The Delhi Co-Operative Societies Act, 1972

[17th June, 1972]

An Act to consolidate and amend the law relating to co-operative societies in the Union territory of Delhi.

BE it enacted by Parliament in the Twenty-third Year of the Republic of India as follows :-

chapter i

preliminary

1.Short title, extent and commencement.- (1) This Act may be called the Delhi Co-operative Societies
Act, 1972.

(2) It extends to the whole of the Union territory of Delhi.

(3) It shall come into force on such date as the Lieutenant-Governor may, by notification in the Delhi Gazette, appoint.

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

(a) “bye-laws” means the registered bye-laws for the time being in force, and includes registered amendments of such bye-laws;

(b) “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;

(c) “co-operative bank” shall have the same meaning as is assigned to it in the Deposit Insurance Corporation Act, 1961 (47 of 1961);

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

(e) “co-operative society with limited liability” means a co-operative society the liability of whose members is limited by its bye-laws to the amount, it any, unpaid on the shares individually held by them or to such amount as they may individually undertake to contribute to the assets of the society, in the event of its being wound up;

(f) “co-operative society with unlimited liability” means a co-operative society the liability of whose members is unlimited for the purpose of contributing jointly and severally to any deficiency in the assets of the society in the event of its being wound up;

(g) “Deposit Insurance Corporation” means the Deposit Insurance Corporation established under section 3 of the Deposit Insurance Corporation Act, 1961 (47 of 1961);

(h) “federal society” means a society-

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

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

(i) “financing bank” means a co-operative society, the objects of which include the creation of funds to be lent to other co-operative societies;

(j) “Lieutenant-Governor” means the administrator of the Union territory of Delhi appointed by the President under article 239 of the Constitution;

(k) “member” means a person joining in the application for the registration of a co-operative society and a person admitted to membership after such registration in accordance with this Act, the rules and the bye-laws, and includes a nominal and an associate member and the Central Government when it subscribes to the share capital of a society;

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

(m) “prescribed” means prescribed by rules;

(n) “Registrar” means a person appointed to perform the functions of the Registrar of Co-operative Societies under this Act, and includes any person appointed to assist the Registrar when exercising all or any of the powers of the Registrar;

(o) “Reserve Bank” means the Reserve Bank of India constituted under the Reserve Bank of India Act, 1934 (2 of 1934);

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

(q) “Tribunal” means the Delhi Co-operative Tribunal constituted under section 78.

CHAPTER II

registration of co-operative societies

3.Registrar.- (1) The Lieutenant-Governor may appoint a person to be the Registrar of Co-operative Societies for the union territory of Delhi and may appoint other persons to assist him.

(2) The Lieutenant-Governor may, by general or special order, confer on any person appointed to assist the Registrar all or any of the powers of the Registrar under this Act.

(3) Every person appointed to assist the Registrar shall exercise the powers conferred on him under sub-section (2) subject to the general guidance, superintendence and control of the Registrar.

(4) the Lieutenant-Governor may, by notification in the Delhi Gazette and subject to such conditions as he may think fit to impose, confer all or any of the powers of the Registrar under this Act on any federal society, or an officer of such federal society; and every such federal society or officer on whom the powers of the Registrar are so conferred shall exercise such powers under the general guidance, superintendence and control of the Registrar.

4.Societies which may be registered.- (1) Subject to the provisions hereinafter contained, a society which has as its object the promotion of the economic interests of its members 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 with or without limited liability :

Provided that no society shall be registered if it is likely to be economically unsound or the registration of which may have an adverse effect on development of co-operative movement :

Provided further that, unless the Lieutenant-Governor by general or special order otherwise directs, the liability of the society of which a member is a co-operative society shall be limited.

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

5.Restrictions on registration.- No society other than a federal society shall be registered under this Act unless it consists of at least ten persons (each of such persons being a member of different family), who are qualified to be members under this Act and who reside in the area of operation of the society.

