Rajasthan Cooperative Societies Act 2001 – Summary
The Rajasthan Cooperative Societies Act 2001 was passed as Act No. 16 of 2002. Salient Features of the Act are:
Rajasthan Cooperative Societies Act 2001: Chapter I – Preliminary
- Apex cooperative bank – apex society in the state which is the federal body of cooperative societies in the state.
- Apex society whose operation is to facilitate the working of other cooperative societies in the state.
- Bye-laws are local laws made by a society which are affiliated by the state govt (the registrar).
- Central society– it’s under apex society and operation is confined to a part of state, it facilitates the working of primary societies and has a minimum of 5 primary societies as members.
- “National Bank” means the National Bank for Agriculture and Rural Development (NABARD) established under section 3 of the National Bank for Agriculture and Rural Development Act, 1981
- Core objects– for which the society is made like agriculture society, banking society, food processing society, raw materials society etc.
- Limited liability society– society whose liability is limited, to not more than 5 times of the subscribed share capital of each member.
- Executive officer- assists CEO
- Family– husband, wife, children and widowed mother of husband only.
- Financing bank- bank whose core object is loan financing and which includes a land development bank.
- Primary agriculture credit society under banking regulations act 1949.
- Special resolution- resolution passed by 50% of total members and 2/3 of present and voting in general meeting of society.
- Short term cooperative credit structure society (STCCSS) – society engaged in short term credit business including primary, central or apex bank (different from normal hierarchy pyramid).
- Weaker sections- small labourers and farmers with land holding of less than 1 acre, artisans and other backward classes with annual income less than 11000, and SC ST and OBC.
Acts to Remember
- Rajasthan land revenue act 1956
- Rajasthan land holding ceilings act 1973
- Banking regulations act 1949
- RBI act 1934
- NABARD act 1981
Rajasthan Cooperative Societies Act 2001: Chapter II – Incorporation
- Promotion of cooperative movement: It shall be policy of the Government to encourage and promote the co-operative moment in the State
- Registrar – Government may appoint a person to be the Registrar of Co-operative Societies for the State.
- Application for registration-
- At least 15 members of different families
- At least 5 members of cooperative societies already existing.
- Minimum share capital as prescribed.
- Registrar will check the requirements and aims of applicant society and shall give its decision within 60 days.
- If no decision taken, the applicant society may move to the government registrar within 30 days, after the period, if not, then the applicant society to government within 30 days, If no reply comes, the society shall be deemed as registered. So, 60+30+30 = 120 days maximum
- Society to be a corporate- with perpetual succession and common seal.
- Bye laws of society- If the society wants to change its name, the registrar will give a public notice for objections for a period of 1 month.
- Amendment to bye laws- Society proposes amendment to registrar, he shall give its reply within 60 days of pass or reconsideration for another 60 days. If no reply then society move to govt. registrar, he shall decide within 30 days, if no decision, the bye aw shall deemed to be passed. 60+60+30+ 150 days max
- Proposal of amendment by registrar- If registrar deems an amendment necessary, he may send it to chairman of society, and general body to decide on amendment within three months. If society fails to answer in that period, amendment shall be deemed passed. If society refuses, and registrar considers it important, he may send it to state govt. within 30 days, the decision of the govt. shall be final.
- Transfer of asset, liabilities, division and amalgamation- sec 12, 13
- Society may propose to registrar for such changes and registrar may decide within 60 days. If no reply gives, society may approach govt within 30 days, and govt has to decide within another 30 days. If no reply, then such change shall be deemed to approval.
- If any member of society has objection with such change, he may withdraw his share within 30 days, else it will be considered consent.
- Proposal by Registrar- If registrar thinks necessary for such changes aforesaid, he may send it to society/s, and society has to answer it within 3 months, else it will be deemed pass. Registrar has state authority in this case.
Rajasthan Cooperative Societies Act 2001: Chapter III – Members of Co-operative Societies and their Rights and Liabilities
- To be a member a person has to be 18 years of age and other general law abiding qualities. An individual can only be a member of a land development bank and no other financing bank.
