THE LAKSHADWEEP GAZETTE EXTRAORDINARY

VOL. LVIII No.36 THURSDAY, 29^th SEPTEMBER, 2022 / 7^th ASWIN, 1944 (SAKA)

PRICE: 75 PAISE

NOTIFICATION

F. No.41/3/2022-Coop dated 29.09.2022: In exercise of powers conferred under Sub Section 3 of Section 1 of

the Lakshadweep Co-operative Societies Regulation, 2022, the Administrator, Union Territory of Lakshadweep, hereby

appoints the date of publication in the official gazette of Lakshadweep as the date on which the Lakshadweep Co-operative

Societies Regulation, 2022 shall come into force.

Sd/-

Secretary (Cooperation)

NOTIFICATION

F.No.101/13/2022-AH(Pension) dated 26.09.2022: Advisor to Hon’ble Administrator Union Territory of

Lakshadweep is pleased to permit Dr. P.Koya, (Date of Birth 15.02.1963), Veterinary Assustant Surgeon, who is to retire

from Government Service on superannuation on the afternoon of 28.02.2023 under rule 74(a) of the CCS (Pension) Rules

1972. Accordingly the Officer will stand relieved from the duties on the afternoon of 28.02.2023.

This is issued with the approval of Advisor to Hon’ble Administrator vide Diary No.2640 dated 15.09.2022.

Sd/-

Director (Animal Husbandry)

THE LAKSHADWEEP CO-OPERATIVE SOCIETIES

REGULATION, 2022

NO. 4 OF 2022

Promulgated by the President in the Seventy-third Year of the Republic of India.

A Regulation for registration, incorporation and management of Co-operative Societies

in the Union territory of Lakshadweep and to repeal the Laccadive, Minicoy and

Amindivi Islands Co-operative Societies Regulation, 1960 and for matters connected

therewith or incidental thereto.

In exercise of the powers conferred by article 240 of the Constitution, the President is

pleased to promulgate the following Regulation made by her:—

CHAPTER I

PRELIMINARY

1. (1) This Regulation may be called the Lakshadweep Co-operative Societies

Regulation, 2022.

(2) It extends to the whole of the Union territory of Lakshadweep.

(3) It shall come into force on such date as the Administrator may, by notification in the

Official Gazette, appoint.

Short title,

extent and

commencement.

MINISTRY OF LAW AND JUSTICE

(Legislative Department)

New Delhi, the 19th September, 2022/Bhadra 28, 1944 (Saka)

THE LAKSHADWEEP GAZETTE EXTRAORDINARY

2. In this Regulation, unless the context otherwise requires,—

(1) “Administration” means the Administration of the Union territory of

Lakshadweep;

(2) “Administrator” means the Administrator of the Union territory of

Lakshadweep, appointed by the President under article 239 of the Constitution;

(3) “auditor” means a certified auditor, who is authorised and appointed by the

Registrar to audit the accounts of the society.

Explanation.—For the purposes of this clause, the expression “certified auditor”

means a person who possesses the prescribed qualifications and is authorised by the

Registrar as an auditor under section 84;

(4) “authorised person” means any person duly authorised by the Registrar to

take action under the provisions of this Regulation;

(5) “Board” means the Board of Directors or the governing body of a co-operative

society, by whatever name called, to which the direction and control of the management

of the affairs of a society is entrusted;

(6) “bye-laws” means the registered bye-laws for the time being in force, and

includes a registered amendment of such bye-laws;

(7) “central bank” means a co-operative bank, the objects of which include the

creation of funds to be loaned to other societies, but does not include the urban

co-operative bank;

(8) “Committee” means the Managing Committee or other governing body of a

society to which the direction and control of the management of the affairs of a society

is entrusted;

(9) “company” means a company as defined in the Companies Act, 2013 and

includes a banking company, any board, corporation or other corporate body,

constituted or established by any Central, State or Provincial Act for the purpose of

the development of any organisation;

(10) “co-operative bank” means a society registered under this Regulation

and carrying the business of banking as defined in clause (b) of sub-section (1) of

section 5 of the Banking Regulation Act, 1949;

(11) “co-operative election authority” means an authority constituted by the

Administrator under section 68;

(12) “co-operative society” means a society registered or deemed to be registered

under the regulations and rules or any other law relating to co-operative societies for

the time being in force in Union territory of Lakshadweep;

(13) “Deposit Insurance Corporation” means the Deposit Insurance and Credit

Guarantee Corporation established under section 3 of the Deposit Insurance and

Credit Guarantee Corporation Act, 1961;

(14) “dividend” means the amount paid, out of the profit of a society, to a

member in proportion to the shares held by such member;

(15) “federal society” means a society—

(a) not less than five members of which are themselves societies; and

(b) in which the voting rights are so regulated that the members which are

societies have not less than four-fifths of the total number of votes in the general

meeting of such society;

(16) “firm” means a firm registered under the Indian Partnership Act, 1932;

Definitions.

18 of 2013.

10 of 1949.

47 of 1961.

9 of 1932.

THE LAKSHADWEEP GAZETTE EXTRAORDINARY

(17) “General Body” means the individuals or institutions obtaining membership

of respective societies;

(18) “Islands” means the Islands of the Union territory of Lakshadweep;

(19) “Liquidator” means a person appointed under section 108;

(20) “member” means a person joining in an application for the registration of a

co-operative society which is subsequently registered or a person duly admitted to

membership of a society after registration and includes a nominal, associate or

sympathiser member;

(21) “National Bank” means the National Bank for Agriculture and Rural

Development established under section 3 of the National Bank for Agriculture and

Rural Development Act, 1981;

(22) “officer” means a person elected or appointed by a society to any office of

such society according to its bye-laws and includes a Chairperson, Vice-Chairperson,

President, Vice-President, Managing Director, General Manager, Manager, Secretary,

Treasurer, Member of the Committee, and any other person elected or appointed under

this Regulation, the rules or the bye-laws, to give directions in regard to the business

of such society;

(23) “office bearer” means a President, Vice-President, Secretary or Treasurer of

a co-operative society and includes any other person to be elected by the board of any

co-operative society;

(24) “official assignee” means a person or body of persons appointed under

sub-section (2) of section 22;

(25) “Official Gazette” means the Official Gazette of the Union territory of

Lakshadweep;

(26) “prescribed” means prescribed by rules made under this Regulation;

(27) “rebate” means any payment made in cash or kind, out of the profits of a

society, to a member or any other person, on the basis of his contribution to the

business of the society;

(28) “Registrar” means a person appointed to be the Registrar of co-operative

societies under this Regulation and includes an Additional Registrar, Joint Registrar,

Deputy Registrar and Assistant Registrar;

(29) “Reserve Bank” means the Reserve Bank of India constituted under

sub-section (1) of section 3 of the Reserve Bank of India Act, 1934;

(30) “rules” means rules made under this Regulation;

(31) “society” means a co-operative society registered, or deemed to be registered,

under this Regulation;

(32) “society with limited liability” means a society having the liability of its

members limited by its bye-laws;

(33) “Tribunal” means the Union territory Co-operative Tribunal constituted

under section 123;

(34) “Union territory” means the Union territory of Lakshadweep.

CHAPTER II

REGISTRAR AND REGISTRATION

3. (1) For carrying out the purposes of this Regulation, the Administrator shall appoint

a person to be called the Registrar of co-operative societies for the Union territory.

61 of 1981.

2 of 1934.

Registrar and

officers and

their powers.

THE LAKSHADWEEP GAZETTE EXTRAORDINARY

(2) To assist the Registrar in his functions under this Regulation, the Administrator

may appoint such number of Additional Registrars, Joint Registrars, Deputy Registrars,

Assistant Registrars and other persons with such designations as it may think fit.

(3) The Administrator may, by general or special order, confer on a person or persons

appointed under sub-section (2) all or any of the powers of the Registrar under this

Regulation.

(4) Every person appointed under sub-section (2) shall work under the general guidance,

and the superintendence and control of the Registrar.

4. A society established for,—

(i) promotion of the economic interests or general welfare of its members, or of

the public, in accordance with the co-operative principles; or

(ii) facilitating the operations of any such society,

may be registered under this Regulation:

Provided that no society shall be registered if it is likely to be economically unsound,

or the registration of which may have an adverse effect upon any other society, or it is

opposed to, or its working is likely to be in contravention of public policy or which may have

an adverse effect on development of the co-operative movement, or the registration of which

may be contrary to the policy directives which the Union territory Administration may, from

time to time, issue.

5. A society may be registered with limited or unlimited liability.

6. (1) No society, other than a federal society, shall be registered under this Regulation,

unless it consists of at least ten persons or such higher number of persons as the Registrar

may, having regard to the objects and economic liability of a society and development of the

co-operative movement, determine from time to time for a class of societies (each of such

persons being a member of a different family), who are qualified to be members under this

Regulation, and who reside in the area of operation of such society:

Provided that the Registrar may specify the norms and conditions for registration of

societies or class of societies.

(2) No society with unlimited liability shall be registered, unless all persons forming

the society reside in the same Island, or in the same group of Islands.

Explanation.—For the purposes of this sub-section, the expression “society with

unlimited liability” means a society, the members of which are, in the event of its being

wound up, jointly and severally liable for and in respect of its obligations and to contribute

to any deficiency in the assets of the society.

(3) No federal society shall be registered, unless it has at least five societies as its

members.

(4) Nothing in this Regulation shall be deemed to affect the registration of any society

made before the commencement of this Regulation.

(5) The word “limited” or “unlimited” shall be the last word in the name of every

society with limited or unlimited liability, as the case may be, which is registered or deemed to

be registered under this Regulation.

Explanation.—For the purposes of this section the expression “member of a family”

means a wife, husband, father, mother, grand-father, grand-mother, step-father, step-mother,

son, daughter, step-son, step-daughter, grand-son, grand-daughter, brother, sister, half-brother,

half-sister and wife of brother or half-brother.

Societies

which may be

registered.

Registration

with limited or

unlimited

liability.

Conditions of

registration.

THE LAKSHADWEEP GAZETTE EXTRAORDINARY

7. Notwithstanding anything contained in this Regulation, the Administrator may, by

special order in each case and for the reasons to be recorded in writing, exempt subject to

such conditions, if any, as it may impose, any society from any of the requirements of this

Regulation as to registration.

8. (1) For the purposes of registration, an application shall be made to the Registrar in

the prescribed form and shall be accompanied by four copies of the proposed bye-laws of

the society and the person by whom, or on whose behalf, such application is made, shall

furnish such information in regard to the society, as the Registrar may require.

(2) The application shall be signed—

(a) in the case of a society other than a federal society, by at least ten persons

(each of such persons being a member of a different family) who are qualified under

this Regulation; and

(b) in the case of a federal society, by at least five societies.

(3) No signature to an application on behalf of a society shall be valid unless the

person signing it is a member of the Committee of such society, and is authorised by such

Committee by resolution to sign on its behalf the application for registration of the society

and its bye-laws; and a copy of such resolution is appended to the application.

9. (1) On receipt of an application for registration from a society,—

(a) if the Registrar is satisfied that the society has complied with the provisions

of this Regulation and the rules as to registration and that its bye-laws are not contrary

to this Regulation and the rules, he shall register the society and its bye-laws; and

(b) if the Registrar is of the opinion that the application complies with the

requirements of section 8, but that its bye-laws are not in conformity with the provisions

of this Regulation and the rules made thereunder, he may provisionally register the

society and by an order in writing permit the society to perform such functions subject

to such conditions as he may specify in the order and may also by an order in writing

direct the society to amend, within the period prescribed in this behalf, its bye-laws so

as to bring them in conformity with this Regulation and the rules made thereunder.

(2) When a society has been provisionally registered, the Registrar shall, on its

compliance with the order made under clause (b) of sub-section (1) finally register it and its

bye-laws; and on its failure to comply with the order shall cancel its provisional registration:

Provided that the provisional registration of a society shall not be cancelled unless

such society has been given an opportunity of being heard in the matter.

(3) A provisionally registered society shall not be deemed to be a society registered

under this Regulation.

