The Co-operative Societies Act, 1912
Act No. II of 1912
[1st March, 1912]
whereas it is
expedient further to facilitate the formation of Co-operative Societies for the
promotion of thrift and self-help among agriculturists, artisans and persons of
limited means, and for that purpose to amend the law relating to Co-operative
Societies ; It is hereby enacted as follows :—
PRELIMINARY
1. Short title and extent. — (1) This
Act may be called the Co-operative Societies Act, 1912 ,- and
(2) It
extends to the whole of Pakistan
2. Definitions. In this Act, unless there
is anything repugnant in the subject or context, — .
(a) "
bye-laws" means the registered bye-laws for the time being in force, and
includes a registered amendment of the bye-laws
(b) "
committee" means the governing body of a registered society to whom the
management of its affairs is entrusted :
(c) "
member " includes a person joining in the application for the
registration of a society and a person admitted to membership after
registration in accordance with the bye-laws and any rules :
(d) "
officer" includes a chairman, secretary, treasurer, member of committee,
or other person empowered under the rules or the bye-laws to give directions in
regard to the business of the society :
(e) "
registered 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 Co-operative Societies under this Act : and
(g) "
rules " means rules made under this Act.
REGISTRATION
3. The Registrar. The Provincial
Government] may appoint a person to be Registrar of Co-operative Societies for
the Province or any portion of it, and may appoint persons to assist such
Registrar, and may, by general or special order, confer on any such persons all
or any of the powers of a Registrar under this Act.
4. Societies which may be registered. 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 unless the Provincial Government by general or special order otherwise
directs —
(1) the
liability of a society of which a member is a registered society shall be
limited ;
(2) the
liability of a society of which the object is the creation of funds to be lent
to its members, and of which the majority of the members are agriculturists,
and of which no member is a registered society, shall be unlimited.
5. Restrictions on interest of member of
society with limited liability and a share capital. . Where the liability
of the members of a society is limited by shares, no member other than a
registered 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 rules ; or
(b) have
or claim any interest in the shares of the Society
exceeding
one thousand rupees.
6. Conditions of registration. — (1) No
society, other than a society of which a member is a registered 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 —
(a) reside
in the same town or village or in the same group of villages ; or
(b) save
where the Registrar otherwise directs,
are members of the same tribe, class, caste or occupation.
(2) The
word " limited " shall be the last word in the name of every society
with limited liability registered under this Act.
7. Power of Registrar to decide certain
questions. When any question arises whether for the purposes 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.
8. Application for registration. — (1)
For purposes of registration an application to register 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 registered society, by at least ten
persons qualified in accordance with the requirements of section 6, subsection
(1) ; and
(b) in the
case of a society of which a member is a registered society, by a duly
authorised person on behalf of every such registered society, and where all the
members of the society are not registered societies, by ten other members or,
when there are less than ten other members, by all of 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.
9. 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 the Act or to the rules, he may,
if he thinks fit, register the society and its bye-laws.
10. 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.
11. Amendment of the bylaws of a registered society.
— (1) No amendment of the bye-laws of a registered society shall be valid
until the same has been registered under this Act, for which purpose a copy of
the amendment shall be forwarded to the Registrar.
(2) If the
Registrar is satisfied that any amendment of the bye-laws is not contrary to
this Act or to the rules, he may, if he thinks fit, register the amendment.
(3) When
the Registrar registers an amendment of the bye-laws of a registered society,
he shall issue to the society a copy of the amendment certified by him, which
shall be conclusive evidence that the same is duly registered.
RIGHTS AND
LIABILITIES OF MEMBERS
12. Member not to exercise rights till due payment
made. No member of a registered society shall exercise the rights of a member
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 bye-laws.
13. Votes of members. — (1) Where the
liability of the members of a registered society is not limited by shares, each
member shall, notwithstanding the amount of his interest in the capital, have
one vote only as a member in the affairs of the society.
(2) Where
the liability of the members of a registered society is limited by shares, each
member shall have as many votes as may be prescribed by the bye-laws.
(3) A
registered society which has invested any part of its funds in the shares of
any other registered society may appoint as its proxy, for the purpose of
voting in the affairs of such other registered society, any one of its members.
14. 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 registered society shall be subject to such conditions as
to maximum holding as may be prescribed by this Act or by the rules.
