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1. This Ordinance may be cited as the Co-operative Societies Ordinance.
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Appointment of Registrar, Deputy and Assistant Registrars.
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2.[8]
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(1) There may be appointed a Registrar of Co-operative Societies for Ceylon or any portion thereof and such number of Deputy or Assistant Registrars as may be necessary.
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(2) The Minister may, by general or special Order published in the Gazette, confer on any Deputy or Assistant Registrar all or any of the powers of a Registrar under this Ordinance or under any rules made thereunder.
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Societies which may be registered.
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3.
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(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 Ordinance with or without limited liability :
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Provided that the liability of a society of which a member is a registered society shall be limited.
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(2) Where the liability of the members of a society is limited by shares, no member other than a registered society shall 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.
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Conditions of registration.
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4.
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(1) No society, other than a society of which a member is a registered society, shall be registered under this Ordinance, which does not consist of at least ten persons each of whom is above the age of eighteen years and resides or owns immovable property within the proposed area of operations of the society seeking registration.
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(2) When for the purposes of this section any question arises as to the age, residence, or property qualification of any person, that question shall be decided by the Registrar whose decision shall be final.
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(3) The word ” limited” shall be the last word in, or the equivalent of that word in Sinhalese or Tamil shall form part of, the name of every society with limited liability registered under this Ordinance.
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Application for registration.
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5.
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(1) For the purposes of registration an application shall be made to the Registrar.
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(2) The application shall be signed-
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(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 4 (1) ; and
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(b) in the case of a society of which a member is a registered society, by a duly authorized 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.
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(3) The application shall be accompanied by two copies of the proposed by-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.
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6. If the Registrar is satisfied that a society has complied with the provisions of this Ordinance and the rules, and that its proposed by-laws are not contrary to this Ordinance or to the rules, he may, if he thinks fit, register the society and its by-laws. An appeal in accordance with such rules as may be made in that behalf shall lie to the Minister[1] against the refusal of the Registrar to register any society.
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Evidence of registration.
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7. 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.
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Amendment of the by-laws of a registered society.
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8.
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(1) Any registered society may, subject to this Ordinance and the rules made thereunder, amend its by-laws, including the by-law which declares the name of the society.
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(2) No amendment of the by-laws of a registered society shall be valid until that amendment has been registered under this Ordinance, for which purpose two copies of the amendment shall be forwarded to the Registrar.
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(3) If the Registrar is satisfied that any amendment of the by-laws is not contrary to this Ordinance or to the rules, he may, if he thinks fit, register the amendment. An appeal in accordance with such rules as may be made in that behalf shall lie to the Minister[1] against the refusal of the Registrar to register any amendment of any by-law.
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(4) An amendment which changes the name of a society 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.
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(5) When the Registrar registers an amendment of the by-laws of a registered society, he shall issue to the society a copy of the amendment certified by him, which shall be conclusive evidence of the fact that the amendment has been duly registered.
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(6) In this section, ” amendment” includes the making of a new by-law and the variation or rescission of a by-law.
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| RIGHTS AND LIABILITIES OF MEMBERS |
Members not to exercise
rights till due payment made.
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9. 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 by-laws.
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Restriction of membership in society.
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10. Except with the sanction of the Registrar, no person shall be a member of more than one registered society whose primary object is to grant loans to its
members.
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Contracts with society of members who are minors.
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11. The minority or non-age of any person duly admitted as a member of any registered society shall not debar that person from executing any instrument or giving any acquittance necessary to be executed or given under this Ordinance or the rules made thereunder, and shall not be a ground for invalidating or avoiding any contract entered into by any such person with the society ; and any such contract entered into by any such person with the society, whether as principal or as surety, shall be enforceable at law by or against such person notwithstanding his minority or non-age.
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12. No member of any primary society shall have more than one vote in the conduct of the affairs of the society ;
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Provided that in the case of an equality of votes the chairman shall have a casting vote.
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13. A registered society which is a member of any other registered society may appoint any one of its members as its proxy for the purpose of voting in the conduct of the affairs of such other registered society.
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Restrictions on transfer of share or
interest.
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14.
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(1) The transfer of the share or other interest of a member or past member or deceased member in the capital of a registered society shall be subject to such conditions as to maximum holding as may be prescribed by this Ordinance or by the rules.
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(2) In the 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-
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(a) he has held such share or interest for not less than one year ; and
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(b) the transfer is made to the society, or to a member of the society, or to a person whose application for membership has been accepted by the committee.
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DUTIES OF REGISTERED SOCIETIES
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15. Every registered society shall have an address, registered in accordance with the rules, to which all notices and communications may be sent, and shall within seven days of any change of that address notify the Registrar of such change.
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Copy of Ordinance, rules, by-laws, &c, to be open to inspection.
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16. Every registered society shall keep a copy of this Ordinance and of the rules and of its by-laws and a list of its members open to inspection, free of charge, at all reasonable times at the registered address of the society.
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17.
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(1) The Registrar shall audit or cause to be audited by some person authorized by him by general or special order in writing in this behalf the accounts of every registered society once at least in every year.
