THE KERALA CO-OPERATIVE SOCIETIES ACT, 1969[1]

(Act 21 of 1969)

An Act to consolidate, amend and unify the laws relating to Co-operative Societies in the State of Kerala.

[2] [“Preamble.—WHEREAS with a view to provide for the orderly development of the Co-operative sector the State, by organizing the Co-operative societies as self governing democratic institutions, to achieve objects of equity, social justice and economic development, as envisaged in the directive principles of State Policy of the Constitution of India, it is expedient to consolidate, amend and unify the law relating to co-operative societies in the State.;”]

BE it enacted in the Nineteenth Year of the republic of India as follows:-

CHAPTER I

Preliminary

       1. Short title, extent and commencement.-(1) This Act may be called the Kerala Co-operative Societies Act, 1969.

        1)It extends to the whole of the State of Kerala.

        2)It shall come into force on such date as the Government may by notification in the Gazette, appoint:

Provided that different dates may be appointed for different provisions of this Act and any reference in any such provision to the commencement of this Act shall be construed as a reference to the coming into force of that provision.

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

a) “apex society” means a society having the whole of the State as its area of operation and having as its members only other societies with similar objects and declared as such by the Registrar;

           b)“bye-laws” means the registered bye-laws of a co-operative society for the time being in force;

    [3][“(d). “central society” means a society having jurisdiction over one or more Revenue Districts but not the whole of the State as its area of operation; and having as its members only other societies and declared as such by the Registrar or the Government;”]

           e)“committee” means the governing body of a co-operative society by whatever name called, to which the management of the affairs of the society is entrusted;

      [4][“ [5][(ea)] “ Co-operative Arbitration Court” means a court constituted under section 70A;”;]

            [6][“(eb) “Consortium Lending Scheme” means the consortium Lending Scheme framed under section 57C;

         (ec) “Co-operative Development and Welfare Fund” means the Co-operative Development Welfare Fund established under section 57A;

         (ed) “Co-operative Service Examination Board” means the Co-operative Service Examination Board constituted under section 80B;”; ]

         (f)“co-operative society” or “society” means a co-operative society registered or deemed to be registered under this Act;

         (g)“co-operative society with limited liability” means a society in which the liability of its members for the debts of the society in the event of its being wound up is limited by its bye-laws-

          (i)to the amount, if any, unpaid on the shares respectively held by them; or

         (ii) to such amount as they may, respectively undertake to contribute to the assets of the society;

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

     [7][“(ha) Deposit Guarantee Scheme” means the Deposit Guarantee Scheme framed under section 57 B;

          (hb) “Director of Co-operative Audit” means the Director of Co-operative Audit appointed under sub section (1) of section 63 and includes any office on whom all or any of the powers of the Director of Co-operative Audit under this Act are conferred;”;]

           (i)“dispute” means any matter touching the business, constitution, establishments or management of a society capable of being the subject of litigation and includes a claim in respect of any sum payable to or by a society whether such claim be admitted or not;

          [8] [ “ [9] [(ia)] “District Co-operative Bank” means a central society having jurisdiction over one revenue district and having as its members Primary Agricultural Credit Societies and Urban Co-operative Banks and the principal object of which is to raise funds to be lent to its members, including nominal or associate members;”;]

          [10][“(ib) “Federal Co-operative Society” means a society having more than one district as its and operation and having individuals and other co-operative societies as its members;”; ]

            (j) “financing bank” means a co-operative society having as its members only other co-operative societies and the main object of which is to raise money and lend the same to its members;

            (k) “general body meeting” means a meeting of the members who are entitled to vote in the affairs of the society;

             (l) “member “ means a person joining in the application for the registration of a Co-operative society or a person admitted to membership after such registration in accordance with this Act, the rules and the bye-laws, and includes a nominal or associate member;

            (m) “nominal or associate member” means a member who possesses only such privileges and rights of a member and who is subject only to such liabilities of a member as may be specified in the bye-laws;

             (n) “officer” means the president, vice-president, chairman, vice chairman, secretary, manager, member of committee or treasurer and includes a liquidator, administrator and any other person empowered under the rules or the bye-laws to give directions in regard to the business of a co-operative society;

             (o) “prescribed” means prescribed by rules made under this Act;

      [11] [“(oa) “Primary Agricultural Credit Society” means a Service Co-operative Society, a Service Co-operative Bank, a Farmers’ Service Co-operative Bank and a Rural Bank, the principal object of which is to undertake agricultural credit activities and having its area of operation confined to a Village Panchayat or a Municipality:

    Provided that the restriction regarding the area of operation shall not apply to Societies or Banks in existence at the commencement of the Kerala Co-operative Societies (Amendment) Act, 1999;”.]