(2) In
case of a society registered with unlimited liability a member shall not
transfer any share held by him or his interest in the capital of the society or
any part thereof unless —
(a) he has
held such share o; interest for not less than one year ; and
(b) the
transfer or charge is made to the society or to a member of the society.
DUTIES OF
REGISTERED SOCIETIES
15. Address of societies. Every registered
society shall have an address, registered in accordance with the rules, to
which all notices and communications may be sent, and shall send to the
Registrar notice of every change thereof.
16. Copy of Act, rules and bye-laws to be open
to inspection. Every registered society shall keep a copy of this Act and
of the rules governing such society, and of its bye-laws, open to inspection
free of charge at all reasonable times at the registered address of the
society.
17. Audit. — (1) The Registrar shall audit
or cause to be audited by some person authorised by him by general or special
order in writing in this behalf the accounts of every registered society once
at least in every year.
(2) The
audit under sub-section (1) shall include an examination of overdue debts, if
any, and a valuation of the assets and liabilities of the society.
(3) The
Registrar, the Collector or any person authorised by general or special order
in writing in this behalf by the Registrar shall at all times have access to
all the books, accounts, papers and securities of a society, and every officer
of the society shall furnish such information in regard to the transactions and
working of the society as the person making such inspection may require.
PRIVILEGES OF
REGISTERED SOCIETIES
18. 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, and 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.
19. Prior claim of society. Subject to any
prior claim of the Government in respect of land-revenue or any money
recoverable as land-revenue or of a landlord in respect of rent or any money
recoverable as rent, a registered society shall be entitled in priority to
other creditors to enforce any outstanding demand due to the society from a
member or past member —
(a) in
respect of the supply of seed or manure or of the loan of money for the
purchase of seed or manure upon the crops or other agricultural produce of such
member or person at any time within eighteen months from the date of such
supply or loan ;
(b) in
respect of the supply of cattle, fodder for cattle, agricultural or industrial
implements or machinery, or raw materials for manufacture, or of the loan of
money for the purchase of any of the foregoing things—upon any such things so
supplied, or purchased in whole or in part from any such loan, or on any
articles manufactured from raw materials so supplied or purchased.
20. Charge and set – of in respect of shares or
interest of member. A registered society shall have a charge upon the share
or interest in the capital and on the deposits of a member or past member and
upon any dividend, bonus or profits payable to a member or past member in
respect of any debt due from 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.
21. Shares or interest not liable to
attachment. Subject to the provisions of section 20, the share or i
interest of a member in the capital of a registered society 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, nor a
Receiver under the Provincial Insolvency Act, 1907, shall be entitled to or
have any claim on such share or interest.
22. Transfer of interest on death of member. —
(1) On the death of a member a registered 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 of
the deceased member, or pay to such nominee, heir or legal representative, as
the case may be, a sum representing the value of such members share or
interest, as ascertained in accordance with the rules or bye-laws :
Provided
that —
(i) in the
case of a 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 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.
(2) A
registered 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.
(3) All
transfers and payments made by a registered 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.
23. Liability of past member. The liability of
a past member for the debts of a
registered 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 a member.
24. Liability of the estates of deceased
member. The estate of a deceased member shall be liable for a period of one year from the time of his
decease for the debts of a registered society as they existed at the time of
his decease.
25. Register of members. Any register or
list of members or shares kept by any registered society shall be prima facie
evidence of any of the following particulars entered therein :—
(a) 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.
26. Proof of entries in societies books. A
copy of any entry in a book of a registered society regularly kept in the
course of business, shall, if certified in such manner as may be prescribed by
the rules, be received, in any suit or legal proceeding, as prima facie
evidence of the existence of such entry, and shall be admitted as evidence of the
matters, transactions and accounts therein recorded in every case where, and to
the same extent as, the original entry itself is admissible.
27. Exemption from compulsory registration of
instruments relating to shares and debentures of registered society. Nothing
in section 17, sub-section (1), clauses (b) )g
and (c), of the Registration Act, 1908, shall apply to —
(1) any
instrument relating to shares in a registered society, notwithstanding that the
assets of such society consist in whole or in part of immovable property ; or
(2) any
debenture issued by any such society and not creating, declaring, assigning,
limiting or extinguishing any right, title or interest to or in immoveable
property except in so far as it entitles the holder to the security afforded by
a registered instrument whereby the society has mortgaged, conveyed or
otherwise transferred the whole or part of its immoveable 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 debenture issued by any such society.