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(2) The audit under subsection (1) shall include an examination of overdue debts, if any, and a valuation and verification of the assets and liabilities of the registered society.
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(3) For the purposes of an audit under subsection (1), the Registrar or any person authorized by him to audit the accounts shall have the power-
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(a) to summon any past or present officer, agent, servant or member of the society or any other person who, in the opinion of the Registrar or the person authorized by him to audit, can give material information about any transactions of the society or the management of its affairs ; and
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(b) to require the production of any book or document relating to the affairs of the society, or any cash, security, or other property belonging to the society, by any past or present officer, agent, servant or member of the society or other person in possession of or having the custody of such book, document, cash, security or other property.
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(4) The Registrar, or any person authorized 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 registered society, and shall be entitled to inspect the cash in hand ; and every officer or member of the society shall furnish such information in regard to the transactions and working of the society as the person making an inspection or audit may require.
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(5) The Registrar and every person authorized by him to audit the accounts of a registered society shall be deemed to be public servants within the meaning of the Penal Code.
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PRIVILEGES OF REGISTERED SOCIETIES
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Societies to be bodies corporate.
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18. 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 purpose of its constitution.
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Disposal of produce to or
through society,
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19.
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(1) A registered society which has as one of its objects the disposal of any article which is the produce of agriculture or animal husbandry or any other industry, may provide in its by-laws or may contract with its members-
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(a) that every such member who produces any such article, shall dispose of the whole or of any specified amount, proportion or description thereof to or through the society ; and
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(b) that any member who is proved or adjudged, in such manner as may be prescribed by rules, to be guilty of a breach of the by-laws or contract, shall pay to the society as liquidated damages a sum ascertained or assessed in such manner as may be prescribed by rules, or by its by-laws.
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(2) A contract made by a registered society under subsection (1) shall create in favour of the society a first charge upon all articles, whether produced or about to be produced, to which the contract relates.
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(3) In any legal proceedings arising out of a contract under subsection (1), it shall not be a defence that the contract is in restraint of trade.
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(4) A member of a registered society shall be deemed not to have contravened any by-law of the society which requires him to deliver any produce to the society, if the failure to deliver such produce was due to the fact that he had, prior to becoming a member of the society, contracted to deliver the produce to some other person.
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(5) Every person who applies for membership of a registered society shall, if required so to do, disclose in his application particulars of all contracts made by him for the delivery of any produce to any other person.
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Compulsory sale of produce through a registered society in certain cases.
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20.
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(1) Where the Minister is satisfied in the case of any registered society that-
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(a) not less than seventy-five per centum of the producers of any article in Ceylon, or in any province, district or area in Ceylon, are members of that society, and
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(b) the quantity of that article produced by such members is not less than seventy-five per centum, of the total quantity of that article produced in Ceylon, or in such province, district or area in Ceylon, as the case may be,
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the Minister may in his discretion, if he thinks fit so to do upon application made in that behalf by the society, by Order direct each producer of that article in Ceylon, or in such province, district or area in Ceylon, as the case may be, to sell to or through the society the total quantity of that article produced by him.
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(2) Every Order made by the Minister under subsection (1) shall be brought before the Senate and the House of Representatives for approval, and if so approved shall be published in the Gazette and shall come into operation on the date of such publication.
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(3) Every producer who is directed by Order under subsection (1) to sell any article to or through a registered society of which he is not a member shall, in respect of any such sale in compliance with such direction and of any matter or transaction arising out of such sale, be subject to the same conditions and obligations to which he would have been subject if he were a member of the society.
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(4) Where any producer in respect of whom an Order is made under subsection (1) and who is not a member of the registered society, applies for admission as a member of the society, the society shall-
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(a) if he so desires, deduct from any funds received or held by the society on his account the whole or any portion of the subscription for membership, and
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(b) admit him as a member upon payment in full of such subscription subject to any such deduction as aforesaid.
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Persons soliciting others to violate
contracts.
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21.
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(1) Any person who, having knowledge or notice that any other person has contracted under section 19 or is bound by an Order under section 20 to sell any article produced by such other person to or through a registered society, solicits or persuades such other person to sell or deliver such article, in violation of such contract or in contravention of such Order, as the case may be, shall be guilty of an offence and shall on conviction after summary trial before a Magistrate be liable to a fine not exceeding one thousand rupees.
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(2) Where the person convicted of an offence under subsection (1) is a body corporate, every person who at the time of the commission of the offence was a director or officer of the body corporate shall be deemed to be guilty of that offence unless he proves that the offence was committed without his knowledge or that he exercised all due diligence to prevent the commission of the offence.
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Rights of
registered society over crops, agricultural produce, cattle, implements, raw material, and manufactured articles, belonging to any member.