       [12][“ [(ob)’] [13] [“primary credit society” means a society other than an apex or central society which has as its principal object the raising of funds to be lent to its members;”;]

        [14][ “(oc) “Primary Co-operative Agricultural and Rural Development Bank” means a society having its area of operation confined to a taluk and the principal object of which is to provide for long term credit for agricultural and rural development activities:

    Provided that the societies in existence at the commencement of the Kerala Co-operative Societies (Amendment) Act, 1999, having more than one taluk as its area of operation shall, restrict such area of operation to the taluk where the headquarter of such society is situated, within a period of six months]

       (p) “Registrar” means the Registrar of Co-operative Societies appointed under sub-section (1) of section 3 and includes any person on whom all or any of the powers of the Registrar under this Act are conferred;

       (q) “rules” means the rules made under this Act;

        [15][“(qa) “Scheduled Castes” means the Scheduled Castes in the State of Kerala as specified in the Constitution (Scheduled Castes) Order, 1950;]

       [16][ “(qb) “Scheduled Tribes” means the Scheduled Tribes in the State of Kerala as specified in the Constitution (Scheduled Tribes) Order, 1950;”].

        (r) “State” means the State of Kerala;

         [17][“(ra) “State Co-operative Agricultural and Rural Development Bank” means an apex society having only Primary Co-operative Agricultural and Rural Development Banks as its members and functioning in accordance with the provisions contained in the Kerala State Co-operative Agricultural and Rural Development Banks Act, 1984 (20 of 1984);]

           (rb) “State Co-operative Bank” means an apex society having only District Co-operative Banks as its members;

           (rc) “State Co-operative Election Commission “means the State Co-operative Election commission constituted under section 28B;”;

        (s)State Co-operative Union” means the State Co-operative Union established under section 89;

        (t)“Tribunal” means the Tribunal constituted under section 81;

      [18] [ “(ta) “Urban Co-operative Bank” means a society registered under this Act having its area of operation in the urban areas and which undertakes banking business;

          (tb) “Vigilance Officer” means the Vigilance Officer appointed under section 68A;”.]

        (u)“year means the period commencing on the [19][“ first day of April of any year and ending with 30st of March”] of the succeeding year or in the case of any registered society or class of registered societies, the accounts of which are made upto any other date with the previous sanction of the Registrar, the year ending with such date.]

CHAPTER II

Registration of Co-operative Societies

       3.Registrar.-(1) The Government may appoint a person to be the Registrar of Co-operative Societies for the State.

                 (2)The Government may by general or special order confer any person all or any of the powers of the Registrar under this Act.

      4.Societies which may be registered.—Subject to the provisions of this Act a co-operative society which has as its object the promotion of the economic interests of its members or of the interests of the public in accordance with co-operative principles, or a society established with the object of facilitating the operations of such a society, may be registered under this Act.

       5.Registration with limited liability only.—(1) A co-operative society shall be registered only with limited liability:

        Provided that this sub-section will not affect the rights and liabilities of societies with unlimited liability which are in existence at the time of commencement of this Act.

            (2)The word ‘limited’ or its equivalent in any Indian language shall be the last word in the name of a society registered under this Act with limited liability.

      6.Application for registration of co-operative societies.—(1) An application for the registration of a co-operative society shall be made to the Registrar in such form as may be prescribed and the applicant shall furnish to him such information about the society as he may require.

          (2)Every such application shall conform to the following requirements, namely:-

             (a)the application shall be accompanied by three copies of the proposed bye-laws of the society;

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

            (c)the application shall be signed by every one of the applicants who is an individual and by a person duly authorized on behalf of the Government or any society or other body of person which is an applicant.