28. Power to exempt from income – tax, stamp –
duty and registration – fees. — (l) The Federal Government], by
notifications in the [official Gazette], may, in the case of any registered
society or class of registered society, remit the income-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;
(2) The
Provincial Government, by notification in the [official Gazette], may, in the
case of any registered society or class of registered society, remit —
(a) the
stamp-duty with which, under any law for the time being in force, instruments
executed by or on behalf of a registered society or by an officer or member and relating to the business of
such society, or any class of such instruments, are respectively chargeable,
and
(b) any
fee payable under the law of
registration for the time being in force.
PROPERTY AND FUNDS
OF REGISTERED SOCIETIES
29. Restrictions on loans. (1) A registered
society shall not make a loan to any person other than a member :
Provided
that, with the general or special sanction of the Registrar, a registered
society may make loans to another registered society.
(2) Save
with the sanction of the Registrar, a society with unlimited liability shall
not lend money on the security of move-able property.
(3) The
[provincial Government] may, by general
or special order, prohibit or restrict the lending of money on mortgage
of immoveable property by any registered society or class of registered
societies.
30. Restrictions on borrowing. A registered
society shall receive deposits and loans from persons who are not members only
to such extent and under such conditions as may be prescribed by the rules or
bye-laws.
31. Restrictions on other transactions with
nonmembers. Save as provided in sections 29 and 30, the transactions of a
registered society with persons other than members shall be subject to such prohibitions
and restrictions, if any, as the Provincial Government may, by rules,
prescribe.
32. Investment of funds. — (1) A registered
society may invest or deposit its funds —
(a) in the
Government Savings Bank, or
(b) in any
of the securities specified in section 20 of the Trusts Act, 1882, or
(c) in the
shares or on the security of any other registered society, or
(d) with
any bank or person carrying on the business of banking approved for this
purpose by the Registrar, affairs.)
(e) in any
other mode permitted by the rules. (2) Any investments or deposits made before
the commencement of this Act which would have been valid if this Act had been
in force are hereby ratified and confirmed.
33. Funds not to be divided by way of profit. No
part of the funds of a registered society shall be divided by way of bonus or
dividend or otherwise among its members :
Provided
that after at least one-fourth of the net profits in any year have been
carried to a reserve fund, payments from the remainder of such profits and from
any profits of past years available for distribution may be made among the
members to such extent and under such conditions as may be prescribed by the
rules or bye-laws :
Provided
also that in the case of a society with unlimited liability no distribution of
profits shall be made without the general or special order of the Provincial
Government in this behalf.
34. Contribution to charitable purpose. Any
registered society may, with the sanction of the Registrar, after one-fourth of
the net profits in any year has been carried to a reserve fund, contribute an
amount not exceeding ten per cent of the remaining net profits to any
charitable purpose, as defined in section 2 of the Charitable Endowments Act,
1890.
INSPECTION OF AFFAIRS
35. Inquiry by Registrar. — (1) The
Registrar may of his own motion, and shall on the request of the Collector, or
on the application of a majority of the committee, or of not less than
one-third of the members, hold an inquiry or direct some person authorised by
him by order in writing in this behalf to hold an inquiry into the
constitution, working and financial condition of a registered society.
(2) All
officers and members of the society shall furnish such information in regard to
the affairs of the society as the Registrar or the person authorised by the
Registrar may require.
36. Inspection of books of indebted society. —
(1) The Registrar shall, on the application of a creditor of a registered
society, inspect or direct some person authorised by him by order in writing in
this behalf to inspect the books of the society :
Provided
that —
(a) the
applicant satisfies the Registrar that the debt is a sum then due, and that he
has demanded payment thereof and has not received satisfaction within a
reasonable time ; and
(b) the
applicant deposits with the Registrar such sum as security for the costs of the
proposed inspection as the Registrar may require.
(2) The
Registrar shall communicate the results of any such inspection to the creditor.
37. Copy of inquiry. Where an inquiry is
held under section 35, or an inspection is made under section 36, the
Registrar may apportion the costs, or such part of the costs as he may think
right, between the society, the members or creditor demanding an inquiry or
inspection, and the officers or former officers of the society.
38. Recovery of costs. Any sum awarded by
way of costs under section 37 may be recovered, on application 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 moveable property within the limits of the jurisdiction of such
Magistrate belonging to such person.