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22. Subject to any prior claim of the Crown on the property of a debtor and to the lien or claim of a landlord in respect of rent or any money recoverable as rent, and in the case of immovable property, to any prior registered charge thereon-
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(a) any debt or outstanding demand payable to a
society by any member or past member shall be a first charge-
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(i) upon crops or other agricultural produce raised in whole or in part with a loan taken from the society by such member or past member ; and
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(ii) upon any cattle, fodder for cattle, agricultural or industrial implements, or raw materials for manufacture, or workshops, godown, or place of business, supplied to or purchased by such member or past member in whole or in part from any loan whether in money or goods given him by the society :
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Provided that nothing herein contained shall affect the claims of any bona fide purchaser or transferee for value without notice of any such crops, or other agricultural produce, cattle, fodder for cattle, or agricultural or industrial implements, or raw materials for manufacture ;
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(b) any outstanding demands or dues payable to a housing society by any member or past member in respect of rent, shares, loans, or purchase money or any other rights or amounts payable to such society shall be a first charge upon his interest in the immovable property of the
society.
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Charge and set-off in respect of shares or interest of members.
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23. A registered society shall have a charge upon the shares or other interests in the capital and on the deposits of a member or past member or deceased member and upon any dividend, bonus, or profits payable to a member or past member or to the estate of a deceased member in respect of any debt due to the society from such member or past member or estate, and may set off any sum credited or payable to a member or past member or estate of a deceased member in or towards payment of any such debt.
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Shares, contributions or other interests not liable to attachment or sale.
[ 9, 21 of 1949.]
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[ [ 9, 21 of 1949.]
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24. Subject to the provisions of section 23, the share, contribution or other 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 in respect of any debt or liability incurred by such member, and neither his assignee in insolvency nor a receiver appointed under Chapter L of the Civil Procedure Code, shall be entitled to, or have any claim on, such share, contribution or other interest.
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Transfer of interest on. death of member.
[ 9, 21 of 1949.]
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[ [ 9, 21 of 1949.]
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25.
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(1) On the death of a member, a registered society may transfer the share or other 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 persons as may appear to the committee to be the heir or legal representative of the deceased member, 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 other interest, as ascertained in accordance with the rules or by-laws :
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Provided that-
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(a) 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 other interest of the deceased member ascertained as aforesaid ;
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(b) in the case of a society with limited liability, the society may transfer the share or other 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 by-laws for membership of the society, or on his application within six months of the death of the deceased member to any person specified in the application who is so qualified.
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(2) A registered society shall pay all other moneys due to the deceased member from the society to such nominee, heir, or legal representative, as the case may be.
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(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.
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Deposits by or on behalf
of minor.
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26.
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(1) A registered society may receive deposits from or for the benefit of minors and it shall be lawful for a registered society to pay to such minors the interest which may become due on such deposits. Any deposits made by a minor may, together with the interest accrued thereon, be paid to that minor ; and any deposit made on behalf of a minor may, together with the interest accrued thereon, be paid to the guardian of that minor for the use of the minor.
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(2) The receipt of any minor or guardian for money paid to him by a society under this section shall be a sufficient discharge of the liability of that society in respect of that money.
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Liability of past member and estate of deceased member for debts of society.
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27.
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(1) The liability of a past member for the debts of a registered society as they existed on the date on which he ceased to be a member shall continue for a period of two years reckoned from that date.
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(2) The estate of a deceased member shall, for a period of two years reckoned from the date of his decease, be liable for the debts of the society as they existed on the date of his decease.
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28. Any register or list of members kept by any registered society shall be prima facie evidence of any of the following particulars entered therein: –
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(a) the date at which the name of any person was entered in such register or list as a member ;
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(b) the date at which any such person ceased to be a
member.
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Proof of entries in books of
society.
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29.
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(1) 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 legal proceeding, civil or criminal, 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.
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(2) No officer of any registered society shall, in any legal proceedings to which the society is not a party, be compelled to produce any of the society’s books, the contents of which can be proved under subsection (1) or to appear as a witness to prove any matters, transactions or accounts therein recorded, unless the court for special reasons so directs.
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Deposits of securities as pledges by a society.
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30. Notwithstanding any written or other law for the time being in force a registered society may-
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(a) pledge as security for a general balance of account any securities held by it; and
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(b) authorize the creditor, in the event of default of payment on the date of the termination of a notice issued to the society, to sell any or all of such securities without recourse to court, and to credit the proceeds to such balance of account.
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Acquisition of lands or buildings.
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31. A registered society may acquire by purchase, gift or otherwise and hold lands or buildings for any purpose connected with its objects.
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Compulsory acquisition of lands and buildings.
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32.
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(1) Where any land or building is required for any purpose connected with the objects of a registered society, that purpose shall be deemed to be a public purpose and that land or building may be acquired under the Land Acquisition Act by the Government for that society.
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(2) Where any land or building is to be acquired under the Land Acquisition Act by the Government for a registered society, that society shall, before an order relating to that land or building is made under section 38 of that Act, pay to the Government the amount determined under that Act as the compensation payable in respect of that land or building and also the costs incurred by the Government in the acquisition proceedings.
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| EXEMPTIONS FROM STAMP DUTIES AND FEES |
Exemption from stamp duty and registration fees.
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33. Every registered society shall be exempt from-
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(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; or
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(b) any fee payable under the law of registration for the time being in force.