(4) On the registration of a society, the Registrar shall issue to it a certificate of registration

signed by him within a period of fifteen days from the date of registration.

(5) A certificate of registration issued under sub-section (4) shall be conclusive evidence

that the society therein mentioned is duly registered, unless it is proved that the registration

has been cancelled.

(6) If the Registrar refuses to register the society, he shall forthwith communicate his

decision with reasons therefor, to the person who has signed first on the application.

10. The Registrar shall maintain a register in the prescribed form of all societies registered

or deemed to be registered under this Regulation.

11. When any question arises whether, for the purpose of the formation or registration

or continuance of a society or the admission of a person as a member of a society under this

Regulation, a person is an agriculturist or non-agriculturist, or whether any person is a

Power to

exempt

societies from

conditions as

t o

registration.

Application

for

registration.

Provisional

registration.

societies.

Power of

Registrar to

decide certain

questions.

THE LAKSHADWEEP GAZETTE EXTRAORDINARY

resident in an Island or group of Islands, or whether two or more Islands shall be considered

to form a group, or whether any person belongs to any particular tribe, class or occupation,

the question shall be decided by the Registrar.

12. The Registrar may classify all societies in such manner, and into such classes, as

he thinks fit; and the classification of a society under any head of classification by the

Registrar shall be final and binding on the societies.

13. (1) No amendment of the bye-laws of a society shall be valid until registered under

this Regulation.

(2) For the purpose of registration of an amendment of the bye-laws, a copy of the

amendment passed, in the manner prescribed, at a general meeting of the society, shall be

forwarded to the Registrar.

(3) If the Registrar is satisfied that the amendment so forwarded is not contrary to this

Regulation or the rules, he may register the amendment:

Provided that no order refusing to register the amendment shall be passed except after

giving the society an opportunity of being heard:

Provided further that the application for registration of amendment of bye-laws of a

society shall be disposed of within two months from the date of its receipt.

(4) When the Registrar registers an amendment of the bye-laws of a society, he shall

issue to the society, the copy of the amendment certified by him within a period of fifteen

days from the date of registration of the amendment, which shall be conclusive evidence of

its registration.

(5) Where the Registrar refuses to register an amendment of the bye-laws of a society,

he shall communicate the order of refusal, together with his reasons therefor within a period

of fifteen days, to the society.

14. (1) If it appears to the Registrar that an amendment of the bye-laws of a society is

necessary or desirable in the interest of such society or any bye-laws of the society are

inconsistent with the provisions of this Regulation or rules made thereunder and that

amendment is necessary in such bye-laws, he may call upon the society, in the manner

prescribed, to make the amendment within such time as he may specify.

(2) If the society fails to make the amendment within the time so specified, the Registrar

after giving the society an opportunity of being heard and with the prior approval of the

Administrator, may register the amendment, and shall thereupon issue to the society a copy

thereof certified by him.

(3) With effect from the date of the registration of the amendment in the manner

aforesaid, the bye-laws shall be deemed to have been duly amended accordingly and the

bye-laws as amended shall be binding on the society and its members.

15. (1) Subject to the provisions of the rules made under this Regulation, a society

may, by resolution passed at a general meeting, and with the approval of the Registrar,

change its name but such change shall not affect any right or obligation of the society, or of

any of its members, or of any of the persons who have ceased to be members; and any legal

proceedings pending before any person, authority or court may be continued by or against

the society, under its new name.

(2) When a society changes its name, the Registrar shall enter the new name in its

place in the register of societies, and shall also amend the certificate of registration accordingly.

16. (1) Subject to the provisions of this Regulation and the rules made thereunder, a

society may, by passing a resolution and by amending its bye-laws, change the form or

extent of its liability.

Classification

of societies.

Amendment

of bye-laws of

society.

Power to

direct

amendment of

bye-laws.

Change of

name.

Change of

liability.

THE LAKSHADWEEP GAZETTE EXTRAORDINARY

(2) When a society has passed a resolution to change the form or extent of its liability,

it shall give notice thereof in writing to all its members and creditors and, notwithstanding

anything in any bye-laws or contract to the contrary, any member or creditor shall, during a

period of thirty days from the date of service of such notice upon him, have the option of

withdrawing his investment in its shares, and his deposits and loans, and of demanding the

payment of his other dues, if any.

(3) Any member or creditor who does not exercise his option within the period specified

in sub-section (2), shall be deemed to have assented to the change.

(4) An amendment of the bye-laws of a society, changing the form or extent of its

liability, shall not be registered or take effect until, either—

(a) all members and creditors have assented, or deemed to have assented, thereto

as aforesaid; or

(b) all claims of members and creditors exercising the option, under

sub-section (2) have been complied in toto.

17. (1) Subject to the provisions of the rules made under this Regulation and the

previous sanction of the Registrar, a society may, by resolution passed by two-thirds majority

of the members present and voting at a special general meeting held for the purpose, decide—

(a) to amalgamate with another society or a society registered under the

Multi-State Co-operative Societies Act 2002;

(b) to transfer its assets and liabilities, in whole or in part, to any other society;

(d) to convert itself into another class of society; or

(e) to change its objects.

(2) Where the amalgamation, transfer, division or conversion referred to in

sub-section (1) involves a transfer of the liabilities of a society to any other society, the

Registrar shall not sanction the resolution of the society unless he is satisfied that—

(i) the society, after passing such resolution, has given notice thereof in writing

to all its members, creditors and other persons whose interests are likely to be affected

(hereafter, in this section referred to as “other interested persons”), giving them the

option to exercise within one month from the date of the receipt of such notice, of

becoming members of any of the new societies, or continuing their membership in the

amalgamated or converted society, or of withdrawing their investments in its shares,

their deposits and loans and demanding payment of their other dues, if any;

(ii) all the members and creditors and other interested persons have assented to

the decision, or are deemed to have assented thereto by having failed to exercise the

option within the period specified in clause (i); and

(iii) all claims of members and creditors and other interested persons, who exercise

the option within the period specified, have been complied in toto.

(3) Notwithstanding anything contained in the Transfer of Property Act, 1882, or the

Indian Registration Act, 1908, in the event of division or conversion, the registration of the

new societies or, as the case may be, of the converted society, and in the event of amalgamation,

on the amalgamation the resolution of the societies concerned with amalgamation, shall in

each case be sufficient conveyance to vest the assets and liabilities of the original society or

amalgamating societies in the new societies or converted or amalgamated society, as the

case may be.

(4) The amalgamation, transfer, division or conversion made under this section shall

not affect any right or obligation of the societies so amalgamated, or of the society so

Amalgamation,

transfer,

division or

conversion of

societies.

39 of 2002.

4 of 1882.

16 of 1908.

THE LAKSHADWEEP GAZETTE EXTRAORDINARY

divided or converted, or of the transfer, or render defective, any legal proceedings which

might have been continued or commenced by or against the societies which have been

amalgamated, or divided or converted; and accordingly such legal proceedings may be

continued or commenced by or against the amalgamated society, the converted society, the

new societies or the transferee, as the case may be.

18. (1) Where the Registrar is satisfied that it is essential in the public interest or in the

interest of co-operative movement, or for the purpose of securing proper management of any

society that two or more societies should be amalgamated or that any society should be

re-organised, then, notwithstanding anything contained in section 17 but subject to the

provisions of this section, the Registrar may, after consulting such federal society as may be

notified in this behalf by the Administrator by order published in the Official Gazette, provide

for the amalgamation of these societies into a single society or, as the case may be, for the

re-organisation of that society, with such constitution, property rights, interests and

authorities, and such liabilities, duties and obligations as may be specified in the order.

(2) The order referred to in sub-section (1) may also provide for the constitution of the

Committee of management or any other Committees of the new amalgamated or re-organised

society, the persons who shall be, or continue to be, the officers of such society and the

period after which such Committee or Committees may be re-constituted.

(3) No order shall be made under this section unless,—

(a) a copy of the draft of the proposed order has been sent to the society or each

of the societies concerned; and

(b) the Registrar has considered suggestions and objections if any received

either from the society or from any member or class of members thereof or from any

creditor or class of creditors within such period (not being less than one month from

the date on which the copy of the order as aforesaid was received by the society) as

the Registrar may fix in that behalf, and has, if necessary, modified the same in the light

of such suggestions and objections.

(4) The order referred to in sub-section (1) may contain such incidental, consequential

and supplemental provisions as may, in the opinion of the Registrar, be necessary to give

effect to the amalgamation or re-organisation.

(5) Every member of each of the societies so amalgamated, shall be deemed to be a

member of the new amalgamated society, and every member of the society so re-organised

shall be deemed to be a member of the new re-organised society and all such members shall

have all rights, privileges and liabilities of the members of the concerned new societies:

Provided that any member of the new society so amalgamated or re-organised may,

within such period and in such manner as may be prescribed, resign his membership of the

new society and on such resignation, he shall be entitled to withdraw his share and any other

dues and interest in the society.

(6) On the issue of an order under sub-section (1) in respect of any societies or society,

notwithstanding anything contained in any law for the time being in force, all the assets,

rights and liabilities of the amalgamating societies, or, as the case may be, the original society

which is re-organised shall stand transferred to, and vest in, the new amalgamated society,

or, as the case may be, the new re-organised society;

(7) The provisions of sub-sections (3) and (4) of section 17 and the provisions of

section 19 shall apply in relation to the amalgamation or re-organisation of the societies

under this section as if—

(a) the order of amalgamation were a resolution of societies concerned with

amalgamation; and

(b) the original society was re-organised under section 17.

Power to

direct

amalgamation

and re-

organisation

of societies in

public interest,

etc.

THE LAKSHADWEEP GAZETTE EXTRAORDINARY

19. Where two or more societies have been amalgamated, or a society has been divided

or converted, the registration of such societies or society, as the case may be, shall be

cancelled on the date of registration of the new society or societies so formed.

20. Where a compromise or arrangement is proposed—

(a) between a society and its creditors; or

(b) between a society and its members,

the Registrar may, on the application of the society or of any member or of any creditor of the

society, or in the case of a society which is being wound up, of the Liquidator, order

reconstruction in the prescribed manner, of the society.

21. (1) The Registrar shall make an order cancelling the registration of a society if it

transfers the whole of its assets and liabilities to another society, or amalgamates with

another society, or divides itself into two or more societies, or if its affairs are wound up or it

has not commenced business within a reasonable time of its registration or has ceased to

function:

Provided that the registration of a society shall not be cancelled unless such society

has been given an opportunity of being heard in the matter.

(2) An order made under sub-section (1) shall be published in the Official Gazette.

(3) The society shall, from the date of such order of cancellation, be deemed to be

dissolved and shall cease to exist as a corporate body.

22. (1) If the Registrar is satisfied that any society is registered on mis-representation

made by applicants, or where the work of the society is completed or exhausted or the

purposes for which the society has been registered are not served, or any primary agricultural

co-operative credit society using the word “bank”, “banking”, “banker” or any other derivative

of the word “bank” in its name, he may, after giving an opportunity of being heard to the

society, de-register the society.

(2) When a society is de-registered under the provisions of sub-section (1), the

Registrar may, notwithstanding anything contained in this Regulation or any other law for

the time being in force, make such incidental and consequential orders including appointment

of official assignee as the circumstances may require.

(3) Subject to the rules made under this Regulation, the official assignee shall realise

the assets and liquidate the liabilities within a period of one year from the date he takes over

the charge of property, assets, books, records and other documents, which period may, at the

discretion of the Registrar, be extended from time to time, so however, that the total period

does not exceed three years in the aggregate.

(4) The official assignee shall be paid such remuneration and allowances as may be

prescribed; and he shall not be entitled to any remuneration whatever beyond the prescribed

remuneration or allowances.

23. (1) Any two or more societies may, with the prior approval of the Registrar, by

resolution passed by three-fourths majority of the members present and voting at a general

meeting of each such society, enter into partnership for carrying out any specific business or

businesses, provided that each member of each society has had clear ten days written notice

of the resolution, and the date of the meeting.

(2) Nothing in the Indian Partnership Act, 1932 and the Companies Act, 2013 shall

apply to such partnership.

