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THE COOPERATIVE SOCIETIES ACT, 1925

 

To facilitate the formation and working of Co-operative Societies for the promotion of thrift, self-help and mutual aid among agriculturists and other persons with common economic needs so as to bring about better living, better business; the act Cooperative Societies, 1925 was promulgated for the Provinces of Pakistan.  

           

            1.                Short title. This Act may be called the Cooperative Societies Act, 1925.

 

  2.                Extent.  This Act extends to the [Punjab/Singh/N.W.F.P./Baluchistan] whole of the Province except the Tribal Area.

           

            3.                Definitions.   In this Act, unless there is any thing repugnant in the subject or context!

a.       “Bye-laws” means bye-laws registered under this Act and for the time being in force and includes a registered amendment of such bye-laws;

b.       “Committee” means the Committee of Management or other directing body to whom the management of the affairs of a society is entrusted;

(bb) “Financing Bank” Means a society the main object of which is to make loans in cash or in kind to any other society or to any agriculturist who is not a member of a society or to both societies and such agriculturists;

c.      “Member” includes a person joining in the application for the registration of a society or a person admitted to membership after registration in accordance with the rules and bye-laws applicable to such society;

d.      “Officer” includes a chairman, secretary, treasurer, member of committee or other person empowered under the rules or under the bye laws of a society to give directions in regard to the business of such society;

e.       “Society” means a society registered or deemed to be registered under this Act;

f.       “Registrar” means a person appointed to perform the duties of a Registrar of Cooperative Societies under this Act;

g.      “Rules” means rules made under this act;

h.      (1)         A Resource society” means a society formed with object of obtaining for its members the credit, goods or services required by them;

        (2)         A “Producers’ society” means a society formed with the object of producing and the disposing of goods as the collective property of its members and includes a society formed with the object of the collective disposal of the labour of the members of such society;

        (3)         A “Consumer’s Society” means a society formed with the object of obtaining and distributing goods to or of performing services for its members, as well as to other consumers and of dividing among its members and customers in a proportion prescribed by the rules or by the bye laws of such society, the profits accruing from such supply and distribution;

        (4)         A “Housing society” means a society formed with the object of providing its members with dwelling houses on conditions to be determined by its bye laws;

(5)          A “General Society” means a society not falling under any of the four classes above mentioned.

           The Registrar shall classify all societies under one or other of the above heads and his decision shall be final.

           A society formed with the object of facilitating the operations of any one of the above classes of societies shall be classified as a society of that class.

 

4.         The Registrar. The Provincial Government may appoint a person to be Registrar of Cooperative Societies for the Province or any portion of it, and may appoint a person or persons to assist such Registrar, and may, by general or special order, confer on any such person or persons all or any of the powers of a Registrar under this Act.

           

4-A.     Power of Registrar to issue search warrant.

1.                  For the purpose for recovering any papers, documents or books of account belonging to a society, the Registrar may issue a search warrant and exercise all such powers with respect thereto as may be lawfully exercised by a magistrate under the provision of Chapter VII of the Code of Criminal Procedure, 1898, and all such searches shall be made in accordance with the provisions of that Code.

2.                  The powers under sub section (1) shall not be exercised by the Registrar before serving a notice on the society and giving it a reasonable opportunity to produce such papers, documents or books of account as are specified in such notice.

 

5.         Societies which may be registered.

Subject to the provisions here in after contained a society which has as its object the promotion of the economic interest of its members in accordance with cooperative principles or a society established with the object of facilitating the operation of such a society, may be registered under this Act with or without limited liability.

 

6.         Restrictions on interest of member of society with limited liability and a share capital.  Where the liability of the members of society is limited by shares, no member other have than society shall

a.         Hold more than such portion of the share capital of the society subject to a maximum of one-fifth, as may be prescribed by the rule; or

b.         Have or claim interest in the share of the society exceeding then thousand rupees provided that it the society is a housing society a member may have or claim an interest in the shares of the society not exceeding Rs.20,000.

 

7.         Conditions of registration. (1)  No society, other than a society of which a member is a society, shall be registered under this Act, which does not consist of at least ten persons above the age of eighteen years and, where the object of the society is the creation of funds to be lent to its members, unless such persons.