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GENERAL PROVISIONS RELATING TO BY-LAWS
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By-laws of a society to bind members.
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34.
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(1) Every by-law of a registered society shall, upon registration, be binding upon the society and the members thereof to the same extent as if the by-law was signed by each member of the society and contained a covenant by each such member to observe the provisions of the by-law.
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(2) Any dispute arising out of the interpretation of a by-law of a registered society shall be referred to the Registrar for his decision and his decision shall be final and conclusive in law.
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Power to make by-laws in restraint of trade.
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35. No by-law made by a registered society in respect of any matter for which by-laws are authorized by any rule to be made, shall be called in question in any court of law on the ground only that such by-law constitutes a contract in restraint of trade.
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Power to make by-laws for the
imposition of fines on members.
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36. The by-laws made by any registered society may, subject to any rules, provide for the imposition of fines on the members of the society for contraventions of its by-laws:
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Provided, however, that no such fine shall be imposed on any member unless-
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(a) notice in writing of the intention to impose such fine and the reasons therefor have been given in writing to him by the society ; and
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(b) he has failed to show, within such time and in such manner as may be prescribed by rules, sufficient cause against the imposition of the fine.
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PROPERTY AND FUNDS OF REGISTERED SOCIETIES
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Loans made by registered society.
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37.
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(1) A registered society shall not make any loan to any person other than a member :
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Provided that, with the consent of the Registrar, a registered society may make loans to another registered society.
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(2) Except with the permission of the Registrar, a registered society shall not lend money on the security of any movable property other than agricultural produce.
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Deposits and loans received by registered society.
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38. 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 by-laws.
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Restrictions on other transactions with non-members.
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39. Save as provided in sections 37 and 38, the transactions of a registered society with persons other than members shall be subject to such prohibitions and restrictions as may be prescribed by the rules.
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Investment
of society’s funds.
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40.
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(1) A registered society may deposit or invest its funds in the Ceylon Savings Bank or in the Ceylon Post Office Savings Bank, or in any of the securities other than a first mortgage of immovable property specified in section 20 of the Trusts Ordinance, or with any banker or person acting as a banker approved for this purpose by the Registrar, or in the shares or on the security of any other registered society, or in any other mode permitted by the rules.
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(2) Any deposit or investment made before the commencement of this Ordinance which would have been valid if this Ordinance had been in force is hereby ratified and confirmed.
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41.
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(1) At least one-fourth of the net profits of every registered society, as ascertained by the audit prescribed by section 17, shall be carried to a reserve fund. The remainder of such profits and any profits of past years available for distribution may be divided among the members by way of dividend or bonus, or allocated to any funds constituted by the society, to such extent or under such conditions as may be prescribed by the rules or by-laws :
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Provided 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 Minister.1
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(2) Any registered society may, with the sanction of the Registrar, after one-fourth or such other portion of the net profits as may have been determined by the Minister by order under section 57 in any year has been carried to a reserve fund, contribute an amount not exceeding ten per centum of the remaining net profits to any charitable purpose or to a common-good fund.
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42.
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(1) The Registrar may of his own motion, and shall on the application of a majority of the committee, or of not less than one-third of the members of a registered society, hold an inquiry or direct some person authorized by him by order in writing in this behalf to hold an inquiry into the constitution, working, and financial condition of a registered society; and all officers, members and employees, whether past or present, of the society shall furnish such information in regard to the affairs of the society and produce the cash in hand and such books, accounts, papers and securities of the society as the Registrar or the person authorized by him may require.
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(2) The Registrar shall, on the application of a creditor of a registered society, inspect or direct some person authorized by him by order in writing in this behalf to inspect the books of the society, if the applicant-
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(a) proves that an ascertained sum of money is then due to him and that he has demanded payment thereof and has not received satisfaction within a reasonable time ; and
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(b) deposits with the Registrar such sum as security for the costs of the proposed inspection as the Registrar may require.
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(3) The Registrar shall communicate the results of any such inspection to the society and to the creditor on whose application such inspection has been made.
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(4) Where an inquiry is held under subsection (1) or an inspection is made under subsection (2), the Registrar may apportion the costs, or such part of the costs, as he may think right between the registered society, the members demanding an inquiry, the officers or former officers of the society, and the creditor, if any, on whose application the inquiry was made.
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(5) Any sum awarded by way of costs against any society or person under this section may be recovered, on application to a Magistrate’s Court having jurisdiction in the place where the registered office of the society is situated or the person resides or carries on business for the time being, in like manner as a fine imposed by the court.
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DISSOLUTION OF THE COMMITTEE OF A REGISTERED SOCIETY
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Dissolution of the committee of a society.
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43.
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(1) If the Registrar is of the opinion that the committee of any registered society is not performing its duties properly, he may, after giving an opportunity to the committee to state its objections, if any, to its dissolution, and after considering such objections at a general meeting of the society summoned by him, by order in writing-
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(a) dissolve the committee ; and
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(b) direct that the affairs of the society shall be managed and administered by a suitable person or persons appointed as hereinafter provided.
