala Co-operative Societies (Amendment) Act, 2013 failing which the societies have no right to accept deposit from depositors and the Registrar shall be competent to issue prohibition order, restraining the society from accepting deposits for such period specified in the order:

Provided that before making such order, the Registrar shall give an opportunity to the chief executive of the society to state his objection, if any, to the proposed action.

(4) Notwithstanding anything contained in sub-section (3) the Registrar may exempt any society for a period upto one year by a general or special order from enrolling such societies under the Deposit Guarantee Scheme with reasons to be recorded:

Provided that if any society violate the prohibition order under sub-section (3) the Registrar shall be competent to demand a sum of rupees five thousand only as penalty. If any society fails to pay such penalty, within two weeks from the date of receipt of demand notice, the Registrar shall be competent to issue direction to the financing bank to recover the amount from the account maintained in the financing bank by the society, or to recover the amount under the provisions of the Kerala Revenue Recovery Act, 1968 (16 of 1968). If the violation is a continuing one, a further penalty of rupees one thousand for every day shall be levied, after the first day, during which the violation continues.]

57C. Consortium Lending Scheme

(1) The Government may, by notification in the Gazette, frame a scheme to be called the “Consortium Lending Scheme” for the purpose of providing loans for infrastructure development, to societies, local authorities, development authorities or similar institutions, on government guarantee subject to such terms and conditions, as may be specified in the said scheme.

(2) A society may contribute to the Consortium Lending Scheme, at such rates, as may be specified in the scheme.]

[^14.57D. Co-operative Risk Fund Scheme.—

(1) The Government may, by notification in the Gazette, frame a scheme to be called the "Co-operative Risk Fund Scheme" for the establishment of a Fund for meeting the loan liability of those members who have availed loans from the co-operative societies and died within the repayment period of such loans.

(2) The types of societies and the types of loans covered by the scheme, the rate and manner of contribution towards the fund by the societies, the manner of administration and utilization of the fund and the maintenance of books of accounts in respect of the fund and its audit shall be such as may be specified in the scheme.]

[^16.(3) All societies covered under the Co-operative Risk Fund Scheme shall contribute towards the scheme at the rate specified in the scheme within three months from the date of commencement of the Kerala Co-operative Societies (Amendment) Act, 2013 failing which the societies have no right to issue loans to members and general public and the Registrar shall be competent to issue prohibition order, restraining the society from providing loans:

Provided that before making such order, the Registrar shall give an opportunity to the chief executive of the society to state his objection, if any, to the proposed action:

Provided further that if any society violate the prohibition order, the Registrar shall be competent to demand a sum of rupees five thousand only as penalty. If any society fails to pay such penalty, within two weeks from the date of receipt of demand notice, the Registrar shall be competent to issue direction to the financing bank to recover the amount from the account maintained in the financing bank by the society, or to recover the amount under the provisions of the Kerala Revenue Recovery Act, 1968 (16 of 1968).]

58. Restriction on borrowings

A society shall receive deposits and loans only to such extent and under such conditions as may be prescribed or as may be specified in the bye-laws.

59. Restrictions on loans

(1) A society shall not make a loan to any person or a society other than a member:

[^9.Provided that District Co-operative Bank may make loan to its nominal or associate members:

Provided further that, with the general or special sanction of the Registrar a society may make loans to another society.]

(2) Notwithstanding anything contained in sub-section (1), a society may make a loan to a depositor on the security of his deposit.

[^14.(3) Granting of loans to members or to non-members under sub-section (2) and recovery thereof shall be in the manner as may be specified by the Registrar.]

60. Restrictions on other transactions with non-members

Save as is provided in sections 58 and 59, the transactions of a society with persons other than members shall be subjected to such restrictions, if any, as may be prescribed.

61. Provident Fund

(1) A society shall establish a contributory provident fund for the benefit of its employees, to which shall be credited all contributions made by the employees and the society in accordance with the rules or the Employees Provident Funds Act, 1952 (Central Act 19 of 1952) whichever is more beneficial

[^7.Provided that the contributory provident fund established under this subsection shall not apply to the employees of such society to which the provisions of the Self Financing Pension Scheme framed under subsection (1) of section 80A are made applicable and such society shall establish a Provident Fund in such manner and subject to such conditions or restrictions, as may be prescribed, for the benefit of such employees.]