- Any other society, govt. can be a member.
- An application is sent to society, if refused within 30 days, refusal shall stand.
- If no reply within 60 days, reach registrar and his decision shall be final.
- Cessation of membership-
- On death, or not attending meeting of general body for 3 years without reasonable answer, create disrepute or work against the interests of society
- Nominal and associate members- Society may admit-
- Class of persons, society or SHG as nominal member.
- Spouse of member as associate member
- But these members have no right to vote, no share in profit, but other rights and all liabilities.
- Membership not to exercise till dues are paid to society.
- MANNER OF VOTE- No proxy vote allowed.
- But chairperson or vice chair, govt., local body may appoint a representative to vote.
- Restrictions on Shareholding- One fifth maximum, individual of urban cooperative bank will hold acc. To bye laws or 1/12 whichever is less.
- Transfer of interest on Death of member
- Where nominee is a member of society- transfer of share or interest.
- Where nominee is not a member of society- Transfer of all due moneys.
- Past member’s liability and estate of deceased-
- His liabilities shall remain till 2 years from leaving his membership or death.
- Wind up under sec 61- Liability shall continue until entire liquidation process completes, but is limited only to such debts of society which were present at the time of leaving membership, and no other.
Rajasthan Cooperative Societies Act 2001: Chapter IV – MANAGEMENT OF COOPERATIVE SOCIETIES
- Management of cooperative society, final decision rests with the general body.
- Annual general meeting- Society shall call a meeting in one year, failing which registrar shall call the meeting.
- If default is made in in calling meeting by any member, registrar may disqualify him for 5 years, if any officer or employee- fine of 1000.
- Special general meeting- If registrar asks, or 1/5 of total member requests, meeting have to call within a month, if not registrar has the power to call such meeting.
- Appointment of Committees- general body may appoint committees to manage affairs of society
- Every society has 11 elected members for 5 years.
- For apex bank, and central banks, persons with special knowledge may be appointed with right to vote. State nominee will not vote for any officer’s election. SC ST OBC members will represent in committee.
- 27 -A .Appointment and Removal of CEO.
- 28. Disqualification of members- No chairman of more than one society, if elected he will be disqualified after 14 days, a person with default on loan after maximum 3 months.
- Person cannot be eligible to be a member of any form if he –
- Represents a society other than PACS (primary agriculture credit society) and defaulted loan for 90 days, for PACS, the limit is 1 year.
- Person representing a society whose committee is superseded or who has been ceased to be member of own committee.
- No money lender can be a member (under money lenders act 1963)
- A political post holder shall not be a chairperson of society.
- If a member is continued for two terms, he shall not be eligible for 5 years.
- If a person has two or more children born after 10-7-1995.
- Nomination by the govt.- If govt subscribed share capital, made repayment or helped, it can appoint max of 3 members, in apex and central banks only one member and no member in PACS.
- 29 B- Board of recruitment- One chairman and two members.
- 30. Removal of committee- where a committee defaults or under perform then zonal registrar in primary society, registrar in case of central society and state govt in case of apex society may remove the committee and appoint an administrator, till new elections are done.
- PACS shall not be removed except-
- Incurred losses for 3 consecutive years
- Irregularities or fraud, judicial direction or lack of quorum.
- If reserve bank recommends such removal, the new change is done within one month.
- 31. Securing Possession of records-
- CEO, then Secretary, then chairperson shall be he trustee of society in that order.
- Where wind up is ordered under sec 61, a liquidator is appointed under sec 63, who will be not below the rank of a sub inspector.
Rajasthan Cooperative Societies Act 2001: Chapter V – Elections of the cooperative society
- Elections are conducted of every society with share capital of more than 5 lakhs.
Rajasthan Cooperative Societies Act 2001: Chapter VI – PRIVILEGES
- 38. First charge of the cooperative society on certain assets- any debt, outstanding loans, any dues, any goods or stock. Provided any prior claim of govt with respect to land revenue.
- 42. Charge and set off of shares of members of society- the interest, dividend, and share of any member may be used to set off his loan.