Cancellation

of registration

amalgamated,

divided or

converted

societies.

Reconstruction

of societies.

Cancellation

registration.

De-

registration of

societies.

Partnership of

societies.

9 of 1932.

18 of 2013.

THE LAKSHADWEEP GAZETTE EXTRAORDINARY

24. (1) Any society or societies may, with the prior approval of the Administrator and

subject to such terms and conditions as the Administrator may impose and in such manner

as may be prescribed, enter into collaboration with any undertaking or any undertaking

approved by the Administrator for carrying on any specific business or businesses, including

industrial investment, financial aid or marketing and management expertise.

(2) Before approving any such scheme of collaboration by any society or societies

under sub-section (1), the Administrator shall have due regard to the following matters,

namely:—

(a) that the scheme is economically viable;

(b) that it can be implemented without, in any way, eroding the co-operative

character of the society or the societies concerned; and

society or societies concerned, or is in the public interest, and in the interest of the

co-operative movement in general.

CHAPTER III

MEMBERS AND THEIR RIGHTS AND LIABILITIES

25. (1) Subject to the provisions of section 28, no person shall be admitted as a member

of a society unless such person is,—

(a) an individual, who is competent to contract under the provisions of the

Indian Contract Act, 1872;

(b) a firm, company or any other body corporate constituted under any law for

the time being in force;

(d) the Central Government;

(e) the Administrator;

(f) a local authority;

(g) a public trust registered or deemed to have been registered under any law for

the time being in force;

(h) the depositor or the financial service user; or

(i) a group of the individuals eligible under clause (a), whether incorporated or

not and whether established or not by or under any law:

Provided that the provisions of clause (a) shall not apply to an individual seeking

admission to a society exclusively formed for the benefit of students of a school or a college:

Provided further that subject to such terms and conditions as may be laid down by the

Administrator by general or special order, a firm or company may be admitted as a member

only of a society which is a federal or urban society or which conducts or intends to conduct

an industrial undertaking:

Provided also that any firm or company, which is immediately before the commencement

of this Regulation a member of a society deemed to be registered under this Regulation, shall

have, subject to the other provisions of this Regulation, the right to continue to be such

member on and after such commencement.

(2) Every person seeking admission as a member of a society, if duly qualified for

membership of such society under the provisions of this Regulation, the rules and the

bye-laws of the society may make an application to the society for membership and the

society shall take decision on the application and shall communicate the decision within a

period of three months from the date of the receipt of the application.

Collaboration

by societies.

Person who

may become

member.

9 of 1872.

THE LAKSHADWEEP GAZETTE EXTRAORDINARY

(3) If the society does not communicate any decision to the applicant within three

months from the date of receipt of such application, the applicant shall be deemed to have

been admitted as a member of the society.

(4) If any question arises whether a person has become a deemed member or otherwise,

the same shall be decided by the Registrar after giving a reasonable opportunity of being

heard to all the concerned parties.

(5) Notwithstanding anything contained in sub-section (1), the Administrator may,

having regard to the fact that the interest of any person or class of persons engaged in or

carrying on any profession, business or employment conflicts or is likely to conflict with the

objects of any society or class of societies, by general or special order published in the

Official Gazette, declare that such person or such class of persons shall be disqualified from

being admitted, or for continuing, as member or members or shall be eligible for membership

only to a limited extent, of any society or class of societies, so long as such person or

persons are engaged in or carry on that profession, business or employment, and the question

whether a person is or is not so engaged in or carrying on any profession, business or

employment or whether a person belongs or does not belong to such class of persons as

declared under this sub-section and has or has not incurred a disqualification under this

sub-section shall be decided by the Registrar under section 11.

(6) Where the Registrar has decided under section 11 that a person has incurred a

disqualification under section 11, the Registrar may, after conducting enquiry, by order,

remove such person from the membership of the society; and such person shall cease to be

a member of the society.

26. (1) Where a person becomes a member of any society on his making a declaration

as required by the bye-laws of the society or otherwise and such declaration is found to be

false, then such person shall be disqualified to continue as a member of the society.

(2) Where a person continues as a member of the society notwithstanding the

disqualification incurred by him under sub-section (5) of section 25 or under sub-section (1),

he shall be removed from the society by the Registrar:

Provided that the Registrar shall, before making an order of removal give the person an

opportunity of being heard.

27. (1) No society shall without a sufficient cause, refuse admission to membership to

any person duly qualified under the provisions of this Regulation and its bye-laws.

(2) Where a society refuses to issue or accept the application for membership from an

eligible person for admission as a member, or the payment made by him in respect of

membership, such person may tender an application in such form as may be prescribed

together with payment in respect of membership, if any, to the Registrar, who shall forward

the application and the amount, if any, so paid, to the society concerned within thirty days

from the date of receipt of such application and the amount; and thereupon, if the society

fails to communicate any decision to the applicant within three months from the date of

receipt of such application and the amount by the society, the applicant shall be deemed to

have become a member of such society.

(3) If any question arises whether a person has become a deemed member or otherwise,

the same shall be decided by the Registrar after giving a reasonable opportunity of being

heard to all the concerned parties.

(4) Any person aggrieved by the decision of a society, refusing him admission to its

membership, within a period of two months from the date of the decision of the society may

appeal to the Registrar and every such appeal, as far as possible, be disposed of by the

Registrar within a period of three months from, the date of its receipt.

(5) The decision of the Registrar in appeal shall be final and binding on the parties.

Removal from

membership in

certain

circumstances.

Open

membership.

THE LAKSHADWEEP GAZETTE EXTRAORDINARY

28. (1) Notwithstanding anything contained in section 25, a society of such class as

may be prescribed may admit any person as a nominal, associate or sympathiser member:

Provided that the total number of associate and sympathiser members in a society

shall not exceed ten per cent. of the total number of members thereof.

(2) A nominal, associate or sympathiser member shall not be entitled to any share, in

any form whatsoever, in the assets or profits of the society:

Provided that subject to the provisions of sub-section (7) of section 32 a nominal,

associate or sympathiser member shall have such rights and privileges of a member and be

subject to such liabilities of a member, as may be specified in the bye-laws of the society.

29. A person shall cease to be a member of a society on his resignation from the

membership thereof being tendered in writing to the society and accepted by the society or

on the transfer of the whole of his share or interest in the society to another member, or on his

death, or removal or expulsion from the society:

Provided that the resignation of a person from the membership of a society, if such

member is not in debt to the society or is not a surety for an unpaid debt due to the society,

shall unless it is accepted earlier be deemed to have been accepted on the expiry of one

month from the date of tendering his resignation in writing to the society.

30. A member shall be entitled to exercise such rights as provided in this Regulation

and rules made thereunder and bye-laws:

Provided that no member shall exercise the rights, until he has made such payment to

the society in respect of membership, or acquired such interest in the society, as may be

prescribed and specified under the bye-laws of the society, from time to time:

Provided further that in case of increase in minimum contribution of member in share

capital to exercise right of membership, the society shall give a due notice of demand to the

members and give reasonable period to comply with.

31. It shall be the duty of every member of a society,—

(a) to attend at least, one general body meeting within a consecutive period of

five years:

Provided that nothing in this clause shall apply to the member whose absence

has been condoned by the general body of the society;

(b) to utilise minimum level of services at least once in a period of five consecutive

years as specified in the bye-laws of the society:

Provided that a member who does not attend at least one meeting of the general body

and does not utilise minimum level of services at least once in a period of five consecutive

years, as specified in the bye-laws of such society shall be classified as non-active member:

Provided further that when a society classifies a member as a non-active member, the

society shall, in the prescribed manner communicate such classification, to the concerned

member within a period of thirty days from the date of closing of the financial year:

Provided also that a non-active member who does not attend at least one meeting of

the general body and does not utilise minimum level of services as specified in the bye-laws,

in next five years from the date of classification as a non-active member, shall have no right

to vote:

Provided also that a member classified as a non-active member shall, on fulfilment of

the eligibility criteria as provided in this section be entitled to be re-classified as an active

member:

Provided also that if a question of a member being active or non-active member arises,

an appeal shall lie to the Registrar within a period of sixty days from the date of communication

of classification.

Nominal,

associate and

sympathiser

member.

Cessation of

membership.

No rights of

membership

to be exercised

till due

payments are

made.

Duties of

member.

THE LAKSHADWEEP GAZETTE EXTRAORDINARY

32. (1) No member of any society shall have more than one vote in its affairs and every

powers of right to vote shall be exercised personally, and not by proxy:

Provided that in the case of an equality of votes, the Chairperson shall have a casting

vote.

(2) Where a share of a society is held jointly by more than one person, each such

person shall have, in the absence of preceding person or persons, a right to vote:

Provided that such person shall be present and not be a minor:

Provided further that where the manner of voting is by ballot, all the joint holders of the

share may appoint one of them to vote on their behalf in the affairs of the society.

(3) A society which has invested any part of its funds in the shares of another society,

may appoint one of its members to vote on its behalf in the affairs of that other society, and

accordingly such member shall have the right to vote on behalf of the first society:

Provided that the first society shall not appoint any of its members who is also its paid

employee.

(4) A company or any other body corporate constituted under any law for the time

being in force which has invested any part of its funds in the shares of a society may appoint

any one of its directors or officers to vote on its behalf in the affairs of such society and

accordingly such director or officer shall have the right to vote on behalf of the company or

the body corporate, as the case may be.

(5) Where a firm has invested any part of its funds in the shares of a society, any one

of its partners appointed by the firm shall be entitled to vote in the affairs of the society on

behalf of the firm.

(6) A local authority or public trust which has invested any part of its funds in the

shares of a society may appoint any of its members or trustees to vote on its behalf in the

affairs of that society; and accordingly, such person shall have the right to vote on behalf of

the local authority or the public trust, as the case may be.

(7) No nominal or sympathiser member shall have the right to vote and no such

member shall be eligible to be a member of a Committee or for appointment as a representative

of the society on any other society.

(8) The person who has committed a default and remains as such defaulter in making

repayment of loan or interest thereon for a period of one year from the due date of repayment

of such loan or interest or instalment shall not be entitled to exercise voting rights of a

member of a society till all such repayments are made.

(9) No person shall exercise the right to vote at an election of a member of a Committee

in a financial year unless he is a member of the society for the whole of the financial year

preceding the financial year in which the election is being held:

Provided that no member society of a federal society shall exercise the right to vote at

an election of a member of a Committee unless such society has its last accounts audited in

class A, B or C.

(10) Nothing in sub-section (9) shall apply to the first election of a Committee to be

held immediately after the registration of a society.

(11) The voting rights of individual members of a federal society shall be such as may

be regulated by the rules and bye-laws of the society.

33. In any society, no member other than the Administrator or a society, shall hold

more than such portion not exceeding one-fifth of the total share capital of the society as

may be prescribed:

Voting powers

of member.

Restrictions

on holding of

shares.

THE LAKSHADWEEP GAZETTE EXTRAORDINARY

Provided that the Administrator may, by notification in the Official Gazette, specify in

respect of any class of societies a higher maximum than one-fifth of the share capital.

34. (1) Subject to the provisions of section 33 and sub-section (2) a transfer of, or

charge on, the share or interest of a member in the capital of a society shall be subject to such

conditions as may be prescribed.

(2) A member shall not transfer any share held by him, or his interest in the capital or

property of any society, or any part thereof, unless,—

(a) he has held such share or interest for not less than one year;

(b) the transfer or charge 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 society; and

(3) Notwithstanding anything contained in sub-sections (1) and (2), where a member

is allowed to resign, or is expelled, or ceases to be a member on account of his being

disqualified by this Regulation or by the rules made thereunder or by the bye-laws of the

society, the society may acquire the share or interest of such member in the share capital by

paying for it at the value determined in the manner prescribed:

Provided that the total payment of share capital of a society in any financial year for

such purposes does not exceed ten per cent. of the paid-up share capital of the society on

the last day of the financial year immediately preceding.

Explanation.—For the purposes of this section, the expression “financial year” means

the year ending on the 31st day of March or, in the case of any society or class of societies

the accounts of which are with the previous sanction of the Registrar balanced on any other

day, the year ending on such day.