 

8.         Power of Registrar to decide certain questions. When any question arises whether for the purpose of this Act] a person is an agriculturist or a non-agriculturist, or whether any person is a resident in a town or village or group of villages, or whether two or more villages shall be considered to form a group, or whether any person belongs to any particular tribe, class, caste or occupation, the question shall be decided by the Registrar, whose decision shall be final.

 

9.         Application for registration.

(1) For purpose of registration an application to register shall be made to he Registrar.

(2)  The application shall be signed;

a.         In the case of a society of which a member is a society, by at least ten persons qualified in accordance with the requirements of section 7, sub-section(1) ; and

b.         In the case of a society of which a member is a society by a duly authorised person on behalf of every such society and where all the members of the society are not societies, by ten other members, by all the them.

(3)        The application shall be accompanied by a copy of the proposed bye laws of the society, and the persons by whom or on whose behalf such application is made shall furnish such information in regard to the society as the Registrar may require.

 

10.       Registration. If the Registrar is satisfied that a society has complied with the provisions of this act and the rules and that its proposed bye-laws are not contrary to [any law for the time being in force] he may register and its bye laws.

 

11.       Evidence of registration. A certificate of registration signed by the Registrar shall be conclusive evidence that the society therein mentioned is duly registered unless it is proved that the registration of the society has been cancelled.

 

12.       Annual general meeting. Every society shall within a period of three months after the date fixed for making up its accounts for the year under the rules for the time being in force call a general meeting of its members.

 

13.       Special general meetings. A special general meeting may be called at any time by a majority of the committee and shall be called within one month.

(1)        On the requisition in writing of one fifth of the members of the society, or

(2)        At the instance of the Registrar

 

            14.             Change of name. A society may, by a resolution of a general meeting and with the approval of the Registrar, 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.

 

            15.             Amalgamation or transfer of Societies.  (1) Any two more societies may, with the approval of the Registrar by a resolution passed by a three fourths majority of the members present at a special general meeting of each such society held for purpose, amalgamate as a single society; provide that each member has had clear fifteen days written notice of the resolution and the date of the meeting. Such an amalgamation may be effected without a dissolution, or a division of the funds, of the amalgamating societies. The resolution of the societies concerned shall on such amalgamation be a sufficient conveyance to vest the assets and liabilities of the amalgamating societies in the amalgamated society.

 

            16.             Amendment of the bye-laws of a society. (1) No amendment of the bye-law of a society shall be valid until it is registered under this Act.

(2) If the Registrar is satisfied that any amendment of the bye-laws made by a society is not contrary to any law for the time being in force he may register the amendment.

16(A).  Power of Government to amend bye-laws.  

 

            17.             No rights of membership to be exercised till due payments are made. No person shall exercise the rights of a member of a society unless or until he has made such payment to the society in respect of membership, or acquired such interest in the society as may be prescribed by the rules or the bye-laws of such society.

 

17(A)   Special Provisions for membership of resource Societies. Notwithstanding anything contained in this act and any other law for the time being in force. 

 

17(B)   Transfer of Interest in a Housing Society.

A member of a cooperative housing society or a society dealing in housing development shall cease to the member of the society in case all his interests in the immovable property in the society or transferred in favour of any other person by sale, inheritance, gift or otherwise, and the person acquiring such interests shall subject to rules, be admitted as a member. 

           

18.      Votes of members. (1) No member of any society shall have more than one vote in its affairs, provided that in the case of an equality of votes the chairman shall have a casting vote. (2) A society which has invested any part of its funds in the shares of another society, may appoint one of its members to vote in the affairs of such other registered society.

 

18(A)   Disqualification for being and for voting at an election of Director, Manager or other Officers of the Society.   A member of the society to which the provision s of this section have been applied to the Provincial Government by Notification in the Official Gazette shall be disqualified for being, and for voting at an election of, a Director, Manager or other officer of the society.

 

           19.       Restrictions on transfer of share or interest. 

(1) The transfer or charge of the share or interest of a member in the capital of a society shall be subject to such conditions as to maximum holding as may be prescribed by this Act or by the rules. 