- 43. Exemption of certain taxes, fees and duties- govt may remit stamp duty and other duties, fee, surcharges etc., but not any instruments of money like bills of exchange etc.
Rajasthan Cooperative Societies Act 2001: Chapter VII – STATE AID TO COOPERATIVE SOCIETIES
- 44. Financial partnership or aid of the government
- The govt. may subscribe directly or indirectly the share capital (not more than 25% of the total subscribed capital of society and society has the right to reduce it further), give loan, guarantee repayment of shares debentures or other payable or give financial assistance to society.
- But govt is allowed only that much profit or dividends equal to other members of society do.
- 45. Principal and subsidiary state partnership funds-
- Apex society will form a principal state partnership fund with the moneys provided by the state govt. to purchase shares in other societies, provide moneys to central societies to purchase shares, and repayment to state govt, if any.
- Central societies with funds of apex society will form a subsidiary state partnership fund to purchase shares and to pay to apex society moneys, if any.
- These funds will not be assets of societies and will be refunded in case of wind up of these societies.
- 46. Indemnity of central and apex societies-
- If a cooperative society is dissolved or wound up in which the shares are purchased from the principal state partnership fund or the subsidiary fund, the govt. shall not have any right on the apex or central societies of loss from shares, but will receive moneys from liquidation of society dissolved.
Rajasthan Cooperative Societies Act 2001: Chapter VIII – PROPERTIES AND FUNDS OF COOPERATIVE SOCIETIES
- 47 (A) Primary agricultural cooperative societies will follow such prudential norms including capital to risk weighted assets ratio to be maintained as specified by registrar.
- 48. Disposal of the net profits
- A cooperative bank from its net profit transfer 25% of its profit to reserve funds, one portion to cooperative education and training fund and to pay dividend, bonus or incentive.
- A STCCSS is bound to create funds only which increase its net worth.
- 49. Investment of funds
- A cooperative society shall invest its funds in central or apex bank or any cooperative society.
- A short term cooperative credit structure society may invest funds in any bank or FI.
- 50. Restrictions on borrowing
- Borrowing of cooperative society is limited to bye laws, but not of STCCSS, it can borrow from any bank or financial institution regulated by RBI.
- 51. Lending Policy
- A cooperative society can loan only to a member and a person whose money is deposited with society.
- At least one third of loans should be sanctioned by primary village service society and at least 25% should be by a land development bank, to the members of the weaker sections, govt can change the limits.
- STCCSS can determine its own loan policies.
- 52. Restrictions on other transactions with non-members
- 53. Provident fund
- A cooperative society may establish a provident fund which shall not be the asset, can’t be used in business and not subject to liability, means solely for provident purpose.
Rajasthan Cooperative Societies Act 2001: Chapter IX – AUDIT, ENQUIRY AND SURCHARGE
- 54. Audit
- The registrar shall prepare three panels of auditors
- Departmental auditors
- Certified auditors
- Chartered accountants,
- And society has to appoint one auditor from these 3 panels. If the society fails to appoint within time, registrar may order an auditor to audit. No same auditor can audit for more than two consecutive years. Auditor will report to the registrar the report.
- The apex bank and central banks has to be audited by chartered accountants only from panel. The registrar may also order special audit if he feels.
- 55. Inquiry by registrar
- Registrar by majority of committee members or himself or with not less than one tenth of total no. of members of society shall inquire into the working and finance of society. Registrar will have power to access all info of society and can summon any member of society and can call a meeting of society.
- 55 (A) Inspection by registrar
- Note- If the registrar comes to know about the misappropriations, he may inquire or cause an inquiry provided no inquiry shall held after six years of act or after two years after knowledge of registrar.
Rajasthan Cooperative Societies Act 2001: Chapter X – SETTLEMENT OF DISPUTES
- If any dispute relating to constitution, management or business of society arises between two societies or members, the registrar has that jurisdiction and not any court.
- A claim by society of debt or demand or election of officer shall also be under registrar.