(4) Where the Administrator is a member of a society, the restrictions contained in this

section shall not apply and that Administrator may, notwithstanding anything contained in

this Regulation, withdraw from the society its share capital at any time, after giving to the

society notice thereof of not less than three months.

35. (1) On the death of a member of a society, the society shall subject to the provisions

of sub-section (2), transfer his share or interest in the society to a person or persons nominated

by such member in accordance with the rules or, in the absence of such nomination to such

person as may appear to the Committee to be the heir or legal representative of such member.

(2) No such transfer shall be made unless such nominee, heir or legal representative, as

the case may be, is duly admitted as a member of the society.

(3) Notwithstanding anything contained in sub-section (2), any such nominee, heir or

legal representative, as the case may be, may require the society to pay to him the amount

equivalent to the value of the share or interest of the deceased member, in such manner as

may be prescribed.

(4) A 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.

(5) All transfers and payments duly made by a society in accordance with the provisions

of this section, shall be valid and effectual against any demand made upon the society by

any other person.

(6) Nothing in the foregoing provisions of this section or section 25 shall be construed

to prevent a minor or a person of unsound mind from acquiring by inheritance or otherwise,

any share or interest of a deceased member of a society, but his liability in consequence of

such acquisition shall be limited to his interest in the shares of the society and the unpaid

dividends as also the loan, stock, bonds, if any, and the interest earned on them which is

unpaid and he shall not have the right of voting.

Restrictions

on transfer of

shares or

interest.

Transfer of

interest on

death of

member.

THE LAKSHADWEEP GAZETTE EXTRAORDINARY

(7) A person under any such disability as is referred to in section 6 shall, on his

disability ceasing, furnish to the society a declaration of his willingness to become a member

and on receipt of such declaration the society, notwithstanding anything contained in this

section may, and if it is a co-operative housing society such society shall admit him as a

member if he is not otherwise disqualified and a person so admitted shall become entitled to

all the rights and privileges of a member and become subject to liabilities like any other

member of the society.

36. The share or interest of a member in the capital of a society, or in the loan stock

issued by a housing society, or in the funds raised by a society from its members by way of

savings deposits shall not be liable to attachment or sale under any decree or order of a court

for or in respect of any debt or liability incurred by the member and accordingly, neither a

receiver under the Provincial Insolvency Act, 1920, nor any such person or authority under

any corresponding law for the time being in force, shall be entitled to or have any claim on,

such share or interest.

37. (1) Every member of a society shall be entitled to inspect, free of cost, at the

society’s office during office hours, or any time fixed for the purpose by the society, the

Regulation, the rules, and the bye-laws, the last audited annual balance-sheet, annual audit

report, the profit and loss account, a list of the members of the Committee, a register of

members, the minutes of general meetings, and those portions of the books and records in

which his transactions with the society have been recorded.

(2) A society shall furnish to a member, on request in writing and on payment of such

fees as may be prescribed therefore, a copy of any of the documents mentioned in

sub-section (1).

(3) A society shall authorise any officer or officers as it deems necessary, for the

purpose of discharging the functions as provided under sub-sections (1) and (2).

38. (1) Where a person has ceased to be a member of a society under section 29,—

(a) his liability in respect of any debt due by him to the society and in respect of

any outstanding demand owing to the society by him shall continue as if he had not

ceased to be a member; and

(b) his liability for the debts of the society as they stood immediately before the

date of such cessation shall, save as otherwise provided in sub-section (2), continue

for a period of three years from such date as if he had not ceased to be a member:

Provided that the liability shall attach to the estate of such person, if such cessation

was due to his death or such person dies after his ceasing to be a member.

(2) Where a society is ordered to be wound up under any provisions of this Regulation,

then the liability under clause (b) of sub-section (1) of a person, who has ceased to be a

member thereof within three years immediately preceding the date of order of winding up,

shall continue, until the entire liquidation proceedings are completed.

39. Notwithstanding anything contained in the Provincial Insolvency Act, 1920, or

any corresponding law for the time being in force, the dues of a society from a member, in

insolvency proceedings against him, shall rank in order of priority next to his dues to the

Union territory Administration or to a local authority.

40. (1) A society may, by resolution passed by three-fourths majority of all the members

present and voting at a general meeting of members held for the purpose, expel a member for

acts which are detrimental to the proper working of the society:

Provided that, no resolution shall be,—

(i) valid, unless the member concerned is given an opportunity of representing

his case to the general body; and

Share or

interest not

liable to

attachment.

5 of 1920.

Rights of

members to

see books, etc.

Liability of

person who

has ceased to

be member.

Insolvency of

members.

5 of 1920.

Expulsion of

members.

THE LAKSHADWEEP GAZETTE EXTRAORDINARY

(ii) effective unless it is submitted to the Registrar for his approval and approved

by him:

Provided further that the approval or disapproval of the Registrar shall be communicated

to the society within a period of three months from the date of such submission.

(2) No member of a society who has been expelled under sub-section (1) shall be

eligible for re-admission as a member of that society, or for admission as a member of any

other society, for a period of two years from the date of such expulsion:

Provided that the Registrar may, in special circumstances, sanction the re-admission or

admission, within the said period, of any such member as a member of the said society or of

any other society, as the case may be.

CHAPTER IV

INCORPORATION, DUTIES AND PRIVILEGES OF SOCIETIES

41. A society on its registration shall be a body corporate by the name under which it

is registered, with perpetual succession and a common seal, and with power to acquire, hold

and dispose of property, to enter into contracts, to institute and defend suits and other legal

proceedings, and to do all such things as are necessary for the purpose for which it is

incorporated.

42. Every society shall have an address, registered in accordance with the rules, to

which all notices and communications may be sent; and the society shall send notice in

writing to the Registrar of any change in the said address, within thirty days thereof.

43. (1) Every society shall keep a register of its members, and enter therein the following

particulars, namely:—

(a) the name, address and occupation of each member;

(b) in the case of a society having share capital, the share held by each member;

(d) the date on which any person ceased to be a member; and

(e) such other particulars as may be prescribed:

Provided that where a society has by or under this Regulation, permitted a member to

transfer his share or interest on death to any person, the register shall also show against the

member concerned the name of the person entitled to the share or interest of the member, and

the date on which the nomination was recorded.

(2) The register shall be prima facie evidence of the date on which any person was

admitted to membership, and of the date on which he ceased to be a member.

44. (1) A copy of any entry in any book, register or list, regularly kept in the course of

business and in the possession of a society shall, if duly certified in such manner as may be

prescribed, be admissible in evidence of the existence of the entry, and shall be admitted as

evidence of the matters and transactions therein recorded in every case where, and to the

same extent to which, the original entry would, if produced, have been admissible to prove

such matter.

(2) In the case of such societies, as the Administrator may by general or special order

direct, no officer of a 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 sub-section (1) or to appear as a witness to prove the matters, transactions

and accounts therein recorded, except by order of the court or a Judge made for special

cause.

Societies to be

bodies

corporate.

Address of

societies.

members.

Admissibility

of copy of

entry as

evidence.

THE LAKSHADWEEP GAZETTE EXTRAORDINARY

45. Nothing in clauses (b) and (c) of sub-section (1) of section 17 of the Indian

Registration Act, 1908 shall, apply—

(a) to any instrument relating to shares in a society not being a housing society

notwithstanding that the assets of the society consist in whole or in part of immovable

property; or

(b) to any debenture issued by any society and not creating, declaring, assigning,

limiting or extinguishing any right, title or interest to or in immovable 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 immovable property, or any interest therein to trustees upon trust for the

benefit of the holders of such debentures; or

46. The Administrator may, in the case of any society or class of societies, by notification

in the Official Gazette, exempt—

(a) the stamp duty with which, under any law relating to stamp duty for the time

being in force, instruments executed by or on behalf of a society or by an officer or

member thereof, and relating to the business of the society, or any class of such

instruments, or awards of the Registrar or his nominee or board of nominees under this

Regulation, are respectively chargeable;

(b) any fee payable by or on behalf of a society under the law relating to the

registration of documents and to court-fees, for the time being in force; and

of a society under any law for the time being in force, which the Administrator is

competent to levy.

47. (1) A society shall receive deposits and loans from members and other persons,

only to such extent, and under such conditions, as may be prescribed, or specified by the

bye-laws of the society.

(2) If in the opinion of the Registrar it is necessary so to do for ensuring safety of the

funds obtained under sub-section (1), for proper utilisation of such funds in furtherance of

the objects of the society or societies concerned and for keeping them within the borrowing

limits as laid down in the rules and bye-laws, the Registrar may, by general or special order,

impose additional conditions on any society or class of societies, subject to which and the

extent up to which such society or such class of societies may receive deposits, issue

debentures or raise loans from any creditor other than a Central Bank.

48. (1) No society shall make a loan to any person other than a member, or on the

security of its own shares, or on the security of any person who is not a member:

Provided that subject to such rules as may be determined, a society may make loans to

another society.

(2) Notwithstanding anything contained in sub-section (1), a society may make a loan

to a depositor on the security of his deposit.

(3) Notwithstanding anything contained in this Regulation, no person or group of

persons other than a member or members shall be eligible to borrow from or make deposit in

a Primary Agricultural Credit Co-operative Society.

(4) If in the opinion of the Administrator, it is necessary or expedient in the interest of

the society or societies concerned to do so, the Administrator may, by general or special

order, prohibit, restrict or regulate the lending of money by any society or class of societies

on the security of any property:

Exemption

from

compulsory

registration of

instruments

relating to

shares and

debentures of

society.

Power to

exempt from

taxation.

Restrictions

on borrowing.

Restrictions

on making

loans.

16 of 1908.

THE LAKSHADWEEP GAZETTE EXTRAORDINARY

Provided that the Registrar may, for ensuring safety of the funds of the society or

societies concerned, for proper utilisation of such funds in furtherance of their objects and

for keeping them within the loan making limits laid down in the rules and bye-laws, by general

or special order, regulate further the extent, conditions and manner of making loans by any

society or class of societies to its members or other societies.

49. Save as provided in this Regulation, the transactions of a society with persons

other than members, shall be subject to such restrictions, if any, as may be prescribed.

50. In respect of any debt due to a society by any member thereof, the society shall

have a charge upon the share or interest of such member in the capital of the society, upon

the deposits of such member with the society and upon any dividend, rebate or profits

payable to such member; and the society may set off any sum credited or payable to such

member in or towards the payment of any such debt:

Provided that no co-operative bank shall have a charge upon any sum invested with it

by a society out of the provident fund referred to in section 62, and no co-operative bank

shall be entitled to set off any such sum towards any debts due from the society.

51. (1) Notwithstanding anything contained in any other law for the time being in

force, but subject to any prior claim of the Union territory Administration in respect of land

revenue or any money recoverable as land revenue and to the provisions of sections 60 and 61

of the Code of Civil Procedure, 1908,—

(a) any debt or outstanding demand, owing to a society by any member or a

person who has ceased to be a member shall be a first charge upon—

(i) the crops or other agricultural produce raised in whole or in part whether

with or without a loan taken from the society by him;

(ii) cattle, fodder for cattle, agricultural or industrial implements or

machinery, or raw materials for manufacture, or workshop, godown or place of

business, supplied to, or purchased by him in whole or in part, from any loan

whether in money or goods made to him by the society; and

(iii) any movable property which may have been hypothecated, pledged

or otherwise mortgaged by him with the society, and remaining in his custody;

(b) any outstanding demands or dues payable to a society by any member or a

person who has ceased to be a 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:

Provided that the prior claim of the Union territory Administration in respect of dues

other than land revenue, shall be restricted for the purpose of this sub-section to the assets

created by a member out of the funds in respect of which the Union territory Administration

has a claim.

(2) No property or interest in property, which is subject to a charge under sub-section (1)

shall be transferred in any manner without the previous permission of the society; and such

transfer shall be subject to such conditions, if any, as the society may determine.

(3) Any transfer made in contravention of sub-section (2) shall be void.