              (a)that the application complies with the provisions of this Act and the rules;

   (c)that the area of operation of the proposed society and the area of operation of another society of similar type do not overlap;

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

he may register the society and its bye-laws [20][“within a period of ninety days of receipt of application”]

         (2)Where the Registrar refuses to register a society, he shall communicate the order of refusal together with the reasons therefore within seven days of such order to such of the applicants as may be prescribed.

         (3)An application for registration of a society shall be disposed of by the Registrar [21][within ninety days] from the date of receipt of the application.

     [22][“(4) Where an application for registration of a society is not disposed of within the time specified in sub-section (3), the applicant may make a representation,--

           (a)before the Registrar, if the application for registration is made to a person on whom the powers of the Registrar is conferred under sub-section (2) of section 3; or

           (b)before the Government, if the application for registration is made before Registrar, and the Registrar or the Government, as the case may be, shall, within sixty days from the date of receipt of such representation, issue directions to the authority concerned to take appropriate decision on the application for registration and the authority concerned shall comply with such directions.”.]

      8.Registration certificate.-Where a co-operative society is registered under this Act, the Registrar shall issue a certificate of registration signed and sealed by him, which shall be conclusive evidence that the said society is duly registered under this Act.

        [23][ “8A. Affiliation to apex Society.—(1) Every Primary Co-operative Society or Central Co-operative Society may, within such time and in such manner, as may be prescribed, apply for affiliation to the concerned apex society or Central society, as the case may be.

          (2)Where the apex society or central society does not, within sixty days from the date of receipt of the application for affiliation, determine whether such affiliation should be given or not such affiliation shall be deemed to have been given to the applicant society from the date on which the said period of sixty days expires.

         (3)When the apex or central society, as the case may be, rejects an application for affiliation under sub-section (1), the aggrieved society may file an appeal before the Registrar against such rejection within thirty days from the date of receipt of the order of rejection and the Registrar shall dispose of the appeal within sixty days from the date of appeal.”]

      9. Co-operative societies to be bodies corporate.—The registration of a society shall render it a body corporate by the name under which it is registered, having perpetual succession and a common seal, and with power to hold property, enter into contracts, institute and defend suits and other legal proceedings and to do all things necessary for the purposes for which it was constituted.

      10. Change of name of society.-(1) A society may, by an amendment of its bye-laws, change its name.

              (2) Where a society changes its name, the Registrar shall enter the new name in the register of co-operative societies in the place of the former name and shall amend the certificate of registration accordingly.

             (3) The change of name of a society shall not affect any rights or obligations of the society or render defective any legal proceedings by or against it; and any legal proceedings which might have been continued or commenced by or against the society by its former name may be continued commenced by its new name.

      11. Change of liability.- (1) Subject to the provisions of this Act and the rules, a society may, by an amendment of its bye-laws, change the form or extent of its liability.

          (2)When a society has passed a resolution to change the form or extent of its liability, it shall give notice thereof in writing to all its members and creditors and notwithstanding the provisions of section 24 or any bye-law or contract to the contrary, any member or creditor shall, during a period of two months from the date of service of the notice upon him, have the option of withdrawing his shares, deposits or loans, as the case may be.

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

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

             (a)the assent thereto of all members and creditors has been given or deemed to have been given; or

             (b)all claims of members and creditors who exercise the option referred to in sub-section (2) within the period specified therein have been me in full.

      12.Amendment of bye-law of society.—(1) No amendment of any bye-law of a society shall be valid unless such amendment has been registered under this Act.

           (2)The provisions of section 7 specifying the conditions to be satisfied before registration of the bye-laws of a society by the Registrar shall mutatis mutandis, apply also to the registration of amendments to bye-laws:

     Provided that the Registrar shall before registering an amendment of any bye-law consult-

              (a)the State Co-operative Union if the bye-laws to be amended are that of an apex society or a central society; or

              (b)the circle co-operative union if the bye-laws that are to be amended are that of any other society; and

             (c)the financing bank if the society is indebted to the financing bank.

          (3)The Registrar shall forward to the society a copy of the registered amendment together with a certificate of registration signed and sealed by him, and such certificate shall be conclusive evidence that the amendment has been duly registered.

