Submitted by Ekta Jha
The provisions related to winding up and liquidation of Co-operative society are contained in Sections 102-110 of the Act. Existence of bad society harm the cause of co-operative movement in general and removal of such societies serve as a check on other society.
II. Grounds for Winding up of Society and Liquidation Proceedings
A. Grounds for Winding Up : Section 102
Section 102 provides the circumstances in which society can be ordered to wind up by a Registrar. They are as follows :
i. If an application is made to registrar upon a resolution passed by 3/4th of the members of the society present at a special general meeting called for this purpose.
ii. On receipt of an inquiry report under section 83 suggesting that society be wound up.
iii. On receipt of audit report under Section 84 indicating fraud or mismanagement and suggesting winding up of the society.
iv. On receipt of audit report under section 81 disclosing the financial condition of the society and suggesting that it should be wound up.
v. If the society has not commenced working.
vi. If the society has ceased working however temporary suspension of business does not mean that society has ceased working.
vii. The society does not possess shares or members deposit exceeding Rs 500.
viii. If the society has ceased to comply with any conditions as to registration or with any rules of bye laws.
It may be noted that cases falling under clauses(e) to (h), i.e. v-viii above, the registrar is empowered to take action on his own motion.
B. Notice :
Registrar shall issue notice along with the copy of interim order of winding up calling upon the society to submit explanation to the registrar within 1 month.
C. Opportunity of being heard :
The registrar after giving opportunity of being heard may issue a final order vacating or confirming the interim order.
III. Appeal against order of winding up :
A. Who may prefer an appeal :
1. committee of the society
2. any member of the society.
against whom the order of winding up is passed.
B. Limitation :
Appeal should be preferred within 2 months from the date of final order of the winding up.
C. Before whom appeal may be preferred :
1. If the final order is passed by the registrar, appeal shall be before the State Government.
2. If the final order is passed by any other officer than the registrar appeal shall be before registrar.
D. On what ground appeal lies :
If the order of winding up is passed on the ground that :
The society has ceased to comply with any condition as to registration, management in this act rules or bye laws.
Only in this case appeal lies and in no other case.
E. Cost of hearing :
Appeal shall be entertained only on the payment of security for the cost of hearing the appeal.
IV. Effect of the order of winding up : Section 106
i. Liquidator shall proceed to release the assets of the society by sale or other otherwise.
ii. No dispute shall be commenced, or if pending, proceeded without leave of the registrar.
iii. Order shall operate on all creditors and contribution of the society.
V. Bar of jurisdiction of civil court
The Civil Court shall not have jurisdiction to try any matter connected with the winding up and dissolution of the society.
VI. Termination of Liquidation Proceedings
1. The winding up proceedings shall be closed within 6 years from the date liquidator has taken control of all the assets of the society.
2. Registrar shall not grant extension of period exceeding 1 year at a time and 4 years in aggregate.
3. After expiration of 10 years it shall be deemed to be terminated.
4. Registrar shall terminate the proceedings on the receipt of the final report of the liquidator.
Submitted by Ekta Jha