(2) [^7.A provident fund, whether contributory or not,”] established by a society under sub-section (1)—

(a) shall not be used in the business of the society;

(b) shall not form part of the assets of the society;

(c) shall not be liable to attachment or be subject to any other process of any court or other authority;

(d) shall be deposited in the financing bank of the area

62. Gratuity

The employees of a society shall be entitled to gratuity at such rates and on such conditions as prescribed.

[^10. CHAPTER VIII

PART – A

AUDIT

63. Director of Co-operative Audit.- (1) the Government shall by notification in the official gazette, appoint a person to be the Director of Co-operative Audit with jurisdiction over the whole of the State.

(2) The qualification and the terms and conditions of the person to be appointed as the Director of Co-operative Audit shall be such, as may be prescribed.

(3) [^14.The Government may by general or special order, delegate all or any of the powers of the Director of Co-operative Audit, in the Act to his subordinate officers [^17.or to the subordinate officers of the Registrar].]

(4) [^16. It shall be the duty of the managing committee to audit the accounts of every society at least once in every year :

Provided that the accounts of every society shall be audited within six months of the close of the financial year to which such accounts relate.]

[^13. [^16. (5) The procedure to be adopted in auditing the accounts of different types of co-operative societies should be in the manner specified in the audit manual approved by Director of Co-operative Audit or guidelines, directions as may be issued, from time to time, by the Registrar, the National Bank for Agricultural and Rural Development or Reserve Bank of India, as the case may be, from time to time.

(5A) It shall be the duty of the Director of Co-operative Audit in consultation with Registrar to revise, amend or update audit manual in every five years, as may be prescribed.]

[^13. (6)  Notwithstanding anything contained in any other  law for the time being in force, the Audit Certificate issued by the Director of Co-operative Audit or by any officer authorized by him shall be valid for all purposes required to be filed before the State Government and non-Governmental authorities.]

[^14.(7) The Director of Co-operative Audit shall be under the control of the Registrar of Cooperative Societies.]

[^16.(8) The minimum qualification and experience of auditors for auditing accounts of the co-operative society may be such, as may be prescribed.

(9) Every co-operative society shall cause to be audited by an auditor or auditors or team of auditors referred to in sub-section (8) appointed by general body or special general body from among the panel of auditors approved by the Director of Co-operative Audit:

Provided that if there are no auditors available from the above panel, the general body of a society may appoint auditing firms from among a panel approved by the Director of Co-operative Audit.

(10) The financial accounts of all apex societies shall be audited by auditing firms from among the panel approved by the Director of Co-operative Audit and the administrative matters and related accounts of assisted apex societies shall be audited by the Departmental auditors from among the panel approved by the Director of Co-operative Audit as may be prescribed and submit the audit reports to the Director of Co-operative Audit.

(11) The audit report of the accounts of an apex co-operative society which includes the report of administrative matters, shall be laid by the Government, before the Legislative Assembly, in the manner prescribed.

(12) It is the responsibility of the managing committee to convene general body meeting or special general body meeting in order to appoint auditors or auditing firms within the stipulated time from among the panel approved by Director of Co-operative Audit, failing which, the members of the managing committee shall cease to hold their office. In such cases to avoid administrative stalemate, the Registrar may suo motu or on application from the Director of Co-operative Audit or from any person authorized in this behalf, appoint an administrator or an administrative committee consisting of not more than three persons, 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:

Provided that administrator or administrative committee shall arrange for the constitution of a new committee or for entering upon office of the new committee, as the case may be.]

[^16.(13) The Government may issue notification, either prospectively or retrospectively, by publishing the same in the Gazette, to carry out the purposes of this section.]

64. Scope of audit, powers of the Director of Co-operative Audit and procedure for audit.-

(1) the audit shall include an examination of overdue debts, if any, the verification of the cash balance and securities and a valuation of the assets and liabilities of the society concerned and such other audit matters, as may be prescribed.

(2) For the purpose of audit, the Director of Co-operative Audit or the person authorized by him under section 63 shall have the following powers, namely:-

(a) he shall, at all reasonable times, have access to all the books, accounts, documents, papers and all other relevant records, securities, cash and other properties belonging to, or in the custody or control of the society;

(b) he may summon any person in possession of, or responsible for the custody, of any such books, accounts, documents, papers, other records, securities, cash or other properties, to produce the same at any place at the headquarters of the society or any branch thereof or, where there is no working office for a society, at the office of the Director of Co-operative Audit or at the office of any of his subordinate officers, as maybe specified by him; and

(c) such other powers as may be prescribed.