          (4)Where the Registrar refuses to register an amendment of the bye-laws of a society, he shall communicate the order of refusal, together with the reasons therefore, within seven days of the order to the society

        [24][“(4A) An application to register an amendment of the bye-laws of a society shall be disposed of by the Registrar within ninety days from the date of receipt of the same.

            (4B) Where an application to register an amendment of the bye-laws of a society is not disposed of within the time specified in sub-section (4A), the society may make a representation,-

            (a)before the Registrar of Co-Operative Societies, if the application to register the amendment of the bye-laws is made to a person on whom the powers of the Registrar is conferred under sub-section (2) of section 3; or

            (b)before the Government if the application for registration of the amendment of the bye-laws is made before the Registrar, and the Registrar or the Government, as the case may be, shall within, sixty days from the date of receipt of such representation, issue directions to the authority concerned, to dispose of the same”]

          (5)Notwithstanding anything contained in this Act or the rules or bye-laws, if the Registrar is satisfied that for the purpose of altering the area of operation of a registered society or for the purpose of improving the services rendered by it, an amendment of the bye-laws of a society is necessary or desirable, he may, after consulting the financing bank, if any, to which the society is affiliated and the circle co-operative union, by order in writing, require the society to make the amendment within such time as may be specified in such order or within such further time as he may grant for the purpose.

          (6)If within the time specified under sub-section (5), the society fails to make the amendment, as required by the Registrar or with such further changes as he may agree to, the Registrar may, after giving the society an opportunity for making its representations, register the amendments as required or agreed to by him and issue to the society a copy of such amendments together with a certificate of registration signed and sealed by him and thereupon such amendment shall be binding on the society and its members.

          (7)The provisions of sub-section (4) of section 11 shall not apply when action is taken under sub-sections (5) and (6) of this section.

      13. When amendments of bye-laws come into force.—An amendment of the bye-laws of a society shall, unless it is expressed to come into operation on a particular day, come into force on the day on which it is registered.

      14.. Amalgamation, transfer of assets and liabilities and division of societies.—(1) A society may, with the previous approval of the Registrar and by a resolution passed by a two-thirds majority of the members present and voting at a general body meeting of the society,-

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

         (c)divide itself into two or more societies

         (2)Any two or more societies may, with the previous approval of the Registrar and by a resolution passed by a two-thirds majority of the members present and voting at a general body meeting of each such society, amalgamate themselves and form a new society.

        (3)The resolution of a society under sub-section (1) or sub-section (2) all contain all particulars of the transfer, division or amalgamation as the case may be.

        (4)When a society has passed any such resolution, it shall give notice thereof in writing to all its members and creditors and notwithstanding the provisions of section 24 or any bye-law or contract to the contrary, any member or creditor shall, within a period of two months from the date of service of the notice upon him, have the option of withdrawing his shares, deposits or loans, as the case may be.

         (5)Any member of creditor who does not exercise his option within the period specified in sub-section (4) shall be deemed to have given his assent to the proposals contained in the resolution.

         (6)A resolution passed by a society under this section shall not take effect until either—

           (a)the assent thereto of all the members and creditors has been given or deemed to have been given; or

           (b)all claims of members and creditors who exercise the option referred to in sub-section (4) within the period specified therein, have been met in full.

        (7)Where a resolution passed by a society under this section involves the transfer of any assets and liabilities, the resolution shall, notwithstanding anything contained in any law for the time being in force, be a sufficient conveyance to vest the assets and liabilities in the transferee without any further assurance.

           (8)(i) Where, in the opinion of the Registrar, the amalgamation of two or more societies is necessary or desirable for increasing their strength or usefulness, lie may, after consulting, in the manner prescribed, the financing bank to which the societies are affiliated and the circle co-operative union, call upon such societies to amalgamate within such time as may be specified by him into one society in accordance with the provisions of sub-sections (2) to (7).

           (ii)If the societies fail to amalgamate into one society within the time specified by the Registrar, he may, after giving an opportunity to the committee of each of the societies to state its objections, if any direct the amalgamation of the societies into one society.

           (iv) (a) Any member of any of the societies so directed may not withstanding the provisions of section 24 or any bye-law to the contrary, by notice given to the society of which he is a member, within a period of two months from the date of receipt by him of the direction, intimate his intention not to become a member of the new society and shall have the option of withdrawing his shares, deposits or loans, as the case may be.