(4) Notwithstanding anything contained in sub-sections (2) and (3), a society, which

has as one of its objects the disposal of the produce of its members, may provide in its

bye-laws, or may otherwise contract with its members,—

(a) that every such member shall dispose of his produce through the society; and

Restrictions

on other

transactions

with non-

members.

Charge and set

off in respect

of share or

interest of

member.

Prior claim of

society.

5 of 1908.

THE LAKSHADWEEP GAZETTE EXTRAORDINARY

(b) that any member, who is found guilty of a breach of the bye-laws or of any

such contract, shall reimburse the society for any resultant loss, determined in such

manner as may be provided in the bye-laws.

52. (1) Notwithstanding anything contained in this Regulation or in any other law for

the time being in force,—

(a) any person who makes an application to a society of which he is a member,

for a loan shall, if he owns any land or has interest in any land as a tenant, make a

declaration in the prescribed form, such declaration shall state that the applicant thereby

creates a charge on such land or interest specified in the declaration for the payment of

the amount of the loan which the society may make to the member in pursuance of the

application, and for all future advances, if any, required by him which the society may

make to him as such member, subject to such maximum as may be determined by the

society, together with interest on such amount of the loan and advances;

(b) any person who has taken a loan from a society of which he is a member,

before the date of the coming into force of this Regulation, and who owns any land or

has interest in land as a tenant, and who has not already made such a declaration

before the aforesaid date shall, as soon as possible thereafter, make a declaration in the

form and to the effect referred to in clause (a); and no such person shall, unless and

until he has made such declaration, be entitled to exercise any right as a member of the

society;

a member, with the consent of the society in favour of which such charge is created;

(d) no member shall alienate the whole or any part of the land or interest therein,

specified in the declaration made under clause (a) or clause (b) until the whole amount

borrowed by the member together with interest thereon, is repaid in full:

Provided that it shall be lawful for a member to execute a mortgage bond in

favour of the Union territory Administration in respect of such land or any part thereof,

under the law for the time being in force, for the supply of water from a canal to such

land:

Provided further that if a part of the amount borrowed by a member is paid, the

society may, on an application from the member, release from the charge created under

the declaration made under clause (a) or clause (b) such part of the movable or

immovable property specified in the declaration as it may deem proper, with due regard

to the adequacy, of the security for the balance of the amount remaining due from or

outstanding against the member;

(e) any alienation made in contravention of the provisions of clause (d) shall be

void;

(f) subject to the prior claims of the Union territory Administration in respect of

land revenue or any money recoverable as land revenue, and to the charge, if any,

created under an award made under the law for the time being in force in any part of the

Union territory:

Provided that notwithstanding anything contained in the Land Revenue Code

or any law for the time being in force, the Record of Rights maintained thereunder shall

also include the particulars of every charge on land or interest created under a declaration

under clause (a) or clause (b).

(2) For the purposes of this section, the expression “society” means—

(i) any society, the majority of the members of which are agriculturists and the

primary object of which is to obtain credit for its members, or

Charge on

immovable

property of

members

borrowing

from certain

societies.

THE LAKSHADWEEP GAZETTE EXTRAORDINARY

(ii) any society, or any society of the class of societies, specified in this behalf

by the Union territory Administration by a general or special order.

53. (1) A member of a society may execute an agreement in favour of the society,

providing that his employer shall be competent to deduct from the salary or wages payable

to him by the employer, such amount as may be specified in the agreement, and to pay to the

society the amount so deducted in satisfaction of any debt or other demand of the society

against the member.

(2) On the execution of such agreement, the employer shall, if by a requisition in

writing so required by the society and so long as the society does not intimate that the whole

of such debt or demand has been paid, make the deduction in accordance with the agreement

notwithstanding anything to the contrary contained in the Payment of Wages Act, 1936 or

any corresponding law for the time being in force and pay the amount so deducted to the

society, within a period of fourteen days from the date on which such deduction is made as

if it were a part of the wages payable by him as required under the said Act on the day on

which he makes payment and in making such deduction and payment, it shall not be open to

the employer to question the validity or otherwise of such debt or demand.

(3) If after receipt of a requisition made under sub-section (2), the employer at any time

fails to deduct the amount specified in the requisition from the salary or wages payable to the

member concerned, or makes default in remitting the amount deducted to the society, the

employer shall be personally liable for the payment thereof; and the amount shall be recoverable

on behalf of the society from him as an arrear of land revenue on a certificate being issued by

the Registrar after holding such inquiry as he deems fit, and the amount so due shall rank in

priority in respect of such liability of the employer as wages in arrears and a certificate so

issued by the Registrar shall not be questioned in any court.

(4) Nothing contained in this section shall apply to persons employed in any railway

within the meaning of the Constitution, and in mines and oil fields.

CHAPTER V

AID TO SOCIETIES

54. (1) The Union territory Administration may subscribe directly to the share capital

of a society with limited liability.

(2) The share capital subscribed by the Union territory Administration under

sub-section (1) shall not be returned to the Union territory Administration by a society

except with the previous approval of the Union territory Administration.

55. Notwithstanding anything contained in any law for the time being in force, but

subject to such conditions as the Union territory Administration may, by general or special

order, specify in this behalf, it may,—

(a) give loans to a society;

(b) guarantee the payment of the principal of debentures issued by a society, or

of interest thereon, or both, or the repayment of the share capital of a society to its

members, or the payment of dividends thereon at such rates as may be specified by the

Union territory Administration;

means given by a co-operative bank to a society;

(d) guarantee the repayment of the principal of and payment of interest on, loans

and advances given by the Reserve Bank of India, or the Industrial Finance Corporation

of India, or any other authority constituted under any law for the time being in force; or

(e) provide financial assistance, in any other form including subsidies, to a

society.

Deduction

from salary to

meet society's

claim in

certain cases.

4 of 1936.

Direct

partnership of

Union

territory

Administration

in societies.

Other forms

of aid to

societies.

THE LAKSHADWEEP GAZETTE EXTRAORDINARY

CHAPTER VI

PROPERTY AND FUNDS OF SOCIETIES

56. (1) No part of the funds or assets of a society, other than the dividend equalisation

fund, if any, and the net profits thereof, shall be paid by way of rebate or dividend or

otherwise distributed, to its members:

Provided that in the case of a member, who is also a salaried employee of the society

payment on such scale as may be laid down by the bye-laws may be made to him for work

done as such employee.

(2) No honorarium shall be paid out of the funds and assets of a society other than the

net profits and such honorarium shall not exceed the prescribed limit.

57. (1) A society earning profit, shall calculate its annual net profits by deducting from

the gross profits for the year, all accrued interest which is overdue for more than three

months, establishment charges, contributions, if any, towards the provident fund and gratuity

fund of its employees, interest payable on loan and deposits, audit fees, working expenses

including repairs, rents, taxes and depreciation, and after providing for or writing off bad

debts and losses not adjusted against any fund created out of profits.

(2) A society may, however, add to the net profits for the year, interest accrued in the

preceding years, but actually recovered during the year and the net profits thus arrived at

together with the amount of profits brought forwarded from the previous year shall be

available for appropriation.

(3) A society may appropriate its profits to its reserve fund or any other fund created

by it to payment of dividends to members on their shares, to contribution to the educational

fund as the Administrator may, by notification in the Official Gazette, specify to the payment

of rebate on the basis of support received from members and persons who are not members

to its business and subject to the prescribed conditions to payment of honorarium, and to

any other purpose which may be specified in the rules or bye-laws:

Provided that no part of the profits shall be appropriated except with the approval of

the annual general meeting and in conformity with this Regulation, rules and bye-laws.

58. (1) Every society which does, or can, derive a profit from its transactions, shall

maintain a reserve fund.

(2) At least one-fourth of the net profits of the society each year, shall be carried to, the

reserve fund; and such reserve fund may be used in the business of the society or may,

subject to the provisions of section 63, be invested, as the Administrator may by general or

special order direct, or may, with the previous sanction of the Administrator, be used in part

for some public purpose likely to promote the objects of this Regulation, or for some such

purpose of the Union territory or of local interest:

Provided that if the Registrar is satisfied that financial condition of the society is such

that it is unable to carry to its reserve fund an amount up to the aforesaid limit of one-fourth

of its net profits, he may by order in writing, for such period as he may specify in the order,

fix for the society a limit lower than the aforesaid limit but not lower than one-tenth of its net

profits.

(3) Where the reserve fund of a society exceeds its authorised share capital, then,

notwithstanding anything contained in sub-section (1), the society may, with the previous

permission of the Registrar carry to its reserve fund each year an amount which may be less

than one-fourth but not less than one-tenth of its net profit.

59. No society shall pay dividend to its members at a rate exceeding fifteen per cent.

except with the prior sanction of the Registrar.

60. (1) Every society which declares, out of the current year’s profit, a dividend to its

members, shall contribute towards the education fund at such rate as may be prescribed.

Fund not to be

divided.

Appropriation

of profits.

Reserve fund.

Restrictions

on dividend.

Contribution

to education

fund.

THE LAKSHADWEEP GAZETTE EXTRAORDINARY

(2) No society, liable to contribute towards the education fund, shall pay a dividend to its

members, unless the said contribution is made to the Registrar within two months from the date

on which its accounts are adopted by the general body of members at its annual general meeting.

(3) An officer who wilfully fails to comply with the requirements of this section, shall

be personally liable for making good the amount to the Registrar.

61. After providing for the reserve fund as provided in section 58, for the educational

fund as provided in section 60, a society may set aside a sum not exceeding twenty per cent.

of its net profits, and utilise from time to time, with the approval of the Registrar, whole or part

of such sum in contributing to any prescribed co-operative purpose, or to any charitable

purpose within the meaning of section 2 of the Charitable Endowments Act, 1890, or to any

other public purpose.

62. A society may invest, or deposit its fund,—

(a) in a Central Bank, or the State Co-operative Bank;

(b) in the State Bank of India or in any nationalised bank;

(d) in any of the securities specified in section 20 of the Indian Trusts Act, 1882;

(e) in shares, or security bonds, or debentures, issued by any other society with

limited liability;

(f) in any land or building;

(g) in Employee’s provident fund; or

(h) in any corporation owned or controlled by the Union territory Administration,

with the prior approval of the Administrator subject to such terms and conditions as may be

prescribed in this behalf.

Explanation.—For the purposes of this section, the expression “nationalised bank”

means a corresponding new bank constituted under sub-section (1) of section 3 of the

Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 and the Banking

Companies (Acquisition and Transfer of Undertakings) Act, 1980.

63. (1) No expenditure from the funds of a society shall be incurred for the purpose of

defraying the costs of any proceedings filed or taken by or against any officer of the society

in his personal capacity under any section of this Regulation.

(2) If any question arises whether any expenditure can be so incurred or not, such

question shall be referred to and decided by the Registrar, and his decision shall be final.

(3) If any person incurs expenditure in violation of sub-section (1), the Registrar shall

direct the person to repay the amount to the society within one month and where such

person fails to repay the amount as directed, such amount shall, on a certificate issued by the

Registrar, be recoverable as arrears of land revenue.

(4) The person against whom action is taken by the Registrar under sub-section (3)

shall be disqualified to continue to be the officer of any society or to be officer of any society

at any next election including any next bye-election held immediately after the expiration of

a period of one month during which such person has failed to pay the amount referred to in

sub-section (3).

CHAPTER VII

MANAGEMENT OF SOCIETIES

64. Subject to the provisions in this Regulation and the rules made thereunder, the

final authority of every society shall vest in the general body of members in general meeting,

summoned in such a manner as may be specified in the bye-laws:

Contribution

to public

purpose.

Investments

of funds.

5 of 1970.

40 of 1980.

Funds not to

be utilised for

certain

proceedings

filed or taken

by or against

officers in

personal

capacities.

Final

authority of

society.

6 of 1890.

2 of 1882.

THE LAKSHADWEEP GAZETTE EXTRAORDINARY

Provided that, where the bye-laws of a society provide for the election of delegates of

such members, the final authority may vest in the delegates of such members elected in the

prescribed manner, and assembled in the general meeting.