(3) Every person who is or has been, at any time, an officer or employee of the society and every member and past member of the society, who is in possession of any information and records in regard to the transactions and working of the society, shall furnish such information in regard to the transactions and working of the society, as the Director or the person authorised by the Government under sub-section (3) of section 63 may require.

(4) [^16.The financial statements and other statutory statements as required by auditors shall be prepared by the chief executive of the society within one month from the date of close of the financial year and submit it before managing committee and the fact shall be reported to the Director of Co-operative Audit or to the persons authorized by him in this behalf.

(4A) It shall be the duty of the managing committee of every society to ensure the accuracy of financial and other statutory statements. It is the responsibility of the managing committee to submit the above statements for audit within one month from the date of receipt of the above statements before the auditor. Lapse on the part of managing committee in this regard will be considered as a disqualification to hold office and they shall cease to be a member of the committee as may be prescribed. In such cases to avoid administrative stalemate, the Registrar may suo motu or on application from the Director of Co-operative Audit or by any person authorized in this behalf, appoint an administrator or an administrative committee consisting of not more than three persons, 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.

Provided that administrator or administrative committee shall arrange for the constitution of a new committee, or for entering upon office of the new committee, as the case may be.

(4B) Within three months from the date of receipt of the audit report, the Director of Co-operative Audit shall issue an audit certificate to the concerned society with a copy of audit memorandum as may be prescribed.

(5) The auditor or auditing firms appointed as per section 63 shall complete the audit within four months from the date of receipt of the statements and submit audit report to the Director of Co-operative Audit or to the persons authorized by him in this behalf.]

(6) The amount of fee [^13.or cost] for the audit of accounts of society for each year shall be such, as may be fixed by the Director of Co-operative Audit, in accordance with the rules made in this behalf.

(7) The fee [^14.or cost] shall be paid by the society concerned within thirty days of intimation thereof and in case of non-payment of the fee [^14.or cost] within the period it shall be recoverable in the manner specified in section79 [^16.or can be recovered from the account maintained in the financing bank by the society, through an order issued by the Registrar upon the request from the Director of Co-operative Audit.]

(8) The procedure for payment of the fee [^14.or cost] shall be such, as may be prescribed.

(9) If the result of the audit held under section 63 discloses any defects in the working of a society, the Director of Co-operative Audit may bring such defects to the notice of the society and if the society is affiliated to another society, also to the notice of that other society.

(10) If the result of the audit held under section 63 discloses any serious defect in the working of the society, the Director of Co-operative Audit or the person authorized by him shall communicate the same forthwith to the Registrar for immediate further action.

(11) The Director of Co-operative Audit may, by order in writing, direct the society or its officers to take such action, as may be specified in the order, within the time mentioned therein to rectify the defects disclosed in the audit, under intimation to the Registrar.

[^14.(12) Notwithstanding anything contained in this Act it shall be the duty of the committee of a society,—

(a) to request the Director of Co-operative Audit to get its accounts audited every year by remitting the required fee or cost for audit in advance or as determined by the Director of Co-operative Audit and to get its books, accounts, financial statements and all other statements required by the auditor for audit, written up and completed and to submit them for audit through its Chief Executive, to the Director of Co-operative Audit or officer authorised by him for the purpose of audit within the time limit stipulated in sub-section (4), before a request for audit is made to the Director of Cooperative Audit;

(b) to place the audit certificate in full before the general body or the representative general body and to read over to the general body or Representative General body of the defects mentioned in it and also to place the rectification reports of each defects before the general body or the Representative General body.

(c) to rectify all the defects mentioned in the audit certificate and to submit the rectification reports on the defects mentioned in the audit certificate, to the Director of Co-operative Audit and to the Registrar within two months of the receipt of the audit certificate.]

PART – B

INQUIRY, SUSPENSION, INVESTIGATION AND SURCHARGE

65. Inquiry by the Registrar.- (1) The Registrar may,-

(a) on his own motion; or

(b) on an inquiry report of the Vigilance Officer appointed under section 68A; or

(c) on a report of the Director of Co-operative Audit appointed under section 63; or

(d) on an application by the majority of the members of the committee of the society, or by not less than one third of the quorum for the general body meeting, whichever is less; or

(e) on an application by the apex society or financing bank of which such society is a member; or

(f) on an application of a society to which the society concerned is affiliated; hold an enquiry by himself or by a person authorized by order in writing, into the constitution, working and financial condition of the society, if he is satisfied that it is necessary so to do.