              (b) Any creditor of any of the societies so directed may, notwithstanding any agreement to the contrary, by notice given to the society of which he is a creditor, within a period of two months from the date of receipt by him of the direction, demand a return of the amount due to him.

           (v) Any member or creditor who does not exercise his option within the period aforesaid shall be deemed to have given his assent to the amalgamation.

         (vi) After the repayment of the share capital of the members and the discharge of the claims of the creditors, if any, under clause (iv) by the societies directed to be amalgamated or after a majority of the members and creditors of such societies have given their assent to the amalgamation the Registrar may register the new society. On such registration, the registration of the old societies shall be deemed to have been cancelled. The registration of the new society shall be a sufficient conveyance to vest in it all the assets and liabilities of the original societies.

           (9) (i) Where, in the opinion of the Registrar it is desirable for increasing the usefulness of a society by restricting the area of its operation, he may, after consulting, in the manner prescribed, the financing bank, if any, to which the society is affiliated and the circle co-operative union, by order call upon the society to divide itself into two or more societies within such time as may be specified in the order in accordance with the provisions of sub-sections (2) to (7).

               (ii) If the society fails to divide itself within the time specified by the Registrar, he may, after giving an opportunity to the committee of the society to state its objections, if any, by order direct the division of the society to state its objections, if any, by order direct the division of the society into two or more societies. The order of the Registrar shall contain directions for the division of the assets and liabilities of the society among the new society into which it is directed to be divided and may specify the area of operation of, and the members who will constitute, each of the new societies. The proposed bye-laws of the new societies shall be annexed to the order.

              (iii) The society shall, within one month of the receipt of the order of the Registrar, give notice of the direction to all its members and creditors.

             (iv) Any members of the society may, notwithstanding the provisions of section 24 or any bye law to the contrary, by notice given to the society within a period of two months from the date of receipt by him of the direction, intimate his intention not to become a member of any of the new societies and shall have the option of withdrawing his shares, deposits or loans, as the case may be.

             (v) Any creditor of the society may, notwithstanding any agreement to the contrary, by notice given to the society within the period referred to the clause (iv), demand a return of the amount due to him.

            (vi) Any number or creditor who does not exercise his option within the period aforesaid shall be deemed to have given his assent to the division in the manner specified in the order of the Registrar under clause (ii).

          (vii) After the repayment of the share capital of the members and the discharge of the claims of the creditors, if any, under clauses (iv) and (v) by the society directed to be divided or after a majority of the members and creditors of the society have given their assent to the division, the Registrar may register the new societies. On such registration the registration of the old society shall be deemed to have been cancelled. The registration of the new societies shall be sufficient conveyance to vest in the new societies all the assets and liabilities of the old society in the manner specified in the order of the Registrar under clause (ii).

       15. Cancellation of registration certificates of societies in certain cases.-(1) Where the whole of the assets and liabilities of a society are transferred to another society in accordance with the provisions of section 14, the registration of the first mentioned society shall stand cancelled and that society shall be deemed to have been dissolved and shall cease to exit as a corporate body.

           (2) Where two or more societies are amalgamated into a new society in accordance with the provisions of section 14 the registration of each of the amalgamating societies shall stand cancelled on the registration of the new society and each amalgamating society shall be deemed to have been dissolved and shall cease to exit as a corporate body.

             (4)Where a society is divided into two or more societies in accordance with the provisions of section 14, the registration of that society shall stand cancelled on the registration of the new societies and that society shall be deemed to have been dissolved and shall cease to exit as a corporate body

CHAPTER III

Members of Co-operative Societies and their rights and liabilities

       16. Persons who may become members.-(1) No person shall be admitted as a member of a society except the following, namely:-

         (a)an individual—

          (i) who has attained the age of eighteen years:

Provided that this sub-clause shall not apply in the case of a society formed exclusively for the benefit of the students of any school or college;

           (ii)who is not of unsound mind;

           (iii)who is a resident within, or is in occupation of land in the area of operation of the society;

       (b) any other society;

      [25][“(ba) a local Self government;”;]