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(2) Every direction under paragraph (b) of subsection (1) shall have effect for such period not exceeding two years as may be specified in the order containing such direction:
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Provided, however, that the Registrar may in his discretion from time to time amend the order for the purpose of extending the period during which the direction shall have effect, so however that the aggregate period during which the direction shall so have effect shall not exceed four years.
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(3) Where any order is made under subsection (1), the Registrar shall by the same or a subsequent order appoint a fit and proper person or two or more such persons to manage and administer the affairs of the society, and may from time to time remove or replace any person so appointed.
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(4) Subject to the general direction and control of the Registrar, any person or persons appointed under this section to manage the affairs of a registered society-
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(a) shall have the power to recover the assets and discharge the liabilities of the society and take such other steps as may be necessary in its interests, and
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(b) may exercise all the powers, rights and privileges of a duly constituted committee of the society.
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(5) The Registrar may fix the remuneration payable to any person or persons appointed by him under this section to manage the affairs of a registered society. The amount of such remuneration and other expenses, if any, incurred in the management of the society shall be payable from its funds.
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(6) It shall be the duty of the person or persons appointed under this section to manage the affairs of a registered society and holding office immediately prior to the date on which the direction under paragraph (b) of subsection (1) ceases to have effect, to arrange, prior to the date aforesaid, for the appointment of a new committee in accordance with the by-laws of the society.
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(7) No order under subsection (1) shall be made by the Registrar in respect of any registered society-
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(a) if the society is indebted to any bank, except after prior consultation with the bank in regard to the dissolution of the committee and to the persons by whom and the manner in which the affairs of the society are to be managed and administered ; and
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(b) if the society is a co-operative bank, except with the prior approval of the Co-operative Federal Bank of Ceylon, Limited.
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(8) Nothing in this section shall be deemed to affect the power of the Registrar to cancel the registration of the society under section 44.
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DISSOLUTION OF A REGISTERED SOCIETY
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44.
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(1) If the Registrar, after holding an inquiry or making an inspection under section 42 or on receipt of an application made by three-fourths 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.
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(2) Any member of a registered society may, within two months from the date of an order under subsection (1), appeal from such order to the Minister.1
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(3) Where no appeal is presented within two months from the making of an order cancelling the registration of a society, the order shall take effect on the expiry of that period. Where an appeal is presented within two months, the order shall not take effect until it is confirmed.
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(4) Where the Registrar cancels the registration of a society under subsection (1) he may make such order as he may think fit for the custody of the books and documents and the protection of the assets of the society until the order cancelling registration takes effect or until such order is reversed in appeal by the Minister.
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Cancellation of registration
of society.
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45. The Registrar may, by order in writing, cancel the registration of any registered society other than a society which includes among its members one or more registered societies, if at any time it is proved to his satisfaction that the number of the members has been reduced to less than ten. Every such order shall take effect from the date thereof.
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Effect of cancellation of
registration.
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46. Where the registration of a society is cancelled by an order under section 44 or under section 45, the society shall cease to exist as a corporate body from the date on which the order takes effect, hereinafter referred to as the date of dissolution :
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Provided that any privileges conferred on the society by or under this Ordinance shall be deemed to be vested in any liquidator or liquidators appointed for that society by the Registrar.
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Liquidation after cancellation
of registration
of society.
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47. Where the registration of a society is cancelled under section 44 or section 45 the Registrar may appoint one or more persons to be the liquidator or liquidators of the society.
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All the property of the society shall vest in the liquidator or liquidators on the date on which the order of cancellation under section 44 or section 45, as the case may be, takes effect.
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48.
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(1) A liquidator appointed under section 47 shall, subject to the guidance and control of the Registrar and to any limitations imposed by the Registrar by order under section 49, have power to-
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(a) determine from time to time the contributions to be made by members and past members or by the estates of deceased members of the society to its assets ;
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(b) appoint a day by proclamation or notice before which creditors whose claims are not already recorded in the books of the society shall state their claims for admission or be excluded from any distribution made before they have proved them ;
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(c) decide any question of priority which arises between creditors ;
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(d) refer for arbitration under section 53 any dispute of any description mentioned in that section (references therein to the society being construed as references to the liquidator), and institute and defend suits and other legal proceedings on behalf of the society by his name or office ;
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(e) decide by what persons and in what proportions the costs of liquidation are to be borne;
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(f) give such directions in regard to the collection and distribution of assets as may be necessary in the course of winding up the society ;
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(g) compromise any claim by or against the society provided the sanction of the Registrar has first been obtained ;
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(h) call such general meetings of members as may be necessary for the proper conduct of the liquidation;
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(i) take possession of the books, documents and assets of the society ;
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(j) sell the property of the society;
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(k) carry on the business of the society so far as may be necessary for winding it up beneficially :
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Provided that nothing herein contained shall entitle the liquidator of a credit society to issue any loan ; and
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(l) arrange for the distribution of the assets of the society in a convenient manner when a scheme of distribution has been approved by
the Registrar.
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(2) Subject to such rules as may be made in this behalf, any liquidator appointed under this Ordinance 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 parties and 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 District Court under the Civil Procedure Code.