(2) A member shall not transfer any share held by him or his interest in the capital or property of any society or any part thereof unless.

 

  20.        Address of societies. Every society shall have an address registered in accordance with the rules, to which all notices and communications may be sent, and shall send notice in writing to the Registrar of any change in the said address within 30 days of such change.

 

           21.       Copy of Act, etc. to be open to inspection. Every society shall keep open to inspection at all reasonable times at the registered address of the society.

a)     A copy of  this act.

b)     A copy of the rules governing such society,

c)     A copy of the bye laws, of such society, and

d)     A register of its members

 

           22.         Audit. The Registrar shall be himself or by some person authorized by him in writing by general or special order in this behalf audit the accounts of every society once at least in every year.

 

22(A). Power of Registrar to exercise powers under section 50-A  in the course of and audit. Where in the course of an audit under section 22 if appears to the Registrar that there exists any such ground as is specified in section 50-A he may, of his own motion or on the application of the person authorised by him under section, 22 exercise the powers specified in section 50-A.

 

23.       Societies to be bodies corporate. The registration of a society shall render it a body corporate by the name under which it is registered with perpetual succession and a common seal, an with power to hold property, to enter into contracts, to institute and defend suits and other legal proceedings and to do all things necessary for the purposes of its constitution.

 

24.       Prior claim of society. Subject to any prior claim of the Crown in respect of land revenue of any money recoverable as land revenue or of a landlord in respect of rent or any money recoverable as rent.

 

25.     Charge and set-off in respect of shares or interest of member.  A society shall have a change upon the share or interest in the capital and on the deposits of a member or a past member an upon any dividend bonus or profits payable to a member or past member in respect of any debt due form such member or past member to the society, and may set off any sum credited or payable to a member or past member in or towards payment of any such debt.

 

26.       Share or interest not liable to attachment. Subject to the provisions of section 25, the share or interest of a member in the capital of a society or in any provident fund established under section 41 of this Act shall not be liable to attachment or sale under any decree or order of a court of justice in respect of any debt or liability incurred by such member, and [neither the official assignee under the insolvency (Karachi Division and Dacca) Act, 1909 nor a Receiver under the Provincial Insolvency Act 1920, shall, be entitled to or have any claim on such  share or interest. 

 

27.       Transfer of interest on death of member. (1) On the death of a member of a society such society may within a period one year from the death of such member transfer the share of interest of the deceased member to a person or persons nominated in accordance with the bye laws of the society, if duly admitted a member of the society in accordance with rules or the bye laws of the society or if there is no person so nominated, to such person as may appear to the Committee to be the heir or legal  representative of the deceased member if duly elected a member of the society, or may pay to such nominee, 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 such nominee, heir or legal representative, as the case may be may require that payment shall be made by the society within one year from the death of the member of the value of the share of interest of such member ascertained as aforesaid.

(2)        A society shall subject to the provision of Section 25 and unless 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 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.

 

28.             Liability of past member. The liability of against member for the debts of a society as they existed at the time when he ceased to be a member, shall continue for a period of two years from the date of his ceasing to be member.

 

29.             Liability of the estates of deceased members. The estate of a deceased member shall be liable for a period of one year from the date of his decease for the debits of a society as they existed at the time of his death.

 

30.             Register of members. Any register or list of members or shares kept by any society shall be prima facie evidence or any of the following particulars entered therein the date at which the name of any person was entered in such register or list as a member; (b) the date at which any such person ceased to be a member

 

31.             Admissibility of copy of entry as evidence.  A copy of any entry in any book, register or list regularly kept in the course of business in the possession of a society shall, if duly certified in such manner as may be prescribed by the rules, be admissible in evidence of the existence of the entry and shall be admitted as evidence of the matters and transactions therein recorded in every case where, and to the same extent to which, the original entry would if produced, have been admissible to prove such matters.