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

6.Restrictions on holdings of shares.- No member other than the Central Government or a co-operative society shall hold more than such portion of the share-capital of a co-operative society, subject to a maximum of one-fifth, as may be prescribed or have or claim any interest in the shares of such society exceeding ten thousand rupees, whichever is less.

7.Application for registration.- (1) For the purposes of registration, an application shall be made to the Registrar.

(2) The application shall be signed,-

(a) in the case of a society of which no member is a co-operative society, by at least ten persons qualified in accordance with the requirements of section 5; and

(b) in the case of a society of which a member is a co-operative society, by a duly authorised person on behalf of every such society and where all the members of the society are not co-operative societies, by ten other members, or, when there are less than ten other members, by all of them.

8.Power of Registrar to decide certain questions.- Where any question arises whether for the purposes of this Act a person resides in the area of operation of a society or not, or whether a society is of same type of another society or of different type, the question shall be decided by the Registrar whose decision shall be final.

9.Registration.- (1) If the Registrar is satisfied-

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

(b) that the objects of the proposed society are in accordance with section 4;

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

(d) that the proposed society has reasonable chances of success,

the Registrar may register the society and its bye-laws.

(2) When the Registrar refuses to register a society, he shall communicate the order of refusal, together with the reasons therefor, to such of the applicants as may be prescribed.

(3) The application for registration shall be disposed of by the Registrar within a period of three months from the date of receipt thereof by him :

Provided that if the Registrar is unable to dispose of the application within the aforesaid period, he shall make a report to the Lieutenant-Governor stating therein the reasons for his inability to do so, and the Lieutenant-Governor may allow him further time not exceeding three months to dispose of such application.

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

11.Amendment of bye-laws of a co-operative society.- (1) No amendment of any bye-laws of a co-operative society shall be valid unless such amendment has been registered under this Act.

(2) Every proposal for such amendment shall be forwarded to the Registrar and if the Registrar is satisfied that the proposed amendment-

(a) is not contrary to the provisions of this Act and the rules;

(b) does not conflict with co-operative principles; and

(c) will promote the economic interests of the members of the society,

he may register the amendment.

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

(4) Where the Registrar issues to register an amendment of the bye-laws of a co-operative society, he shall communicate the order of refusal together with the reasons therefor, to the society in the manner prescribed.

12.When amendments of bye-laws come into force.- An amendment of the bye-laws of a co-operative 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.

13.Change of name.- (1) A co-operative society may, by an amendment of its bye-laws, change its name but such change shall not affect any right or obligation of the society or of any of its members or past members, and any legal proceedings pending may be continued by or against the society under its new name.

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

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

(2) When a co-operative 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 any bye-law or contract to the contrary, any member or creditor shall, during a period of one month 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 assented to the change.

(4) An amendment of a bye-law of a co-operative 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 obtained; 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 met in full.

15.Amalgamation, transfer of assets and liabilities and division of co-operative societies.- (1) A co-operative 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 meeting of the society,-

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

(b) divide itself into two or more co-operative societies.

(2) Any two or more co-operative 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 meeting of each such society, amalgamate themselves and form a new co-co-operative society.

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

Provided that in the case of a co-operative bank, the Registrar shall not accord approval to any such resolution without the previous sanction in writing of the Reserve Bank.

(4) When a co-operative society has passed any such resolution, it shall give notice thereof in writing of all its members and creditors and, notwithstanding any bye-laws or contract to the contrary, any member or creditor shall, during the period of one month of 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 or creditor who does not exercise his opinion within the period specified in sub-section (4) shall be deemed to have assented to the proposals contained in the resolution.

(6) A resolution passed by a co-operative society under this section shall not take effect until, either-

(a) the assent thereto of all the members and creditors has been obtained; or

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

(7) where a resolution passed by a co-operative 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.