- Registrar in any case may admit an inquiry after expiry period in any case if the applicant satisfies him that he had sufficient cause for not referring dispute within stipulated time.
Chapter XI – WINDING UP AND DISSOLUTION OF COOPERATIVE SOCIETIES
- 61. If the registrar is satisfied that number of members or amount of paid up capital is below minimum, or society has not commenced work till 2 years or has irregularities regarding core objects, he may order wind up of society. He may cancel order of wind up.
- Wind up of apex bank and central bank should be within one month of the recommendation of RBI.
- If RBI in the interests of the stakeholders, orders dissolution of committee and appoints an administrator for not more than 5 years.
- An insured cooperative bank is a bank insured under deposit insurance and credit guarantee scheme 1961.
- Transferee bank is a bank to which the cooperative bank is amalgamated.
- 63. Liquidator. – Under wind up under sec 61, registrar will appoint a liquidator under sec 63, not below of inspector rank. He will take all property under his authority and shall take relevant decisions.
- 64. Powers of a Liquidator
- Liquidator has the power defend legal suits on behalf of society and to determine from time to time the contribution of the present and past members
- To investigate claims against the society, to pay claims,
- To carry out business, to make any settlements with creditors as he deems fit,
- To write off irredeemable claims subject to approval by registrar, to declare a claim ‘not payable’, to transfer property to govt. or other as he deems fit subject to approval by registrar or the govt.
- 65. Termination of winding up proceedings
- Winding up shall be completed within 3 years, subject to registrar extending term with one year at a time and not more than 2 years in aggregate.
- 66. Disposal of surplus assets
- After settling all the claims, the surplus shall not be divided among members but is used according to the bye laws or in an object of public utility, development of cooperative movement or for community as registrar deems fit.
Chapter XII LAND DEVELOPMENT BANKS
- 67. Application of chapter to land development Banks – Applied to cooperative banks advancing loans other than short term (up to 18 months) and medium term loans (18 months to 5 years) are called land development banks. Loans for the purpose of agricultural land improvement and productive purposes for eg- repair or erection of agro building, purchase or otherwise of agricultural land, animal husbandry etc.
- 67 A. State and other land development banks
- There shall be a state land development bank of Rajasthan and as many as required. Land development bank and land mortgage banks are same for this act.
- 68. Appointment, powers and function of trustee
- The registrar shall be the trustee for state land development bank for its obligations of debentures.
- The debentures to be issued should not exceed 30 years.
- 71. Guarantee by state govt.
- State govt on the aforesaid debentures may guarantee if it deem fit and can fix a maximum amount payable.
- The assets of bank on which debentures are issued shall be vested in the Trustee.
- Land development bank advance loans for purposes under sec 67. On receiving an application of loan, a public notice will be given for objections and the loan may be given.
- Rajasthan agricultural loans act 957
- Rajasthan tenancy act 1955
- Registration act 1908
- Transfer of property act 1882
- Hindu minority and guardianship act 1956
- 91. Disposal of the sale proceeds – All the mortgaged lands shall be vested in the state land development bank only. If the mortgaged property is sold on account of non-payment of loan, the moneys will be first paid for payment of sale proceeds expenses, then to the interests if any, thirdly for the principal amount of loan, if any residue remains, to the persons shown interests in the property.
- NO officer or employee or his family members of the land development bank shall bid for the land.
- 96. Provision of guarantee Funds to meet certain losses arising out of default to land development bank- The state and other land development banks shall contribute to such fund.
- 98. Power of committee of state land development bank – on the accounts and management of land development banks.
Chapter XIII – EXECUTION OF AWARDS, DECREES, ORDERS AND DECISIONS
- Any order if not carried on a certificate of registrar shall be deemed as decree of a civil court. The recovery shall be made within 12 years of the decree. If the registrar is satisfied that the person from whom recovery is to be made is about to dispose or is remove from the jurisdiction of registrar, the registrar shall direct the attachment of the property.
- Sums due to govt. from the societies shall be recovered in the manner as arrears of land revenue. Sums due will be recovered firstly from property of society, secondly from members.