 

32.             Exemption form compulsory registration of instruments relating to shares [etc] of society. (1)Nothing in section 17, sub section (1) clauses (b) and (c) of the Registration Act, 1908, shall apply to

          (2)          any debenture issued by any society and not creating declaring, assigning, limiting of extinguishing any rights, title, or interest to or in immovable property except in so for as it entitle whereby the society has mortgaged, conveyed or otherwise transferred the whole or part of its immovable property or any interest therein to trustees upon trust for the benefit of the holders of such debentures; or (3) any endorsement upon or transfer of any debentures issued by any society

 

33.             Power to exempt form income Tax duty, registration and court fees. (1)The Federal Government by notification in the Official Gazette may, in the case of any society class of Societies remit the income tax or super tax payable in respect of the profits of the society or of the dividends or other payments received by the members of the society on account of profits or in respect of interest (or return) on securities held by the society.

(2)        The Provincial Government by notification in the Office Gazette may in the case of any society or class of societies, remit.

 

33A.          Provincial Government may give loans or guarantee interest. (1) Except with the general or special sanction of the Registrar [and subject to such terms and conditions as he may impose] a society shall not make a loan to any person the than a member.

 

34.             Restrictions on loans. (1) Except with the general or special sanction of the Registrar a society shall not make a loan to any person other than a member.

(2)        Save with the sanction of the Registrar, a society with unlimited liability shall not lend money on the security of movable property.

 

35.             Restrictions on borrowing. A society shall receive deposits and loans from persons who are not members only to such extent under such conditions as may be prescribed the rules or bye laws of the society.

 

36.             Restrictions on other transactions with non-members. Consumers, Producers and Housing Societies may to the extent permitted by their bye laws trade with persons who are not members, but the transactions of a Resource society with persons other than members except as provided under section 34 or 35 shall be subject to such prohibitions and restrictions if any as the Provincial Government may by rules prescribe.

 

37.             Investment of funds. A society may invest or deposit its funds in the Government  Savings Bank; or (b) in any of the securities specialized in section 20 of the Trusts Act, 1882. (c) in the shares or on the security of any other society provided that no such investment shall be made in the shares of any society other than one with limited liability; or  (d) with any bank or person carrying on the business of banking approved for this purpose by the Registrar; or  (e) in any other mode permitted by the rules.

 

38.             Restrictions on dividend. No society shall pay a dividend to its members at a rate exceeding 10 per cent.

 

39.             Reserve fund.

(1)        Every society which does or can derive a profit from its transactions shall maintain a reserve fund. 

(2)        In the case of a Resource or Producers society at least 1/4th of the net profits of the society each year shall be carried to the reserve fund and in the case of other society at least 1/10th of the net profits of the society each year shall be carried to the reserve fund and such reserve fund may be used in the business of the society or may be invested subject to the provisions of section 37 as may be general or special order direct or may with the previous sanction of [Provincial Government] be used in part for some public purpose likely to promote the objects of this Act or for some purpose of provincial or local interest.

 

40.             Restrictions on distribution of profit. Subject to the provisions of Section 38 the balance of the profits of a society after making the prescribed provision for the reserve fund may together with any available profits of past years be distributed among its members and in the case of Consumer’s and Producers societies also among persons who are not members to the extent and under the conditions prescribed by the rules or by the bye laws of such societies.

 

41.             Provident fund. Any society may establish a provident fund for its members out of contributions from such members in accordance with bye law made be the society in this behalf and may contribute to such provident fund form its net profits after the prescribed payments have been made to the reserve fund business of the society but shall be invested under the provisions of Section 37 and provided further, that no part of such provident fund shall be considered as an asset of the society. 

 

42.             Contribution to charitable purpose. With the approval of the Registrar and after the payments prescribed by the sub-section (2) of Section 39 have been made to the reserve fund , any society

 

43.             Inquiry by Registrar.  (1) The Registrar may of his own motion by himself or by a person duly authorised by him in writing in this behalf hold an inquiry into the constitution working and financial condition of a society.

(2)        The Registrar shall hold such an inquiry as is contemplated in sub section (1) of this section.

a.         On the requisition of society duly authorised by rules made in this behalf to make such requisition, in respect of one of its members such member being itself a society;

b.         On the application of a majority of the Committee of the society

c.         On the application of 1/3rd of the members of the society.