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Power of Registrar to control liquidation.
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49. A liquidator shall exercise his powers subject to the control and revision of the Registrar, who may-
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(a) rescind or vary any order made by a liquidator and make whatever new order is required ;
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(b) remove a liquidator from office ;
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(c) call for all books, documents, and assets of the society ;
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(d) by order in writing limit the powers of a liquidator under section 48 ;
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(e) require accounts to be rendered to him by the liquidator at his discretion;
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(f) procure the auditing of the liquidator’s accounts and authorize the distribution of the assets of the society;
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the society; (g) make order for the remuneration of the liquidator ; or
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(h) refer for arbitration any dispute (not being a dispute so referable under section 48 (1) (d) ) between the liquidator and any third party, if such party consents in writing to be bound by the decision of the arbitrator.
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50.
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(1) The decision of an arbitrator on any matter referred to him under section 49, shall be binding upon the parties, and shall be enforceable in like manner as an order made by the Registrar under that section.
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(2) An order made by a liquidator or by the Registrar under section 48 or section 49 shall not be called in question in any civil court, and shall be enforced by any civil court having jurisdiction over the place where the registered office of the society is situated in like manner as a decree of that court.
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Limitation of the jurisdiction of the civil court.
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51. Save in so far as is herein before expressly provided, no civil court shall have any jurisdiction in respect of any matter concerned with the dissolution of a registered society under this Ordinance.
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52.
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(1) In the liquidation of a society whose registration has been cancelled, the funds, including the reserve fund, shall be applied first to the costs of liquidation, then to the discharge of the liabilities of the society, then to the payment of the share capital and then, provided the by-laws of the society permit, to the payment of a dividend at a rate not exceeding six per centum per annum for any period for which no disposal of profits was made.
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(2) When the liquidation of a society has been closed and any creditor of that society has not claimed or received what is due to him under the scheme of distribution, notice of the closing of the liquidation shall be published in the Gazette ; and, in respect of any claim against the funds of such society, no action shall be maintainable unless it is commenced within two years from the date of the publication of such notice in the Gazette.
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(3) Any surplus remaining after the application of the funds to the purposes specified in subsection (1) and the payment of any claims for which an action is instituted under subsection (2), may be applied to such object of local or public utility as may be
selected, subject to the approval of the Registrar, by the persons who were officers of the society at the date of the dissolution thereof.
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If such persons fail within three months after the date on which the liquidation of the society is closed to select as aforesaid an object approved by the Registrar, the Registrar shall deposit the surplus in a bank or with a registered society.
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If a new society operating in the same area is registered at any time thereafter, the surplus so deposited may at the discretion of the Registrar be credited to the reserve fund of that new society ; and any interest accruing on the deposit until such time may be paid into such Audit and Supervision Fund as may be constituted for the purposes of this Ordinance.
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53.
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(1) If any dispute touching the business of a registered society arises-
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(a) among members, past members and persons claiming through members, past members and deceased members ; or
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(b) between a member, past member or person claiming through a member, past member or deceased member, and the society, its committee or any officer or employee of the society, whether past or present, or any heir or legal representative of any deceased officer or employee ; or
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(c) between the society or its committee and any officer or employee of the society, whether past or present, or any heir or legal representative of any deceased officer or employee ; or
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(d) between the society and any other registered society,
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such disputes shall be referred to the Registrar for decision.
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[ 9, 21 of 1949.]
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[[ 9, 21 of 1949.]
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A claim by a registered society for any debt, demand or damages due to it from a member, officer or employee, whether past or present, or any nominee, heir or legal representative of a deceased member, officer or employee, whether such debt, demand or damages be admitted or not, shall be deemed to be a dispute touching the business of the society within the meaning of this subsection.
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(2) The Registrar may, on receipt of a reference under subsection (1)
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(a) decide the dispute himself, or
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(b) refer it for disposal to an arbitrator or
arbitrators.
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(3) Any party aggrieved by the award of the arbitrator or arbitrators may appeal therefrom to the Registrar within such period and in such manner as may be prescribed by rules.
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(4) A decision of the Registrar under subsection (2) or in appeal under subsection (3) shall be final and shall not be called in question in any civil court.
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(5) The award of the arbitrator or arbitrators under subsection (2) shall, if no appeal is preferred to the Registrar under subsection (3) or if any such appeal is abandoned or withdrawn be final and shall not be called in question in any civil court.
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54.
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(1) The Minister1 may make all such rules as may be necessary for the purpose of carrying out or giving effect to the principles and provisions of this Ordinance.