65. (1) The management of every society shall vest in a Committee, constituted in

accordance with this Regulation, the rules and bye-laws, which shall exercise such powers

and perform such duties as may be conferred or imposed on it respectively by this Regulation,

the rules and the bye-laws.

(2) Except as otherwise provided herein, the Managing Committee of a society, which

is not an apex society, shall consist of, among others, such number of elected members not

exceeding twenty-one.

Explanation.—For the purposes of this sub-section, the expression “apex society”

means a society,—

(a) the area of operation of which extends to the whole of the Union territory of

Lakshadweep;

(b) the main object of which is to promote the principal objects of the societies

affiliated to it as members and to provide for the facilities and services to them; and

(3) There shall be reserved two seats for women in the Managing Committee of every

society consisting of individuals as members and having members from such class or category

of persons as may be prescribed:

Provided that one seat shall be reserved for the persons who are small farmers and

marginal farmers.

(4) Every member of a society who is entitled to vote shall be eligible for appointment

as a member of a Committee thereof if—

(a) he is continuously a member of the society for a period not less than three

years and continues to be such member and not in default in respect of any loan taken

by him from any co-operative society, co-operative bank or any other financial

institution;

(b) he has any interest directly or indirectly in any subsisting contract made with

the society or in any property sold or purchased by the society or any other transaction

of the society except in any investment made in or any loan taken from the society;

(d) he is not held responsible under section 80;

(e) no order for recovery of costs is made against him by a magistrate under

section 90;

(f) no order is made against him under section 92;

(g) he is not found guilty of any of the offences under section 120 of this

Regulation or any offence section 403 of the Indian Penal Code in respect of the

property of any society.

(5) A member of the Committee who incurs any of the disqualifications specified above

shall vacate the office and if he does not vacate such office, he shall be removed by the

Registrar as such member:

Provided that the Registrar shall before making such order of removal, give the person

concerned an opportunity of being heard.

Committee,

qualifications,

dis-

qualifications

to become

member of

Committee,

powers and

functions of

Committee.

45 of 1860.

THE LAKSHADWEEP GAZETTE EXTRAORDINARY

(6) Notwithstanding anything contained in sub-section (4),—

(a) in case of societies dispensing with credit, no person who does money

lending business shall be eligible for appointment as a member of the Managing

Committee of the society; and

(b) a member of a society, who carries on business of the kind carried on by the

societies of which he is the member, shall not be eligible to be the member of any

Committee of that society without the sanction of the Registrar.

(7) Where any person becomes a member of a Committee of a society in contravention

of sub-section (6) he shall be removed from office as a member of such Committee by the

Registrar:

Provided that the Registrar shall, before making order of removal, give the person

concerned an opportunity of being heard.

(8) The term of the elected members of the Managing Committee and its office bearers

shall be five years from the date of election:

Provided that the term of office bearers shall be two and a half years from the date of

election of Managing Committee for the co-operative banks and federal societies:

Provided further that the Managing Committee shall fill up a casual vacancy in the

Committee by nomination out of the same class or categories of members in respect of which

the casual vacancy has arisen within sixty days from the date of such vacancy, if the remaining

term of office of the Managing Committee is less than half of its original term.

(9) The elected members of the Managing Committee and its office bearers shall cease

to hold the office on the date of expiry of their term.

(10) The office bearers of the Managing Committee of the co-operative banks and

federal societies shall be eligible for re-election.

(11) The society shall co-opt persons having experience in the field of banking,

management, finance or specialisation in any other field relating to the objects and activities

undertaken by the society as the members of the Managing Committee:

Provided that the number of such co-opted members shall not exceed two in addition

to the twenty-one members as specified in sub-section (2).

(12) The co-opted members as aforesaid shall not have the right to vote in any election

of the society in their capacity as such members or to be eligible to be elected as office

bearers of the Managing Committee.

(13) In case, where there are functional directors of a society, they shall also be

members of the Managing Committee and such members shall be excluded for the purpose of

counting the total number of members of such Managing Committee.

Explanation.—For the purposes of this sub-section, the expression “functional

director” means and includes a Managing Director or a Chief Executive Officer, by whatever

designation called, or any ex officio member or any of the Head of the Department of the

concerned society, nominated by the Committee.

66. (1) Where in respect of any society—

(i) a new Committee of Management is, for any reason whatsoever, not elected

before the expiry of the term of office of members of a Committee of Management of

such society;

(ii) a new Committee has been elected and not functioning within a period of

fifteen days (not being a Committee referred to in section 79);

(iii) there is a stalemate in the constitution of the Committee and if such Committee

has ceased to function and a vacuum is created in the Management;

Appointment

of custodian in

certain

circumstances.

THE LAKSHADWEEP GAZETTE EXTRAORDINARY

(iv) any Committee is prevented from entering upon office;

(v) a new Committee has failed to enter upon office on the date on which the term

of office of the existing Committee expired; or

(vi) where more than one group of persons in a society is claiming to be elected

as the Committee members and proceedings in respect thereof have been filed,

the Registrar shall, by an order in writing, appoint a person or a Committee of persons to be

the custodian of the society to manage the affairs of the society for a period of one year or

until a new Committee of Management is elected or, as the case may be, starts functioning:

Provided that before making such order, the Registrar shall publish a notice on the

notice board at the head office of the society, inviting objections and suggestions with

respect to the proposed order within a period specified in the notice and consider all objections

and suggestions received by him within that period:

Provided further that it shall not be necessary to publish such notice in any case where

Registrar is satisfied that immediate action is required to be taken or that it is not reasonably

practical to publish such notice.

(2) The custodian shall arrange to hold election of such society within a period of one

year and the Committee shall be constituted before the expiration of that period.

(3) The custodian so appointed shall, subject to the control of the Registrar and to

such instructions as he may from time to time give, have powers to exercise all or any of the

functions of the Committee and take all such action as may be required in the interest of the

society.

(4) All acts done or purported to be done by the custodian during the period when the

affairs of the society are carried on by such custodian, shall be binding on the new Committee

of Management.

67. (1) A President, Vice-President, Chairperson, Vice-Chairperson, Secretary, Treasurer

or any other officer by whatever designation called, who holds office by virtue of his election

to that office, shall cease to be the President, Vice-President, Chairperson, Vice-Chairperson,

Secretary, Treasurer or such officer, as the case may be, if a motion of no-confidence is

carried at a meeting of the Committee by the majority of not less than two-thirds of the total

number of members present at the meeting and voting, and such office shall thereupon be

deemed to be vacant.

(2) The requisition for such special meeting shall be signed by not less than one-third

of the total number of members of the Committee who are entitled to vote, shall be delivered

to the Registrar in respect of a Committee of a society which has the Registrar as its member

and also in any other cases to the Registrar:

Provided that no such requisition for a special meeting shall be made within a period of

six months from the date on which any of the officers referred to in sub-section (1) has

entered upon his office.

(3) The Registrar upon whom the requisition has been made under sub-section (2)

shall convene a special meeting of the Committee within a period of thirty days from the date

of receipt of such requisition.

(4) The meeting shall be presided over by such officer as authorised by the Registrar

and the officer shall, when presiding over such meeting, have the same powers as the

President or Chairperson when presiding over such meeting, but shall not have the right to

vote:

Provided that the voting shall be by secret ballot of votes.

(5) The meeting called under this section shall not, for any reason, be adjourned.

Motion of

no-confidence.

THE LAKSHADWEEP GAZETTE EXTRAORDINARY

(6) If such motion of no-confidence is rejected, no fresh motion of no-confidence shall

be brought within a period of six months from the date of such rejection of the motion.

68. (1) The superintendence, direction and control of the preparation of the electoral

rolls for, and the conduct of, all elections to a society shall vest in the authority called as the

“Co-operative Election Authority”, as may be constituted by the Administrator in that behalf.

(2) Every general election of the members of the Committee and election of the office-

bearers of a society including any casual vacancy, to the extent applicable, shall be held as

per the procedure prescribed.

(3) The Co-operative Election Authority shall consist of a Co-operative Election Officer,

appointed by the Administrator from officers of the Union territory who fulfills such

qualification and experience as may be prescribed.

(4) The Administrator may appoint any employee of the Union territory, as a Secretary

to the Co-operative Election Authority.

(5) The Administrator, after consultation with the Co-operative Election Officer, may

provide the officers and employees for his office, to assist him in performing his functions

under this Regulation.

(6) The Administrator may, when so requested by the Co-operative Election Officer,

make available to the Co-operative Election Authority such staff as may be necessary

for discharge of the functions conferred on the Co-operative Election Authority by

sub-section (1).

(7) Notwithstanding anything contained in any law for the time being in force, the

election of the Committee of each society shall be conducted by the Co-operative Election

Authority one month before the expiry of the term of the existing Committee so as to ensure

that the newly elected members of the Committee assume office immediately on the expiry of

the office of the members of the outgoing Committee.

(8) The Co-operative Election Authority shall hold the elections of the society or class

of societies as per the procedure, guidelines and the manner, including using the latest

technology and expertise, as may be prescribed:

Provided that the Administrator may, considering the objects of the society, class of

societies, area of operation and norms of business and for proper management and interest

of members, may by general or special order, classify the societies in such manner as may be

prescribed.

(9) The Co-operative Election Authority shall conduct elections to the Committee and

also to the office of President or Chairperson, Vice-President or Vice-Chairperson and such

other office bearers as are required to be elected as per the bye-laws of the society, within

fifteen days from the date of constitution of the Committee after a general election.

(10) There shall be an Election Fund maintained at level of the Co-operative Election

Authority and every society shall deposit in advance, the estimated amount of expenditure

on its election, as may be prescribed and required by the Co-operative Election Authority

towards the Election Fund. The Co-operative Election Authority shall incur the necessary

expenses, for the conduct of the elections of the societies, including the election of the office

bearers, from the said Fund contributed by the concerned society.

(11) The expenses of the holding of any election, including the payment of travelling

allowances, daily allowances and remuneration, if any, to the persons appointed to exercise

the powers and perform the duties in respect of the election, shall be incurred from the said

Fund and the expenditure shall be made in the manner prescribed and the Registrar, on

requisition by the Co-operative Election Authority, shall recover expenses of holding election

from any such society or class of societies as may be prescribed in the rules:

Co-operative

Election

Authority.

THE LAKSHADWEEP GAZETTE EXTRAORDINARY

Provided that if any society fails to pay the election expenses, the Registrar may issue

the recovery certificate for recovery of the amount due and such amount shall be recovered

as arrears of land revenue.

(12) The Committee of every co-operative society shall,—

(a) inform the Registrar of co-operative societies about the expiry of its term of

office at least six months before the date of expiry of such term;

(b) inform any casual vacancy occurred in the Committee or its office bearers,

within fifteen days of the occurrence of such vacancy;

Authority may require as per the calendar specified by it; and

(d) provide all necessary help, assistance and co-operation for the smooth

preparation of electoral rolls for the conduct of elections.

69. Where due to scarcity, drought, flood, fire or any other natural calamity or rainy

season or any election programme, of the Council or House of the People or a local authority,

coinciding with the election programme of any society or class of societies, in the opinion of

the Administrator, it is not in the public interest to hold elections to any society or class of

societies, the Administrator may, notwithstanding anything contained in this Regulation or

the rules or bye-laws made thereunder, or any other law for the time being in force, for

reasons to be recorded in writing, by general or special order, postpone the election of any

society or class of societies, for a period not exceeding six months at a time, which period

may further be extended so, however, that, the total period shall not exceed one year in the

aggregate.

70. If a person is elected to more than one seat on the Committee then, unless within a

period of seven days from the date of declaration of the result of the election he resigns all

but one of the seats by writing under his hand addressed to the Election Officer, or as the

case may be, the officer authorised by the Co-operative Election Authority in this regard, all

the seats shall become vacant and on receipt of such resignation or on the seats becoming

so vacant, the Election Officer, or as the case may be, the officer authorised by the

Co-operative Election Authority in this regard shall cause to hold the election for filling the

vacancy.

71. (1) It shall be the duty of the Committee to intimate to the Co-operative Election

Authority, for holding of its election, before expiry of its term.