Chapter XIV- APPEALS TO THE REGISTRAR AND THE STATE GOVT.
- The appeal against the order of the registrar shall be made to the state govt. and to the registrar against order of subordinate officer like a liquidator of society.
- 105. Constitution of an appellate tribunal
- The govt. shall constitute a tribunal named Rajasthan state cooperative tribunal with one chairman and two members. Any decree of the registrar or the state govt. shall be appealed in tribunal. Tribunal, if deems necessary, may review its order.
- Chairman shall be officer of Rajasthan higher judicial service of rank of district or sessions judge.
- One member shall be additional registrar
- Another member an advocate of minimum 15 years’ experience in cooperative law or a co-operator with 20 years’ experience in field of cooperation and hold office in any state or national level societies for two times.
- Chairman and members be appointed for 5 years.
- The appeal for review of tribunal or any appeal in front of registrar or state govt may be made within 90 days of the decree.
Rajasthan Cooperative Societies Act 2001: Chapter XV – OFFENCES AND PENALTIES
- No person other than a cooperative society shall trade in name of cooperative; punishment is 5000 rs, which can extend.
- There are various specified offences of business by the members of the society and the committee, whose punishment is six months and fine up to 50,000 rs.
- Cognizance of offences- No court inferior to that of first class magistrate shall try offences under this act.
Rajasthan Cooperative Societies Act 2001: Chapter XVI MISCELLANEOUS
- Cooperative education and training- It shall be duty of every society to arrange for training and education for its members and employees, the plan of which will be prepared by the registrar.
- Insolvency- the insolvent member will first pay his dues to govt. and then to the society in that order.
- If society members ask for any account or statement of the society, he shall be furnished with it in seven days.
- Powers of a civil court- The tribunal, the registrar, arbitrator deciding a dispute and liquidator shall have the powers of a civil court under code of civil procedure 1908.
- The registrar and other officers to be the public servants.
- Bar on jurisdiction of the courts- no civil or revenue court shall have jurisdiction over the matters with cooperative societies. Neither a legal practitioner is allowed on behalf of a party other than under section 109.
- Limitation act 1963
- No act of cooperative society or officer to be invalidated on grounds of defects or disqualification.
- No suit or prosecution shall lie against registrar for acts done in good faith under this act.
- Certain acts not to apply- Provisions of companies act 1956 or 2013 do not apply here. Provisions of Rajasthan relief on agricultural indebtness act 1957 do not apply on loan advancing of society.
- Powers of state govt. to make rules- State govt. after or before publication of notice may make rules regarding the cooperative societies, and it shall be laid before state legislature for a period of 14 days, state legislature may pass or annul the rules made thereof.
- A cooperative society may open a branch outside state or an outsider society may open its branch in the state and to file to registrar within 3 months of opening branch.
- Power of registrar to rescind certain resolution- If in the opinion of the registrar, certain bye laws of resolution of the committee or chairman are not in regularities, he may abolish them, provided registrar cannot curtail freedom and powers of STCCSS.
- If registrar has internly abolished certain resolution, he shall forward it to tribunal within 45 days.
- Repeal and savings of the Rajasthan cooperative societies act 1965.
SCHEDULE A COOPERATIVE PRINCIPLES
The co-operative principles are guidelines by which co-operatives put their value into practice. These principles are:
- 1st Principle: Voluntary and open memberships of cooperative societies.
- 2nd Principle: Democratic member control
- 3rd Principle: Member economic participation
- 4th Principle: Autonomy and independence of cooperative organisations
- 5th Principle: Education and training
- 6th Principle: Cooperation among cooperatives
SCHEDULE B SUBJECT MATTER OF BYE LAWS
- Two categories of subject bye-laws –
- a. shall make
- b. may make
- The bye laws of society shall mention the basic structure and form of conduct and providing statements to the authority.
- Society may make bye laws for matters like
- Method of recruitment
- Withdraw of membership
- Transfer of shares and interests and remuneration
- And power of govt officer employed there.