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(2) In particular, and without prejudice to the generality of the power conferred by subsection (1), such rules, may-
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(a) prescribe the conditions to be complied with in applying for the registration of a society and the procedure in the matter of such applications;
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(b) prescribe the conditions to be complied with by persons applying or admission or admitted as members, and provide for the election and admission of members from time to time, and the payment to be made and interest to be acquired before exercising rights of membership ;
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(c) provide for the withdrawal and expulsion of
members, and for the payments to be made to members who withdraw or are expelled, and for the liabilities of past members ;
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(d) prescribe the extent to which a registered
society may limit the number of its members ;
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(e) provide for the mode in which the value of a
deceased member’s interest shall be ascertained, and for the nomination of a person to whom such interest may be paid or transferred;
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(f) subject to the provisions of section 3, prescribe
the maximum number of shares or portion of the capital of a registered society which may be held by a member ;
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(g) prescribe the payments to be made, the condi-
tions to be complied with, and the forms of the bonds, instruments or other documents to be executed, by members applying for loans or cash credits, the period for which loans may be made or credits granted, and the maximum amount which may be lent and the maximum credit which may be allowed to individual members;
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(h) 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;
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(i) regulate the manner in which funds may be raised by means of shares or debentures or otherwise and the rate of interest which may be paid on deposits ;
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(j) provide for general meetings of the members, and for the procedure at such meetings and the powers to be exercised by such meetings ;
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(k) 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 ;
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(I) prescribe the matters in respect of which a society may or shall make by-laws, and for the procedure to be followed in making, altering, and rescinding by-laws, and the conditions to be satisfied prior to such making, alteration, or rescission ;
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(m) prescribe the accounts and books to be kept by a registered society, and for the periodical publication of a balance sheet showing the assets and liabilities of a registered society;
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(n) provide for the audit of the accounts of registered societies and for the charges, if any, to be made for such audit and provide for the levy of contributions from all or any registered societies to a fund to be used for the audit and supervision of and assistance to existing societies and co-operative propaganda and prescribe for the administration of such a fund;
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(o) prescribe the returns to be submitted by registered societies to the Registrar, and the persons by whom and the form in which the same are to be made ;
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to be made ;
(p) provide for the persons by whom, and the form in which, copies of entries in books of registered societies may be certified ;
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registered societies may be certified ;
(q) 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 ;
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(r) provide for the formation and the 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 any
registered society;
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(s) prescribe the manner in which any question, as to the breach of any by-law or contract relating to the disposal of produce to or through a society, may be determined, and the manner in which the liquidated damages for any such breach may be ascertained or assessed ;
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(t) 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 ;
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(u) prescribe the conditions to be observed by a registered society applying for the financial assistance of Government;
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(v) determine the cases, not expressly provided for in this Ordinance, in which an appeal shall lie to the Minister1 against orders made by the Registrar ;
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(w) prescribe the procedure to be followed by a liquidator appointed under section 47, and the cases in which appeals shall lie from the orders of such liquidator ;
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(x) prescribe the forms to be used, the fees to be paid, the procedure to be observed, and all other matters connected with or incidental to the presentation, hearing and disposal of appeals under this Ordinance or the rules made thereunder.
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(3) No rule shall have effect unless it has been approved by the Senate and the House of Representatives.1 Notification of such approval shall be published in the Gazette.
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(4) Every rule shall, upon the publication in the Gazette of the Notification required by subsection (3), be as valid and effectual as though it were herein enacted.
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Recovery of sums due to Government.
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55.
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(1) 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 42, may be recovered in manner provided for the recovery of Crown debts by the Crown Debtors Ordinance.
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(2) Sums due from a registered society to Government and recoverable under subsection (1) may be recovered, first from the property of the society; secondly, in the case of a registered 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.
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Special power of Minister to exempt any society from requirements as to registration.
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56. Notwithstanding anything contained in this Ordinance the Minister[1] may by special order in each case and subject to such conditions as he may impose, exempt any society from any of the requirements of this Ordinance as to registration.
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Special power of Minister to exempt societies from provisions of Ordinance.
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57. The Minister[1] may by general or special order exempt any registered society or class of societies from any of the provisions of this Ordinance, or may direct that such provisions shall apply to any society or class of societies with effect from such date or with such modifications as may be specified in the order.
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Restriction of use of word “co-operative “.
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58.
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(1) No person other than a registered society shall, without the sanction of the Minister,1 trade or carry on business under any name or title of which the word ” co-operative ” or in Sinhalese the word ” Eksat Sahakara” or ” Samupakara” or in Tamil the word “Aikkiya” or “Kutturavu” forms part:
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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 prior to the 22nd day of September, 1921.
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(2) Whoever contravenes the provisions of this section shall be liable on conviction after summary trial by a Magistrate’s Court to a fine which may extend to five hundred rupees, and in the case of a continuing offence, with a further fine of fifty rupees for each day on which the offence is continued after conviction therefor.
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Registrar may order repayment or restoration of money or other property due to a society.
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59.
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(1) Where in the course of an audit under section 17, or an inquiry or inspection under section 42, or the winding up of a registered society, it appears that any sum of money or other property is due to the society from any person who has taken part in the organization or management of the society or from any past or present officer of the society, the Registrar may, of his own motion or upon the application of the committee or the liquidator or any creditor or contributory of the society, as the case may be, examine into the con-duct of such person or officer and make an order requiring him-
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(a) to repay with such interest as the Registrar
thinks fit such money or part thereof ,
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(b) to restore such other property or part thereof, or
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(c) to contribute such sum as the Registrar thinks fit to the assets of the society by way of compensation.