DISSOLUTION OF SOCIETY
39. Dissolution. — (1) If the Registrar,
after an inquiry has been held under section 35 or after an inspection has been
made under section 36 or on receipt of an application made by three-fourth of
the members of a registered society, is of opinion that the society ought to be
dissolved, he may cancel the registration of the society.
(2) Any
member of a society may, within two months from the date of an order made under
sub-section (1), appeal from such order.
(3) Where
no appeal is presented within two months from the making of an order canceling
the registration of a society, the order shall take effect on the expiry of
that period.
(4) Where
an appeal is presented within two months, the order shall not take effect until
it is confirmed by the appellate authority.
(5) The
authority to which appeals under this section shall lie shall be the Provincial
Government] :
Provided
that the Provincial Government] may, by notification in the official Gazette],
direct that appeals shall lie to such Revenue-authority as may be specified in
the notification.
40. Cancellation of registration of society. Where
it is a condition of the registration of a society that it should consist of at
least ten members, the Registrar may, by order in writing, cancel the
registration of the society if at any time it is proved to his satisfaction
that the number of the members has been reduced to less than ten.
41. Effect of cancellation of registration. Where
the registration of a society is cancelled, the society shall cease to exist as
a corporate body —
(a) in the
case of cancellation in accordance with the provisions of section 39, from the
date the order of cancellation takes effect ;
(b) in the
case of cancellation in accordance with the provisions of section 40, from the
date of the order.
42. Winding up. — (1) Where the
registration of a society is cancelled under section 39 or section 40, the
Registrar may appoint a competent person to be liquidator of the society.
(2) A
liquidator appointed under sub-section (1) shall have power —
(a) to
institute and defend suits and other legal proceedings on behalf of the
society by his name of office ;
(b) to
determine the contribution to be made by the members and past members of the
society respectively to the assets of the society ;
(c) to
investigate all claims against the society
and, subject to the provisions of
this Act, to decide questions of priority arising between claimants ;
(d) to
determine by what persons and in what proportions the costs of the liquidation
are to be borne ; and
(e) to
give such directions in regard to the collection and distribution of the assets
of the society, as may appear to him to be necessary for winding up the affairs
of the society.
(3)
Subject to any rules, a liquidator appointed under this section shall, in so
far as such powers are necessary for carrying out the purposes of this section,
have power to summon and enforce the attendance of witnesses and to compel the
production of documents by the same means and (so far as may be) in the same
manner as is provided in the case of a Civil Court under the Code of Civil
Procedure, 1908 .
(4) Where
an appeal from any order made by a liquidator under this section is provided
for by the rules, it shall lie to the Court of the District Judge.
(5) Orders
made under this section shall, on application, be enforced as follows :—
(a) when
made by a liquidator, by any Civil
Court
(b) when
made by the Court of the District Judge on appeal, in the same manner as a
decree of such Court made in any suit pending therein.
(6) Save
in so far as is hereinbefore expressly provided, no Civil Court
RULES
43. Rules. — (1) The Provincial Government
may, for the whole or any part of the Province and for any registered society
or class of such societies, make rules to carry out the purposes of this Act.
(2) In
particular and without prejudice to the generality of the foregoing power, such
rules may —
(a)
subject to the provisions of section 5, prescribe the maximum number of shares
or portion of the capital of a society which may be held by a member ;
(b)
prescribe the forms to be used and the conditions to be complied with in the
making of applications for the registration of a society and the procedure in
the matter of such applications ;
(c)
prescribe the matters in respect of which a society may or shall make bye-laws
and for the procedure to be followed in making, altering and abrogating
bye-laws, and the conditions to be satisfied prior to such making, alteration
or abrogation ;
(d)
prescribe the conditions to be complied with
by persons applying for admission or admitted as members, and provide
for the election and admission of members, and the payment to be made and the
interest to be acquired before the exercise of the right of membership ;
(e)
regulate the manner in which funds may be raised by means of shares or
debentures or otherwise ;
(f)
provide for general meetings of the members and for the procedure at such
meetings and the powers to be exercised by such meetings ;
(g)
provide for the appointment, suspension and removal of the members of the
committee and other officers, and for the procedure at meetings of the
committee, and for the powers to be exercised and the duties to be performed by
the committee and other officers ;
(h)
prescribe the accounts and books to be kept by a society and provide for the
audit of such accounts and the charges, if any, to be made for such audit, and
for the periodical publication of a balance-sheet showing the assets and
liabilities of a society ;
(i)
prescribe the returns to be submitted by a society to the Registrar and provide
for the persons by whom and the form in which such returns shall be submitted
;
(j)
provide for the persons by whom and the form in which copies of entries in
books of societies may be certified ;
(k)
provide for the formation and maintenance of a register of members and, where
the liability of the members is limited
by shares, of a register of shares ;
(1)
provide that any dispute touching the business of a society between members or
past members of the society or persons claiming through a member or past member
or between a member or past member or persons so claiming and the committee or
any officer shall be referred to the Registrar for decision or, if he so
directs, to arbitration, and prescribe the mode of appointing an arbitrator or
arbitrators and the procedure to be followed in proceedings before the
Registrar or such arbitrator or arbitrators, and the enforcement of the
decisions of the Registrar or the awards of arbitrators ;
(m.)