(2) The Registrar or the person authorized by him under sub-section (1) shall, for the purpose of an inquiry under this section, have the following powers, namely:-

(a) he shall, at all reasonable times, have free access to the books, accounts, documents, securities, cash and other properties belonging to, or in the custody of the society and may summon any person in possession of or responsible for the custody of any such books, accounts, documents, securities, cash or other properties, to produce the same at any place at the headquarters of the society or at any branch thereof or where there is no working office for the society, at the office of the Registrar or at the office of any of his subordinate officers;

(b) he may summon any person who, he has reason to believe, has knowledge of any of the affairs of the society, to appear before him at any place at the headquarters of the society or any branch thereof and may examine such person on oath; and

(c) (i) he may, notwithstanding any rule or bye-law specifying the period of notice for a general body meeting of the society, himself call a general body meeting or require the President or Secretary of the society to call a general body meeting at such time and place at the headquarters of the society or any branch thereof, to determine such matters as my be directed by him;

(ii) any meeting called under sub-clause (i), shall have all the powers of a general body meeting called under the bye-laws of the society.

(3) When an inquiry is made under this section, the Registrar may communicate the result of the inquiry to the financing bank, if any, to the society to which such society is affiliated and to the Circle Co-operative Union.

(4) When an inquiry made under this section reveals only minor defects which, in the opinion of the Registrar, can be remedied by the society, he shall communicate the result of the inquiry to the society and the society, if any, to which that society is affiliated. He shall also direct the society or its officers to take such action within the time specified therein to rectify the defects disclosed in such inquiry.

(5) The inquiry under this section shall be completed within a period of six months [16. 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 way, exceed one year.]

(6) If the Registrar, on completion of the inquiry finds that there is a major defect in the constitution or working or financial condition of the society, he may initiate action in accordance with the provisions of section 32.

66. Supervision and Inspection.- (1) The Registrar shall supervise or cause to be supervised by a person authorised by him by general or special order in writing in this behalf, the working of every society as frequently, as he may consider necessary. The supervision under this sub-section may include an inspection of the books of the society.

(2) The Registrar may, on his own motion, or on the application of a creditor of a society, inspect or direct any person authorized by him, by order in writing in this behalf, to inspect the books of the society:

Provided that no such inspection shall be made on the application of a creditor unless the applicant,-

(a) satisfies the Registrar that the debt is a sum then due and that he has demanded payment thereof and has not received satisfaction within a reasonable time; and

(b) deposits with the Registrar such a sum as security for the costs of the proposed inspection as the Registrar may require.

(3) Where the inspection under sub-section (2) is made on the application of a creditor, the Registrar shall communicate the result of such inspection to such creditor.

(4) [14. The Registrar or any person authorised by him under sub-section (l) or sub-section (2) shall at all reasonable time have free access to and have power to inspect the books, records, accounts, documents, securities, cash balance and other properties belonging to the society and may summon any person in possession of or responsible for the custody of such books, records, accounts, documents, securities, cash balance and other properties, to produce the same for inspection at any place at the Headquarters of the society or any branch thereof or where there is no working office for the society, at the office of the Registrar or at the office of any of his .subordinate officers.

(4A) It shall be the duty of every officer and employee of the society to co-operate with and assist in such supervision or inspection, to furnish any information that may be required for the purpose and to produce the books, records, cash balance etc. referred to in sub-section (4), on demand by such officer, failing which it shall be treated as an offence under sub-section (4) of section 94.]

(5) The Registrar or the person authorized by him under sub-section (1) or sub-section (2) may, by order in writing, direct the society or its officers to take such action, as may be specified in such order, within the time that may be mentioned in such order.

(6) The Circle Co-operative Union shall have the power to direct that a non-official member-thereof shall be present at an inspection under sub-section (2):

Provided that such non-official member shall not have the power to make the inspection himself.

(7) Apex Society or Federal Co-operative Society or a financing bank shall have the right to inspect the books of any registered society which is affiliated to it, through its officers.

(8) An officer of an Apex Society or Federal Co-operative Society or a financing bank, inspecting the books of a society shall at all reasonable times have the access to the books, accounts, documents, securities, cash and other properties belonging to the society and may call for such information, statements and return, as may be necessary to ascertain the financial condition of the society and the safety of the sums lent to it.

(9) An officer referred to in sub-section (8) shall also have power to summon any person in possession of or responsible for the custody of any books, accounts, documents, securities, cash and other properties, referred to in that sub-section to produce the same for inspection or verification at any place at the headquarters of the society or any branch thereof.