(2) Where there is a wilful failure on the part of the Committee to intimate to the

Co-operative Election Authority as required under sub-section (1) for holding of its election,

and for any reason whatsoever, election of the members of the Committee could not be held

before the expiry of its term then the members thereof shall cease to hold their office and in

such a situation the Registrar shall take action as contemplated under section 66.

(3) On taking such action under sub-section (2), the custodian so appointed shall

intimate to the Co-operative Election Authority for holding of the election with immediate

effect and assist to make necessary arrangement for holding such election within the period

specified.

72. (1) On the election of a new Committee and its Chairperson, the retiring Chairperson

in whose place the new Chairperson is elected shall hand over charge of the office of the

Committee and all papers and property, if any, of the society in possession of the Committee

or any officer thereof, to the new Chairperson of the Committee.

(2) If the retiring Chairperson fails or refuses to hand over charge or to hand over the

papers and property of the society as aforesaid, the Registrar, or any person empowered by

him in this behalf, may by order in writing direct him to forthwith hand over such charge and

property and the Registrar may, on the retiring Chairperson’s failure to comply with such

Power of

Administrator

to postpone

election.

Election to

more than one

seat on

Committee of

society.

Responsibility

of Committee

or Special

Officer or

Custodian to

intimate and

assist to

arrange for

election,

before expiry

of term.

Handing over

records and

property to

new

Chairperson

on election.

THE LAKSHADWEEP GAZETTE EXTRAORDINARY

direction, make order for seizing the records and property and handing them over to the new

Chairperson, in the manner provided in section 83.

73. Notwithstanding anything contained in the bye-laws of a society—

(1) no society shall prescribe nor a member of a Committee thereof shall be

entitled to sitting fees, and travelling and daily allowances while touring on public

business, at rates exceeding such rates as may be prescribed, and

(2) a member of a Committee of a society shall, in relation to touring on public

business be subject to such conditions and limitations as may be prescribed and

different rates, conditions and limitations may be prescribed in relation to members of

Committees of different societies or class of societies.

Explanation.—For the purposes of this section, the expression “touring on public

business” includes—

(a) a journey for attending any meeting of the Committee;

(b) a journey in connection with the performance of any other functions of the

Committee;

(i) the Central Government;

(ii) the State Government;

(iii) the Union territory Administration;

(iv) any co-operative institution; or

(v) such other institutions recognised by the Union territory Administration

in this behalf.

74. (1) If, in the opinion of the Registrar, any officer makes persistent default or is

negligent in performance of the duties imposed on him by this Regulation or the rules or the

bye-laws made thereunder or does anything which is prejudicial to the interests of the

society or where he stands disqualified by or under this Regulation, the Registrar may, after

giving the officer an opportunity of being heard, by order remove such officer and direct the

society to elect or appoint a person or a qualified member in the vacancy caused by such

removal and the officer so elected or appointed shall hold office so long only as the officer in

whose place he is elected or appointed would have held if the vacancy had not occurred.

(2) The Registrar may, by order, direct that the officer so removed shall be disqualified

to hold or to contest election for any office in the society from which he is removed and in

any other society for a period not exceeding six years from the date of the order and such

officer shall stand disqualified accordingly.

75. (1) Every society shall convene the general meeting of its members within a period

of six months of closure of the financial year to transaction the business as provided under

this Regulation:

Provided that if such meeting is not called by the society within such period, the

Registrar or any person authorised by him in that behalf may in the prescribed manner, call

such meeting which shall be deemed to be a general meeting duly called by the society.

(2) At every annual general meeting of a society, the Committee shall lay before the

society a balance-sheet and profit and loss account for the year in the manner prescribed by

the Registrar by general or special order for any class or classes of societies.

Explanation.—For the purposes of this section, it is hereby clarified that in the case of

a society not carrying on business for profit, an income and expenditure account shall be

placed before the society at the annual general meeting instead of profit and loss account;

Restriction on

rates of sitting

fees and

travelling and

daily

allowances of

members of

Committee.

Removal of

officer.

Annual

general

meeting.

THE LAKSHADWEEP GAZETTE EXTRAORDINARY

and all references to profit and loss account, and to “profit” or loss in this Regulation, shall

be construed in relation to such society as references respectively to the “excess of income

over expenditure” and “excess of expenditure over income”.

(3) There shall be attached to every balance sheet laid before the society in general

meeting, a report by its Committee, with respect to—

(a) the state of the society’s affairs;

(b) the amounts, if any, which it proposes to carry to any reserve either in such

balance sheet, or any specific balance sheet; and

bonus, or honoraria to honorary workers.

(4) The Committee’s report shall also deal in any changes in the nature of the society’s

business which have occurred during the year for which the accounts are drawn up and such

report shall be signed by its Chairperson, or any other member authorised to sign on behalf

of the Committee.

(5) At every annual general meeting, the balance sheet, the profit and loss account, the

auditor’s report and the Committee’s report, shall be placed for adoption, and such other

business shall be transacted as may be laid down in the bye-laws and of which due notice

has been given.

(6) Where any officer of the society, whose duty was to call a general meeting within

the period specified in sub-section (1) or to comply with sub-section (2), (3) or (4) fails

without reasonable excuse to call such meeting or to comply with such sub-sections, then—

(i) if such officer is a servant of the society, the Registrar may by an order in

writing impose on him a penalty of an amount not exceeding ten thousand rupees; and

(ii) if such officer is not a servant of the society, the Registrar may by an order in

writing declare such officer to be disqualified for being an officer or a member of the

Committee of the society or for being elected or appointed to any office of the society,

for such period not exceeding six years as he may specify in the order:

Provided that before making an order under this sub-section, the Registrar shall give

or cause to be given, a reasonable opportunity to the officer to show cause against the act

proposed to be taken in regard to him.

76. (1) A special general meeting may be called at any time by a majority of the Committee,

and shall be called by the Committee within one month—

(i) on a requisition in writing of one-fifths of the members of the society or of

members the number of which is specified in the bye-laws for the purpose, whichever

is lower;

(ii) on a requisition from the Registrar; or

(iii) in the case of a society, which is a member of a federal society, on a requisition

from the Committee of such federal society.

(2) Where any officer or a member of the Committee, whose duty was to call such

meeting, without reasonable excuse, fails to call such meeting, the Registrar may by order

declare such officer or member disqualified for being a member of the Committee for such

period not exceeding six years, as he may specify in such order and if the officer is an

employee of the society, he may impose on him a penalty not exceeding ten thousand rupees:

Provided that before making an order under this sub-section, the Registrar shall give,

or cause to be given, a reasonable opportunity to the person concerned of showing cause

against the action proposed to be taken in regard to him.

Special general

meeting.

THE LAKSHADWEEP GAZETTE EXTRAORDINARY

(3) If a special general meeting of a society is not called in accordance with the requisition

referred to in sub-section (1), the Registrar or any person authorised by him in that behalf,

shall have power to call such meeting, which shall be deemed to be a meeting duly called by

the Committee.

(4) The Registrar shall have power to order that the expenditure incurred in calling a

meeting under sub-section (3) shall be paid out of the funds of the society or by such person

or persons who, in the opinion of the Registrar, were responsible for refusal or failure to

convene the meeting.

77. (1) No act of a society or a Committee or any officer, done in good faith in pursuance

of the business of the society shall be deemed to be invalid by reason only of some defect

subsequently discovered in the organisation of the society, or in the constitution of the

Committee, or in the appointment, or election of an officer, or on the ground that such officer

was disqualified for his office.

(2) No act done in good faith by any person appointed under this Regulation, the rules

or bye-laws made thereunder shall be invalid merely by reason of the fact that his appointment

has been cancelled by or in consequence of any order subsequently passed thereunder.

(3) The Registrar shall decide whether any act was done in good faith in pursuance of

the business of the society and his decision thereon shall be final.

78. (1) Where the Union territory Administration has subscribed to the share capital

of a society, directly or through another society, or has guaranteed the repayment of the

principal and payment of interest on, debentures issued or loans raised by a society, the

Union territory Administration shall, notwithstanding anything contained in the bye-laws of

such society, have the right to nominate three representatives on the Committee of such

society, in such manner as may be determined by the Union territory Administration from

time to time.

(2) The members so nominated shall hold office during the pleasure of the Union

territory Administration, or for such period as may be specified in the order by which they are

appointed, and any such member on assuming office shall have all rights, duties,

responsibilities and liabilities as if he were a member of the Committee duly elected.

Explanation.— For the purposes of this clause, it is hereby clarified that a nomination

of the Registrar or his nominee on the Committee of a society under the bye-laws of such

society shall not be construed as nomination of the representative on that Committee in

exercise of the right of the Union territory Administration under this sub-section.

(3) Where the Union territory Administration is of the opinion that having regard to

the public interest involved in the operation of a society it is necessary or expedient so to do,

it may nominate its representatives on the Committee of such society as if the Union territory

Administration had subscribed to the share capital of the society and the provisions of

sub-sections (1) and (2) shall, so far as may be apply to such nomination.

79. (1) Where on the expiry of the term of office of the members of any Committee of

Management nominated by the Administrator, or the Registrar, the Administrator or, as the

case may be, the Registrar is of the opinion that it is necessary or expedient so to do, it or he

may, by an order published in the Official Gazette,—

(a) extend the term of office of the members of the said Committee of the

Management; or

(b) appoint a person or a Committee of persons to be the custodian of the

society for such period not exceeding two years in the aggregate or until a new

Committee of Management is elected, whichever is earlier.

(2) The custodian so appointed shall, subject to the control of the Registrar and to

such instructions as he may, from time to time, give, have powers to exercise all or any of the

Acts of

societies, etc.,

not to be

invalidated by

certain

defects.

Power to

appoint

nominee of

Union

territory

Administration.

Extension of

term of

nominated

Committee or

appointment

of custodian.

THE LAKSHADWEEP GAZETTE EXTRAORDINARY

functions of the Committee, and take all such actions as may be required in the interests of

the society.

(3) All acts done or purported to be done by the custodian during the period when the

affairs of the society are carried on by the custodian appointed under sub-section (1) shall

be binding on the new Committee of Management.

80. (1) If, in respect of a Committee of a society having the Registrar as its member, the

Administrator and in respect of a Committee of a society which does not have the Registrar

as its member, the Registrar, is of the opinion that—

(i) the Committee persistently makes default;

(ii) the Committee is negligent in the performance of its duties imposed on it by

or under this Regulation or the rules made thereunder or bye-laws; or

(iii) the Committee has committed any act prejudicial to the interest of the society

or its members,

the Administrator or, as the case may be, the Registrar, after giving the Committee an

opportunity of being heard, within fifteen days from the date of issue of notice, by an order

in writing, supersede the Committee and appoint—

(a) a Committee, consisting of one or more members of the society, not being the

members of the Committee superseded under this sub-section; or

(b) a special officer from amongst the officers of the Union territory

Administration,

to manage the affairs of the society for a period not exceeding one year as may be specified

in the order, which period may, at the discretion of the Administrator or the Registrar, as the

case may be, be extended from time to time, so, however, the term of the Committee or the

special officer shall be, two years in aggregate.

(2) Before passing an order under sub-section (1), the Administrator or the Registrar,

as the case may be, shall consult the co-operative financing institution if such society is

indebted to it.

(3) The Committee or special officer so appointed shall, subject to such instructions

and control of the Administrator or the Registrar, as the case may be, have power to exercise

all or any of the functions of the Committee or of any officer of the society, and take all such

action as may be required in the interests of the society.

(4) The Committee or special officer appointed under sub-section (1) shall arrange

to hold the election of the Committee of the society at such time as directed by the

Administrator or the Registrar, as the case may be, but not later than the period as specified

in sub-section (1).

(5) All acts done or purported to be done by the Committee or special officer during the

period during which the affairs of the society are carried on by the Committee or special

officer appointed under sub-section (1), shall be binding on the new Committee.

(6) The remuneration of members of the Committee or special officer appointed under

sub-section (1) shall be such as may be prescribed and the same shall be paid from the fund

of the society.