provide for the withdrawal and expulsion of members and for the payments, if
any, to be made to members who withdraw or are expelled and for the liabilities
of past members ; .
(n)
provide for the mode in which the value of a deceased members interest shall be
ascertained, and for the nomination of a person to whom such interest may be
paid or transferred;
(o)
prescribe the payments to be made and the conditions to be complied with by
members applying for loans, the period for which loans may be made, and the
amount which may be lent, to an individual member ;
(p)
provide for the formation and maintenance of reserve funds, and the objects to
which such funds may be applied, and for the investment of any funds under the
control of the society ;
(q)
prescribe the extent to which a society may limit the number of its members ;
(r)
prescribe the conditions under which profits may be distributed to the members
of a society with unlimited liability and the maximum rate of dividend which
may be paid by societies ;
(s)
subject to the provisions of section 39, determine in what cases an appeal
shall lie from the orders of the Registrar, and prescribe the procedure to be
followed in presenting and disposing of such appeals ; and
(t)
prescribe the procedure to be followed by a liquidator appointed under section
42, and the cases in which an appeal shall lie from the order of such
liquidator.
(3) The
Provincial Government] may delegate, subject to such conditions, if any, as it
thinks fit, all or any of its powers to make rules under this section to any
authority specified in the order of delegation.
(4) The
power to make rules conferred by this section is subject to the condition of
the rules being made after previous publication.
(5) All
rules made under this section shall be published in the official Gazette], and
on such publication shall have effect as if enacted in this Act.
MISCELLANEOUS
44. Recovery of sums due to Government. — (i)
All sums due from a registered society or from an officer or member or past
member of a registered society as such to the Government, including any costs
awarded to the Government under section 37, may be recovered in the same
manner as arrears of land-revenue.
(2) Sums
due from a registered society to Government and recoverable under sub-section
(1) may be recovered, firstly, from the property of the society; secondly, in
the case of a society of which the liability of the members is limited, from
the members subject to the limit of their liability ; and, thirdly in the case
of other societies, from the members.
45. Power to exempt societies from conditions as
to registration. Notwithstanding anything contained in this Act, the
Provincial Government] may, by special order in each case and subject to such
conditions, if any, as it may impose, exempt any society from any of the
requirements of this Act as to registration.
46. Power to exempt registered societies from
provisions of the Act. The
Provincial Government] may, by general or special order, exempt any registered
society from any of the provisions of this Act or may direct that such
provisions shall apply to such society with such modifications as may be
specified in the order.
47. Prohibition of the use of the word
“co-operative”. — (1) No person other than a registered society shall trade
or carry on business under any name or title of which the word "
co-operative " is part without the sanction of the Provincial Government]
Provided
that nothing in this section shall apply to the use by any person or his
successor in interest of any name or title under which he traded or carried on
business at the date on which this Act comes into operation.
(2)
Whoever contravenes the provisions of this section shall be punishable with
fine which may extend to fifty rupees, and in the case of a continuing offence
with further fine of five rupees for each day on which the offence is continued
after conviction therefor.
48. Indian companies Act, 1882, no to apply. The
provisions of the Indian Companies Act, 1882], shall not apply to registered
societies.
49. Saving of existing societies. Every
society now existing which has been registered under the Co-operative Credit
Societies Act, 1904, shall be deemed to be registered under this Act, and its
bye-laws shall, so far as the same are not inconsistent with the express
provisions of this Act, continue in force until altered or rescinded.
50. [Repeal.] Rep. by the Second Repealing and
Amending Act, 1914 (XVII of 1914), s. 3 and Schedule II.
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