       (c)the Government; and

       (d) any body of persons, whether incorporated or not and whether or not established by or under any law, if such body is approved by the Government in this behalf by general or special order:

     Provided that in a society formed for the promotion of the economic interests of members through a specified activity no person other than one who is likely to be benefited directly by such activity may be admitted as a member of such society unless such admission is permitted specifically by rules:

    Provided further that where a society is formed exclusively for the benefit of persons engaged in any particular industry, no person who is not an actual worker in the industry shall be admitted in excess of such percentage of the total membership of the society as may be prescribed:

    Provided also that the Coffee Board, the Rubber Board and any other statutory or non-statutory Board, Committee or Corporation constituted for the purpose of the development of an industry, may be admitted as a member of a society engaged in marketing and processing of the products of the industry concerned and formed for the workers and growers of such industry, so however that no such Board, Committee or Corporation shall be admitted as a member of a co-operative credit society.

   [26][“Provided also that in the case of hospital co-operative societies, industrial and commercial establishments and other organizations registered under any other law may be admitted as members.

  Explanation.-For the purpose of this sub-section ‘hospital co-operative society’ means a society, the main object of which is to run a hospital or to conduct medical or paramedical courses or to run medical shops.”;]

         (2) Membership in any society other than a society formed for the benefit of the Scheduled Castes or the Scheduled Tribes shall not be refused merely on the ground that a person belongs or does not belong to a particular religion, race, community, caste, sect or denomination. A decision on an application for membership shall be taken within two months from the date of receipt of the application.

      [27][“(2A) Where an application for membership in a society is not disposed of within the time specified in sub-section (2), the Registrar shall be bound, on the written request of the applicant, to determine whether such membership shall be given or not;

           (2B) Where the Registrar does not, within one month of the date of receipt of such written request determine whether such membership should be given or not, the applicant may make a representation,-

           (a)before the Registrar, if the request referred to in sub-section (2A) is made to a person on whom, the powers of the Registrar is conferred under sub-section (2) of section 3; or

          (b)before the Government, if the request referred to in sub-section (2A) is made to the Registrar and the Registrar or the Government, as the case may be, shall, within thirty days from the date of receipt of such representation, determine whether such membership should be given or not.”.]

            (3).Where a person is refused admission as a member in a society, the decision refusing admission together with the reasons therefore shall be communicated by the society to that person within a period of fifteen days from the date of the decision.

       17.Expulsion of members.—(1) Any member of a society, who has acted adversely to the interests of the society, may be expelled upon a resolution of the general body passed at a special meeting convened for the purpose by the votes of not less than two-thirds of the total number of members present and voting at the meeting.

           (2)No member shall be expelled under sub-section (1) without being given an opportunity of making his representation.

      18. Nominal or associate members.-(1) A society may admit any individual as a nominal or associate member

       [28] [“Provided that a District Co-operative Bank may admit any Co-operative Society registered under the provisions of this Act, other than Primary Agricultural Credit Societies and Urban Co-operative Banks functioning within its area of operation, as nominal or associated member:

     Provided further that the members of a District Co-operative Bank other than Primary Agricultural Credit Societies and Urban Co-operative Banks, as on the date of commencement of the Kerala Co-operative Society (Second Amendment) Act, 1997, shall become nominal or associate members of such District Co-operative Bank, at such commencement.”]

    [29][“Provided also that a hospital co-operative society may admit any other society as nominal or associate member.

     Explanation.-The term ‘hospital co-operative society’ shall have the same meaning as in the Explanation to the fourth proviso to sub-section (1) of section 16.”.]

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

           (3)Save as provided in this section, a nominal or associate member shall have such privileges and rights of a member and be subject to such liabilities of a member, as may be specified in the bye-laws of the society.

      19. Member not to exercise rights till due payment made.—No member of a society shall exercise the rights of a member unless he has made such payments to the society in respect of membership or has acquired such interest in the society, as may be prescribed by the rules or the bye-laws.