(10) Apex Society or Federal Co-operative Society or the financing bank may also report to the Registrar about the action to be taken against the society, as a result of the inspection by tits officers.

[14. (11) Notwithstanding anything contained in sub-sections (1) and (2) above, the Registrar or his subordinate officers authorized by him under sub-section (1), shall have power to hold an enquiry with necessary records of a society, on any petition received, and to inspect the affairs of a society periodically, in such cases, the inspecting officers shall have the same powers as specified in subsection (4).

Explanation 1:—The "affairs of a society" for the purpose of this subsection includes, among other things, matters relating to administration, management and the business of a society.

Explanation 2:—The duty of the officers and chief executive of a society and the nature of offences and penalties mentioned in [17. sub-section (4A)] shall be applicable to this subsection also]

[^14.66A. Powers of Registrar to give directions.—Subject to the provisions of the Act and the Rules made thereunder the Registrar may issue general directions and guidelines to any or all of the cooperative societies in furtherance of the purposes of the Act or for implementing Government policies for the benefit of the members and the general public.]

66B. Suspension of Officers.- If the Registrar, in the course of any inquiry under section 65 or on inspection under section 66 or on audit under section 64 of on the report of Vigilance Officer appointed under section, 68A, is satisfied that any officer other than the President, Vice President, Chairman, Vice Chairman and member of the committee of any society, has done any act, detrimental to the interest of the society or its members and that there is reason to believe that such officer has indulged in misappropriation, manipulation of accounts, forgery, destruction or tampering of records of the society, he may, for reasons to be recorded in writing issue a direction to the committee of the said society to suspend the officer or officers responsible for the offence forthwith.

[16. 66C. Submission of returns to the Registrar.—Every co-operative society shall file returns, within six months of the closure of every financial year, before the Registrar, containing the following particulars, namely :—

(a) a comprehensive annual report of its activities ;

(b) its audited statements of accounts ;

(c) plan for surplus disposal as approved by the general body of the co-operative society ;

(d) list of amendments to the bye-laws of the co-operative society, if any ;

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

(f) any other information required by the Registrar in pursuance of any of the provisions of this Act or the Rules.]

67. Cost of inquiry or inspection.- Where an inquiry is held under section 65, or an inspection is held under section 66 on the application of a creditor, the Registrar may, by order, apportion the cost, or such portion of the cost, as he may deem fit, between the society to which the society concerned is affiliated, the society, the member or creditor demanding an inquiry or inspection and the officers or former officers, of the society:

Provided that,-

(a)no order of apportionment of the cost shall be made under this section unless the society or the person sought to be made liable to pay the costs thereunder has had a reasonable opportunity of being heard;

(b)the Registrar shall state, in writing the grounds on which the costs are apportioned.

68. Surcharge.- (1) If in the course of an audit, inquiry, inspection or the winding up of a society, it is found that any person, who is or was entrusted with the organization or management of such society or who is or has, at any time been an officer or an employee of the society, has made any payment contrary to the Act and the rules or the bye-laws, or has caused any loss or damage in the assets of the society by breach of trust, or willful negligence or mismanagement or has misappropriated or fraudulently retained any money or other property belonging to such society or has destroyed or caused the destruction of the records, the Registrar may, of his own motion or on the application of the committee, liquidator of any creditor, inquire himself or direct any person authorised by him by an order in writing in this behalf, to inquire into the conduct of such person.

(2) Where an inquiry is made under sub-section (1), the Registrar may, after giving the person concerned, an opportunity of being heard, by order in writing, require him to repay or restore the money or other property or any part thereof, with interest at such rate, or to pay contribution and costs or compensation to such extent, as the Registrar may consider just and equitable.

[14. (3) Where the money, property, interest, cost or compensation is not repaid or restored as per subsection (2), the Registrar shall take urgent steps to recover such amounts from the concerned persons as arrears of public revenue due on land as specified in section 79 of the Act.]

68A. Vigilance Officer.- (1) The Government shall appoint an officer, not below the rank of Deputy Inspector General of Police, as Vigilance Officer with powers to inquire into and investigate the cases of misappropriation, corruption and any other major irregularity in the societies as may be referred to him by the Registrar.

(2) The Vigilance Officer shall conduct the inquiry and investigation in such manner, as may be prescribed.

(3) The Vigilance Officer shall be under the administrative control of the Registrar of Cooperative Societies:

Provided that the powers of the Registrar of Co-operative Societies under this section shall not be conferred on any other person.]

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.