16.Power to direct amalgamation, division and reorganisation in public interest etc.- (1) Where a Registrar is satisfied that it is essential in the public interest, or in the interest of the co-operative movement, or for the purpose of securing the proper management of any co-operative society that two or move co-operative societies should be amalgamated or any co-operative society should be divided to form two or more co-operative society or should be reorganised, then, notwithstanding anything contained in section 15, but subject to the provisions of this section, the Registrar may, by order, provide for the amalgamation, division or reorganisation of these co-operative societies into a single society or into societies with such constitution, property rights, interests and authorities and such liabilities, duties and obligation as may be specified in the order :

Provided that no such order of amalgamation, division or reorganisation in respect of a co-operative bank shall be made without the previous sanction in writing of the Reserve Bank.

(2) No order shall be made under this section, unless-

(a) a copy of the proposed order has been sent in draft to the co-operative society or each of the co-operative societies concerned; and

(b) the Registrar has considered and made such modifications in the draft order as may seem to him desirable in the light of any suggestions and objections which may be received by him within such period (not being less than two months from the date on which a copy of the order aforesaid is received by the society or societies, as the case may be), as the Registrar may fix in that behalf, either from the society or from any of the societies concerned or from any member or class of members thereof or from any creditor or class of creditors thereof.

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

(4) Every member or creditor of each of the co-operative societies to be amalgamated, divided or reorganised, who has objected to the scheme of amalgamation, division or reorganisation, within the period specified, shall be entitled to receive, on the issue of the order of amalgamation, division or reorganisation, his share or interest, if he be a member, and the amount in satisfaction of his dues, if he be a creditor.

(5) On the issue of an order under sub-section (1), the provisions of sub-sections (2) , (3) and (4) of section 19 shall apply to the co-operative societies so amalgamated, divided or reorganised as if the amalgamation, division or reorganisation had been made under section 15.

17.Registrar to prepare scheme of amalgamation of co-operative bank in certain cases.- When an order of moratorium has been made by the Central Government under sub-section (2) of section 45 of the Banking Regulation Act, 1949, (10 of 1949) in respect of a co-operative bank, the Registrar, with the previous approval of the Reserve Bank in writing, may, during the period of moratorium, prepare a scheme-

(a) for the reorganisation of the co-operative bank; or

(b) for the amalgamation of the co-operative bank with any other co-operative bank

18.Liability of a co-operative bank to the Deposit Insurance Corporation.- Notwithstanding anything contained in sections 15 and 16 or any other provision of this Act, where a co-operative bank, being an insured bank within the meaning of the Deposit Insurance Corporation Act, 1961, (47 of 1961) is amalgamated or reorganised and the Deposit Insurance Corporation has become liable to pay to the depositors of the insured bank under sub-section (2) of section 16 of that Act, the bank with which such insured bank is amalgamated, or the new co-operative bank formed after such amalgamation, or as the case may be, the insured bank or transferee bank shall be under an obligation to repay to the Deposit Insurance Corporation in the circumstances, to the extend of and in the manner referred to in section 21 of the Deposit Insurance Corporation Act, 1961 (47 of 1961).

19.Cancellation of registration certificates of co-operative societies in certain cases.- (1) Where the whole of the assets and liabilities of a co-operative society are transferred to another co-operative society in accordance with the provisions of section 15 or section 16, the registration of the first mentioned co-operative society shall stand cancelled and the society shall be deemed to have been dissolved and shall cease to exist as a corporate body.

(2) Where two or more co-operative societies are amalgamated into a new co-operative society in accordance with the provisions of section 15 or section 16, the registration of each of the amalgamating societies shall stand cancelled on the registration of the new society, and each society shall be deemed to have been dissolved and shall cease to exist as a corporate body.

(3) Where a co-operative society divides itself into two or more co-operative societies in accordance with the provisions of section 15 or is divided by the Registrar in accordance with the provisions of section 16, 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 exist as a corporate body.

(4) The amalgamation and splitting of co-operative societies shall not in any manner whatsoever affect any right or obligation of the resulting co-operative society or societies or render defective any legal proceedings by or against the co-operative society or societies, and any legal proceedings that might have been continued or commenced by or against the co-operative society or societies, as the case may be, before the amalgamation or splitting, may be continued or commenced by or against the resulting co-operative society or societies.