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Before making any such order against any person, the Registrar shall give that person an opportunity of being heard and of showing cause why such order should not be made.
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(2) Where an order under subsection (1) for the repayment of any sum to a registered society, or for the contribution of any sum to its assets by way of compensation, has not been complied with, such sum may be recovered by the society on application to the Magistrate having jurisdiction in the division in which the registered place of business of the society is situated or in which the person or officer against whom the order was made resides or carries on business, as though it were a fine imposed by a sentence of the
Magistrate.
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(3) Neither the preceding provisions of this section nor the making of any order thereunder may be deemed or construed to preclude or otherwise affect the institution or maintenance of a prosecution against any person or officer referred to in subsection (1) in respect of any offence under any other written law.
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Liability of officers, &c, for breach of trust.
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60. It shall be lawful for the Registrar, after the accounts of a registered society have been audited as provided in section 17 or after an inquiry or inspection into the affairs of a registered society has been held under section 42, to require any person, being a person entrusted with or having the dominion of any money in his capacity as an officer or a member or a servant of the society, to pay over or produce such amount of money or balance thereof which is shown in the books of accounts or statements kept or signed by such person as held by or due from him as such officer, member or servant; and if such person, upon being so required, fails to pay over or produce such amount of money or balance thereof forthwith or to duly account therefor, he shall be guilty of the offence of criminal breach of trust, and shall on conviction be subject to imprisonment of either description for a term which may extend to ten years and shall also be liable to a fine.
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Registrar may require bank to produce any information, &c.
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61. Notwithstanding anything in any other written law, the Registrar may, where he considers it necessary to do so, require any bank-
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(a) to furnish any information regarding the transactions of any registered society with the bank;
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(b) to produce a copy showing the account of the society with the bank from the ledger kept by the bank; or
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(c) to produce any cheques paid to the credit of the society or endorsed by the society.
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Companies Ordinance and Trade Unions Ordinance not to apply.
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62. The provisions of the Companies Ordinance, and of the Trade Unions Ordinance, and of any enactments amending those Ordinances, shall not apply to societies registered under this Ordinance.
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Savings for existing societies, rules, &c.
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63.
|
(1) Every society registered or deemed to be registered under any enactment repealed by this Ordinance, shall be deemed to be registered under this Ordinance, and the by-laws of such society shall, so far as they are not inconsistent with the express provisions of this Ordinance, continue in force until altered or rescinded.
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(2) All rules made under any enactment repealed by this Ordinance and in force at the time of the commencement of this Ordinance shall, in so far as they are not inconsistent with the provisions of this Ordinance, be deemed to have been made under this Ordinance and shall continue in force until new rules are made under section 54 in substitution for those rules.
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(3) All appointments and orders made, notifications and notices issued, and suits and other proceedings Instituted or deemed to have been made, issued or instituted under any enactment repealed by this Ordinance, shall, so far as may be, be deemed to have been respectively made, issued and instituted under this Ordinance.
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Penalty for non-compliance with Ordinance.
|
64.
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(1)
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(a) Any registered society or an officer or a member thereof, wilfully neglecting or refusing to do any act or to furnish any information required for the purposes of this Ordinance by the Registrar or other person duly authorized by him in this behalf ; or
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(b) any person wilfully or without any reasonable excuse disobeying any summons, requisition or lawful written order issued under the provisions of this Ordinance, or failing to furnish any information lawfully required from him by a person authorized to do so under the provisions of this Ordinance ; or
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(c) any registered society or an officer or a member thereof wilfully making a false return or furnishing false information, shall be guilty of an offence under this Ordinance.
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(2) Every person who commits any offence referred to in subsection (1) shall, on conviction after summary trial before a Magistrate, be liable to a fine not exceeding five hundred rupees.
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(3) Where any offence under this Ordinance is committed by a registered society, every officer of the society bound by the by-laws or the rules to fulfil any duty whereof the offence is a breach, or if there is no such officer, then every member of the committee, unless that member is proved to have been ignorant of or to have attempted to prevent the commission of the offence, shall be liable to the same penalty as if he had committed the offence.
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65. In this Ordinance, unless the context otherwise requires-
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” by-laws” means the registered by-laws for the time being in force and includes a registered amendment of the by-laws ;
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” committee ” means the governing body of a registered society to whom the management of its affairs is entrusted ;
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” dividend” means profits divided on a basis of share capital in a registered society; and ” bonus ” means rebate upon patronage ;
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“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 rules and by-laws ;
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“officer” includes every person who is the chairman, secretary, treasurer or manager of a society or a member of the committee of a society, and any other person who is empowered by the rules or by-laws of a society to give directions in regard to the business of the society;
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” primary society ” means a registered society not being a society established with the object of facilitating the operations of other registered societies;
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” registered society ” means a society registered or deemed to be registered under this Ordinance ;
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” Registrar ” means a person appointed to perform the duties of a Registrar of Co-operative Societies under this Ordinance ;
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” rules ” means rules made or deemed to have been made under this Ordinance.
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