       [30][“20 Vote of numbers.—Notwithstanding anything contained in any other provision of this Act other law, every active member of a society shall have one vote in the affairs of the society:

      Provided that,---

             (a)a member admitted within sixty days immediately prior to the date of election shall not have a right to vote;

            (c)Where the Government is a member of a society, each person nominated by the Government the committee of the society shall have one vote each including the right to vote for election of office bearers of the society;

(e)in the case of an equality of votes, the Chairman shall have and exercise a second or casting vote:

    Provided further that the procedure and manner in which an active member may be identified shall be such as may be prescribed.

Explanation.—For the purpose of this section, active member means,-

       (i) in the case of a credit society, a member who has made a deposit or has become a borrower or surety or has attended any general body meeting of the society during the period of five years immediately preceding the date of resolution of the committee for the conduct of election;

        (ii) in the case of any other society, a member who has involved in all or any of the objects of the society specified in the bye-laws thereof during the period of five years immediately preceding the date of resolution of the committee for the conduct of election.”.]

      21. Manner of exercising vote.-(1) Every member of a society shall exercise his vote in person

           (2)Notwithstanding anything contained in sub-section (1), a society or corporation or a statutory or non-statutory Board, Committee or other body of persons which is a member of another society may, subject to any rules made under this Act, appoint one of its members to vote on its behalf in the affairs of that other society.

      [31][“22. Restriction on holding shares.-In any society, no member other than the Government any statutory or non-statutory Board, Committee or Corporation approved by the Government in this behalf any other society, shall hold more than such portion of the total share capital of the society, not exceeding one fifth thereof, as may be prescribed:

     Provided that the Government may, by notification in the Gazette, specify in respect of any class of societies a higher maximum than one fifty of the share capital.”.]

       23. Restrictions on transfer of shares or interest.-(1) The transfer of a share or interest of a member in the capital of a society shall be subject to such conditions and restriction as to the maximum holdings as are specified in section 22.

        (2) No transfer by a member of his share or interest in a society shall be valid unless-

         (a)the member has held such share or interest for not less than three years; and

         (b)the transfer is approved by the committee of the society

      24. Restriction on withdrawal of shares.—Subject to the other provisions of this Act, no withdrawal by a member of his share in a society shall be valid unless-

         (a)the member has held such share for not less than three years; and

         (b)such withdrawal is in accordance with the bye-laws of the society.

       25. Transfer of interest on death of members.-(1) On the death of a member of a society, the society shall transfer the share or interest of the deceased member to the person or persons nominated in accordance with the rules or the bye-laws or, if no person has been so nominated, to such person as may appear to the committee to be the heir or legal representative of the deceased member.:

      Provided that such nominee, heir or legal representative, as the case may be, is admitted as a member of the society.

     Provided further that nothing in this sub-section shall prevent a minor or a person of unsound mind from acquiring by inheritance or otherwise the share or interests of a deceased member in a society.

        (2)Notwithstanding anything contained in sub-section (1), any such nominee, heir or legal representative, as the case may be, may require the society to pay to him the value of the share or interest of the deceased member ascertained in accordance with the rules or the bye-laws and the society shall pay the amount to the nominee, heir or legal representative, as the case may be, on receipt of such requisition.

         (3)A society may pay all other moneys due to the deceased member from the society to such nominee, heir or legal representative, as the case may be.

          (4)All transfers and payments made by a society in accordance with the provisions of this section shall be valid and effectual against any demand made upon the society by any other person.

      26. Liability of past member or of estate of deceased member.—(1) Subject to the provisions of sub-section (2), the liability of a past member or of the estate of a deceased member of a society for the debts of the society as they existed--

       (a)in the case of a past member, on the date on which he ceased to be a member;

       (b)in the case of a deceased member, on the date of his death shall continue for a period of two years from such date.

        (2) Where a society is ordered to be wound up under section 71, the liability of a past member or of the estate of a deceased member who ceased to be a member or died within two years immediately preceding the date of the order of winding up, shall continue until the entire liquidation proceedings are completed, but such liability shall extend only to the debts of the society as they existed on the date of his ceasing to be a member, or death, as the case may be.

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 bye-laws 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 [32][ “constitute a committee, for a period not exceeding [33] [five years]”] in accordance with the bye-laws and entrust the management of the affairs of the society to such 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:

       [34][“Provided 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 [35] [twelve months]”]

       [36][“Provided also that a Committee constituted prior to the commencement of the Kerala Co-operative Societies (Amendment) Act 1999, shall be eligible to continue for a period of five years:

       Provided also that the above proviso is not applicable to a committee where the committee has passed a resolution before the commencement of the Kerala Co-operative Societies (Amendment) Act, 1999, for the conduct of election thereof.”]