3.         All officers and members of the society whose affairs are investigated shall furnish such information in their possession in regard to the affairs of the society as the Registrar or the person authorized by the Registrar may require. (4) The result of any inquiry under this section shall be communicated to the society whose affairs have been investigated.

 

44.             Inspection of books of indebted society. (1) The Registrar may, on the application of a creditor of a society, inspect or direct some person authorised by him by order writing in his behalf to inspection the books of the society.

 

44-A.   Inspection of books by financing bank.  A financing bank shall have the right to inspect the books of any society which is indebted to it. The inspection may be made either by an officer of the financing bank or by a member of its paid staff certified by the Registrar as competent to undertake such inspection. The officer or member so inspecting shall at all reasonable time have free access to the books, accounts documents, securities, cash and other properties belonging to or in the custody of the society and may also call for such information, statements and returns as may be necessary to ascertain the financial condition of the society and the safety of the sums lent to it by the financing bank.

 

44-B.   Power of Registrar to exercise powers under Section 50-A in the course of an inquiry or inspection.

Where, in the course of any inquiry under section 43 or an inspection under section 44 or section 44-A it appears to the Registrar that there exists any such ground as is specified in section 50-A, he may, of his own motion or on the application of the person authorized by him under section 43, or section 44, or section 44-A, exercise the powers specified in section 50-A.

           

44-C.   Power to remove officers. An officer of a society, by whatever name called, may be removed by the Registrar, if, on an enquiry , he is satisfied that the said officer.

 

44-D.   Power of Registrar to give directions.  

Where the Registrar is satisfied that in the public interest or to prevent the affairs of any society from being conducted in a manner detrimental to the interest of its members or depositors of the society or to secure the proper management of any society generally, it is necessary to issue directions to the societies generally or to any society in particular, it may issue necessary directions and the societies or as the case may be the society shall be bound to comply with such directions.

 

44-E.   Special measures.  If it appears to the Registrar that in the interest of the members of the society ore its depositors it is necessary that the moneys received any other assets of the society, whether held in the name of that society or any other person, or protected and preserved, the registrar or any other person authorised by him, may without prejudice to any other action or proceedings which may be taken against the society under any law for the time being in force.

 

45.       Cost of inquiry. Where an inquiry is held under section 43 or an inspection is made under section 44 the Registrar may apportion the costs, or such part of the costs, as he may thing right between the society, the members or creditor demanding the inquiry or inspection, the officers or former officers, and the members of past members of the society. Costs may also be awarded by the Registrar to the financing bank in the case of inspection under section 44-A of the books of any society other than an Agricultural Credit society the liability of which is unlimited.

 

46.       Recovery of cost. Any sum awarded by way of cost under section 45 may be recovered on application by the Registrar to a Magistrate having jurisdiction in the place where the person from whom the money is claimable actually and voluntarily resides, or carries on business, by the distress and sale of any movable property within the limits of the jurisdiction of such Magistrate belonging to such person, and such Magistrate shall proceed to recover the same in the same manner as if it were a fine imposed by himself.  

 

47.        Winding up. If the Registrar, after an inquiry has been held under section 43 or after an inspection  has been made under section 44 [or section 44-A] or on receipt of an application made by three fourths of the members of a society present at a special general meeting, called for the purpose or of his own motion, in the case of a society that has not commenced working or has ceased working or possesses shares or members deposits not exceeding  Rs.500, or a society the shares or deposits of the members of which are in jeopardy is of the opinion that the society ought to be wound up he may issue an order directing to be wound up and when necessary may appoint a liquidator for the purpose and fix his remuneration.

 

48.         Society may be wound up if membership is reduced. Where it is a condition of the registration of a society that it shall consist of at least ten members who are majors, the Registrar may be order in writing direct the society to be wound up if at any time it is proved to his satisfaction that the membership has been reduced to less than ten such members.

 

49.         Effect of cancellation of registration. When the affairs of a society for which a liquidator has been appointed  under section 47 have been wound up or where no liquidator has been appointed after two months from the date of an order under section 47, or after confirmation of such order in appeal, the Registrar shall make an order canceling the registration of the society, and the society shall be deemed to be dissolved from the date of such order.

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