(5) Where a co-operative society has not commenced business within a reasonable time of its registration or has ceased to function or if the Registrar is satisfied, after making such inquiry as he thinks fit, that the society no longer has genuinely as its objects one or more of the objects specified in section 4 and that its registration ought in the interests of the general public be cancelled, he shall make an order cancelling the registration of the co-operative society.The co-operative society shall, from the date of such order of cancellation, be deemed to be dissolved and shall cease to exist as a corporate body.

Chapter III

members of co-operative societies and their rights and liabilities

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

(a) an individual competent to contract under section 11 of the Indian Contract Act, 1872;

(b) any other co-operative society;

(c) the Central Government; and

(d) such class or classes of persons or association of persons as may be notified by the Lieutenant-Governor in this behalf;

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

(2) Notwithstanding anything contained in sub-section (1), the Lieutenant-Governor, may, having regard to the fact that the interest of any person or class or persons conflicts or is likely to conflict with the objects of any society or class of societies, by general or special order, published in the Delhi Gazette, declare that any person or class of persons engaged in or carrying on any profession, business or employment shall be disqualified from being admitted, or for continuing, as members or shall be eligible for membership only to a limited extent of any specified society or class of societies, so long as such person is or such persons are engaged in or carrying on that profession, business or employment, as the case may be.

21.Nominal or associate members.- (1) Notwithstanding anything contained in clause (d) of section 20, a co-operative society may admit any person as a nominal or associate member in accordance with its bye-laws.

(2) A nominal or associate member shall not be entitled to any share in any form whatsoever, in the assets or profits of the co-operative 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.

22.Member not to exercise rights till due payment made.- No member of a co-operative society shall exercise the rights of a member unless he has made such payment to the society in respect of membership or has acquired such interest in the society as may be specified in the bye-laws.

23.Votes of members.- Every member of a co-operative society shall have one vote in the affairs of the society :

Provided that-

(a) in the case of an equality of votes, the chairman shall have a second or casting vote;

(b) a nominal or associate member shall not have the right of vote;

(c) where the Central Government is a member of the co-operative society, each person nominated by the Central Government on the committee shall have one vote.

24.Manner of exercising vote.- (1) Every member of a co-operative society shall exercise his vote in person and no member shall be permitted to vote by proxy.

(2) Notwithstanding anything contained in sub-section (1), a co-operative society which is a member of another co-operative society, and subject to the rule, appoint one of its members to vote on its behalf in the affairs of that other society.

25.Restriction on transfer of shares or interest.- The transfer of the share or interest of a member in the capital of a co-operative society shall be subject to such conditions as to maximum holding as are specified in section 6.

26.Transfer of interest on death of members.- (1) On the death of a member of co-operative society may transfer the share or interest of the deceased member to the person nominated in accordance with the rules made in this behalf, or, if there is no person so nominated, to such person as may appear to the committee to be the heir or legal representative, as the case may be, a sum representing the value of such member’s share or interest as ascertained in accordance with the rules or bye-laws :

Provided that-

(i) in the case of a co-operative society with unlimited liability, such nominee, heir or legal representative, as the case may be, may require payment by the society of the value of the share or interest of the deceased member ascertained as aforesaid;

(ii) in the case of a co-operative society with limited liability the society shall transfer the share or interest of the deceased member to such nominee, heir or legal representative, as the case may be, being qualified in accordance with the rules and bye-laws for membership of the society, or on his application within one month of the death of the deceased member to any person specified in the application who is so qualified;

(iii) no such transfer or payment shall be made except with the consent of the nominee, heir or legal representative, as the case may be.

(2) A co-operative society shall, subject to the provisions of section 36 and unless within six months of the death of member prevented by an order of a competent court, pay to such nominee, heir or legal representative, as the case may be, all other moneys due to the deceased member from the society.

(3) All transfers and payments made by a co-operative 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.