       [37][(1A) Notwithstanding anything contained in the bye-laws of a society, the maximum number of members of the committee shall not exceed fifteen, in the case of primary co-operative societies., and twenty-five in the case of all other types of co-operative societies.

        (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.”].

         (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 another society of the same type; or

           (b)if he is member of the committees of two or more societies of a different type or 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.

      [38][“(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.”.]

      [39][“28A Reservation for women members and members belonging to Scheduled Castes or Scheduled Tribes in the committee.—

         [40][“(1) Notwithstanding anything contained in this Acts the rules or the bye-laws, there shall be reserved in the committee of every society, one seat for a woman member 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.”.]

       [41][“(3) Where there is no representation of woman or of a member belonging to the Scheduled Castes or Scheduled Tribes in the committee of any apex or central society at the commencement of the Kerala Co-operative Societies (Amendment) Act, 1999, the Government or the Registrar, respectively, may nominate a woman member or a member belonging to the Scheduled Castes or Scheduled Tribes to the committee.”]

         (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.”]

       [42][“28B. State Co-operative Election Commission.-(1) Notwithstanding anything contained in this Act or in the rules the Government shall, by notification in the Gazette, constitute a State Co--operative Election Commission for the superintendence, directions and control of the conduct of elections to the committees of all credit, apex, central and federal societies in the State. The Government may, by notification in the Gazette, entrust the superintendence, directions and control of the conduct of election to the committee of any other society or any other class of societies to the State Co-operative Election Commission:

      Provided that in respect of societies not coming under this sub-section, the provisions contained in this Act and the Rules made thereunder shall be followed for the conduct of elections to the committees thereof.

        (2)The State Co-operative Election Commission shall be an officer not below the rank of Secretary to Government appointed by the Government for a period of five years. The terms and conditions of appointment of the State Co-operative Election Commission shall be such, as may be prescribed.

        (3)The State Co-operative Election Commission shall, in consultation with the Government, designate or nominate officers and employees of the Government to assist the Commission in the conduct of election to the committee 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 of a society.”]

       29. Annual general body meeting—(1) A general body meeting of a society shall be held once in a 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 and the annual report;

       (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.

      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.

      [43][“31. 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,

         the Government or any authority specified by them in this behalf shall have the right to nominate not more than three persons or one-third of the total number of members of the committee of such apex or central society whichever is less, to be members of the committee.

         (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.

         (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)Any person who holds office as a nominated member of the committee of a society, other than an apex or a central society, at the commencement of the Kerala Co-operative Societies (Amendment) Act 1987 shall cease to hold such office at such commencement.”]

      32. Supersession of committee.-[44][“(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 bye-laws or causes any loss or damage to the assets of the society, by breach of trust or wilful negligence; or

          (d)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 a new committee consisting of not more than three members of the society in its place or appoint not more than three administrators who need not be members of the society, 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, be extended from time to time, so however that the aggregate period does not exceed one year.”;]

        (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

[45] [“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 [46][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

           (b)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 terms of office of the existing committee expires,

        the Registrar may, either suo motu or on the application of any member of the society after [47][intimating] the circle co-operative union, appoint—

         (i) a new committee consisting of not more than three members of the society;

        (ii)[48] [ note more than three Administrates who need not be members of the society, to manage the affairs of the society] [49][“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.

    [50][“Provided 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.”]

    [51][ Explanation.-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.]

     [52][“(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 committee, administrator or administrators, 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 committee, administrator or administrators, 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 committee or administrator or administrators appointed under sub-section [53][ (1) and (1A)] shall, subject to the control of the Registrar and to such instructions as he may from time to time give, [54][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 committee or administrator or administrators 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

(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 sub-section (2) shall be void.

       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;

(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

(i) or any variation or cancellation thereof under clause (ii) or any release under the third proviso to clause (iii) 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);

      [55][“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 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”, “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 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 sub-section (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.

         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;

        (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

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

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