(7) The members of the Committee which has been superseded under sub-section (1),

shall not be eligible to become a member of the Committee of any society for a period of six

years from the date of supersession of such Committee.

81. (1) It shall be the duty of every society to keep the prescribed books of accounts

with respect to all sums of money received and expended by the society, and the matters in

respect of which the receipt and expenditure take place, all sales and purchases of goods by

the society, and the assets and liabilities of the society, and to furnish such statements and

Supersession

of a

Committee

and

appointment

of a

Committee or

special officer.

Registrar's

power to

enforce

performance

of obligation.

THE LAKSHADWEEP GAZETTE EXTRAORDINARY

returns and such records to the Registrar as the Registrar may by order direct from time to

time and the officer or officers of the society shall be bound to comply with the order within

the period specified therein.

(2) Where any society is required to take any action under this Regulation, the rules or

the bye-laws made thereunder, or in compliance with an order made under sub-section (1)

and such action is not taken—

(a) within the time provided in this Regulation, the rules or the bye-laws, or the

order, as the case may be; or

(b) where no time is so provided, within such time, having regard to the nature

and extent of the action to be taken, as the Registrar may specify by notice in writing,

the Registrar may himself, or through a person authorised by him, take such action, at the

expense of the society and such expense shall be recoverable from the society as if it were an

arrear of land revenue.

(3) Where the Registrar takes action under sub-section (2), he may call upon any

officer of the society whom he considers to be responsible for not complying with the

provisions of this Regulation, the rules or the bye-laws made thereunder, or the order made

under sub section (1), and, after giving him an opportunity of being heard, may require him

to pay to the society the expenses paid or payable by it to the Union territory Administration

as a result of his failure to take action, and to pay to the assets of the society such sum not

exceeding one hundred rupees for each day until the directions of the Registrar are carried

out.

82. (1) If the Union territory Administration, on receipt of a report from the Registrar

or otherwise, is satisfied that in the public interest or for the purposes of securing proper

implementation of co-operative production and other development programmes approved or

undertaken by the Union territory Administration or to secure the proper management of the

business of the society generally, or for preventing the affairs of the society being conducted

in a manner detrimental to the interests of the members or of the depositors or the creditors

thereof, it is necessary to issue directions to any class of societies generally or to any

society or societies in particular, the Union territory Administration may issue directions to

them from time to time, and all societies or the society concerned, as the case may be, shall be

bound to comply with such directions.

(2) The Union territory Administration may modify or cancel any directions issued

under sub-section (1), and in modifying or cancelling such directions, it may impose such

conditions as it may deem fit.

(3) Where the Registrar is satisfied that any person was responsible for complying

with directions or modified directions issued to a society under sub-sections (1) and (2) and

he has failed, without any good reason or justification, to comply with the directions, the

Registrar may by order,—

(a) if the person is a member of the Committee of the society, declare him to be

disqualified or to continue to be a member of the Committee of any society for a period

of six years from the date of the order;

(b) if the person is an employee of the society, direct the Committee to remove

such person from employment of the society forthwith, and if any member or members

of the Committee, without any good reason or justification, fail to comply with this

order, declare them disqualified as provided in clause (a):

Provided that, before making any order under this sub-section, the Registrar shall give

a reasonable opportunity of being heard to the person or persons concerned and consult the

federal society to which the society is affiliated:

Provided further that, such federal society shall communicate its opinion to the Registrar

within a period of forty-five days from the date of receipt of communication, failing which it

Union

territory

Administration's

power to give

directions in

public interest,

etc.

THE LAKSHADWEEP GAZETTE EXTRAORDINARY

shall be presumed that such federal society has no objection to take action under this

section and the Registrar shall be at liberty to proceed further to take action accordingly.

(4) Any order made by the Registrar under this section shall be final and binding on the

parties.

83. (1) Where the Registrar is satisfied that the books and records of a society are

likely to be suppressed, tampered with or destroyed or the funds and property of a society

are likely to be mis-appropriated or mis-applied or the officer or the person in possession

unreasonably refuses to give possession of the books, records, funds and property, the

Registrar may issue an order directing the person duly authorised by him in writing to seize

and take possession of such books, records, funds and property of the society, and the

officer of the society responsible for the custody of such books, records, funds and property

or person in possession of the same shall give delivery thereof forthwith to the person so

authorised.

(2) If the officer of the society or person in possession does not so give the delivery,

then, without prejudice to any other action that may be taken against such officer, person or

society under the provisions of this Regulation, the Registrar or the person authorised by

him may apply to the Executive Magistrate within whose jurisdiction the society is functioning

for seizing and taking the possession of such books, records, funds and property of the

society.

(3) On receipt of an application under sub-section (2), the Magistrate may authorise

any police officer not below the rank of a Sub-Inspector to enter and search any place where

the books, records, funds and property are kept or likely to be kept and to seize them and

hand over possession thereof to the Registrar or the person authorised by him, as the case

may be.

CHAPTER VIII

AUDIT, INQUIRY, INSPECTION AND SUPERVISION

84. (1) The Registrar shall audit, or cause to be audited by a person possessing

prescribed qualifications and authorised by the Registrar by general or special order in

writing in this behalf, the accounts of every society at least once in each year and the person

so authorised shall be an auditor for the purposes of this Regulation.

(2) The auditor shall for the purpose of audit, at all times have access to all the books,

accounts, documents, papers, securities, cash and other properties belonging to, or in the

custody of the society and may summon any person in possession or responsible for the

custody of any such books, accounts, documents, papers, securities, cash and other

properties to be produced the same at any place at the headquarters of the society or any

branch thereof.

(3) If it appears to the Registrar on an application or otherwise that it is necessary or

expedient to get any account of the society re-audited, the Registrar may, by an order,

provide for such re-audit and the provisions of this Regulation applicable to the audit of

accounts of the society shall apply to such re-audit.

(4) The Registrar shall, by an order, provide for a special audit of any society on its

own or on the basis of the recommendation of the Reserve Bank of India or, as the case may

be, the National Bank and the provisions relating to audit of accounts of the society made

under this section shall also apply to such special audit.

(5) For auditing the accounts of a society under this section, every society shall be

liable to pay to the auditor such amount as audit fee as may be prescribed for different

categories or class of societies.

(6) The Registrar may, in consultation with the National Bank determine prudential

norms including capital to risk weighted assets ratio for Primary Agricultural Credit

Co-operative Societies.

Registrar's

power to seize

records, etc.

Audit.

THE LAKSHADWEEP GAZETTE EXTRAORDINARY

(7) The Administrator may by rules, provide for the form and manner in which and the

period within which the accounts of the society or the class of society shall be prepared and

submitted for the purpose of online audit.

(8) The auditor’s report shall contain,—

(a) all particulars of the defects or the irregularities observed in audit and in case

of financial irregularities and misappropriation or embezzlement of funds or fraud, the

auditor or the auditing firm shall investigate and report the modus operandi, the

entrustment and amount involved;

(b) the accounting irregularities and their implications on the financial statements

to be indicated in detail in the report with the corresponding effects on the profit and

loss; and

societies be checked and if any irregularities or violations are observed or reported,

duly fixing the responsibilities for such irregularities or violations.

(9) If it is brought to the notice of the Registrar that the audit report submitted by the

auditor does not disclose the true and correct picture of the accounts, the Registrar or the

authorised person may carry out or cause to be carried out a test audit of accounts of such

society and the test audit shall include the examination of such items as may be prescribed

and specified by the Registrar in such order.

(10) If, during the course of audit of any society, the auditor is satisfied that some

books of accounts or other documents contain any incriminatory evidence against past or

present officer or employee of the society the auditor shall immediately report the matter to

the Registrar and, with previous permission of the Registrar, may impound the books or

documents and give a receipt thereof to the society.

(11) The auditor shall submit his audit report within a period of one week from its

completion to the society and to the Registrar in such form as may be specified by the

Registrar, on the accounts examined by him and on the balance sheet and profit and loss

account as on the date and for the period up to which the accounts have been audited, and

shall state whether in his opinion and to the best of his information and according to the

explanation given to him by the society the said accounts give all information required by or

under this Regulation and present the true and fair view of the financial transaction of the

society:

Provided that where the auditor has come to a conclusion in his audit report that any

person, is guilty of any offence relating to the accounts or any other offences, he shall file a

specific report to the Registrar within a period of fifteen days from the date of submission of

his audit report and the auditor concerned shall, after obtaining written permission of the

Registrar, file a First Information Report of the offence and the auditor, who fails to file First

Information Report, shall be liable for disqualification and his name shall be liable to be

removed from the panel of auditors and he shall also be liable to any other action as the

Registrar may thinks fit:

Provided further that when it is brought to the notice of the Registrar that, the auditor

has failed to initiate action, the Registrar shall cause a First Information Report to be filed by

a person authorised by him in that behalf:

Provided also that on conclusion of his audit, if the auditor finds that there are apparent

instances of financial irregularities resulting into losses to the society caused by any member

of the Committee or officers of the society or by any other person, then he shall prepare a

Special Report and submit the same to the Registrar along with his audit report and failure to

file such Special Report, would amount to negligence in the duties of the auditor and he shall

be liable for disqualification for appointment as an auditor or any other action, as the Registrar

may deem fit.

THE LAKSHADWEEP GAZETTE EXTRAORDINARY

85. If the result of the audit held under section 84 and inspection held under, section 87

and section 88 discloses any defects in the working of the society, the society shall within a

period of two months from the date of the audit and inspection report, clarify to the Registrar

as regards the defects or the irregularities so pointed out in audit and inspection report, and

if clarification in respect of any defect or irregularity is not accepted, take steps to rectify the

defects and remedy irregularities within such period as may be specified by the Registrar and

shall report to the Registrar, failing which the Registrar shall have power to impose a penalty

of such amount not exceeding rupees ten thousand and where society concerned is a member

of a federal society, such order shall be made after consulting the federal society.

86. (1) The Registrar may of his own motion or,—

(a) on the requisition of a society duly authorised by rules made in this behalf to

make such requisition, in respect of any of its members, such member being itself a

society;

(b) on the application of a majority of the Committee of a society; or

shall hold such an inquiry himself, or by a person duly authorised by him in writing in this

behalf, hold an inquiry into the constitution, working and financial conditions of a society.

(2) Every officer, member and past member of the society in respect of which an inquiry

is held, and any other person who is in possession of information, books and papers relating

to the society, shall on being so required furnish such information as is in his possession,

and produce all books and papers relating to the society which are in his custody or power,

and otherwise give to the officer holding the inquiry all assistance in connection with the

inquiry which he can reasonably give.

(3) If any such person refuses to produce to the Registrar or any person authorised by

him under sub-section (1), any book or paper which it is his duty under sub-section (2) to

produce or to answer any question which is put to him by the Registrar or the person

authorised by the Registrar in pursuance of sub-section (2) the Registrar or the person

authorised by the Registrar may certify the refusal and the Registrar may impose on the

defaulter a penalty of an amount not exceeding five thousand rupees and before imposing

such penalty, the Registrar shall give, or cause to be given a reasonable opportunity to the

defaulter, of showing cause against the action proposed to be taken in regard to him.

(4) If at any stage of the inquiry under this section, the Registrar is satisfied that in the

interest of the members of the society it is necessary to take over all books and papers

relating to the society during the period of inquiry, he may make an order in writing to that

effect and directing the society to hand over all books and papers relating to the society to

such officer as may be specified in the order and the Registrar may also issue a direction to

the society to refrain from doing such acts or engaging in such activities as may be specified

in the direction.

(5) The society shall be bound to comply with any direction issued to it under

sub-section (4).

(6) The books and papers taken over under sub-section (4) shall be returned to the

society on the completion of the inquiry.

(7) When an inquiry is held under this section the Registrar shall communicate the

result of the inquiry—

(a) in case the Union territory Administration have subscribed directly to the

share capital of the society to the Union territory Administration or to any officer

appointed by it in this behalf;

(b) to the federal co-operative society concerned; and

Rectification

of defects or

irregularities

in accounts

and inspection

report of

society.

Inquiry by

Registrar.

THE LAKSHADWEEP GAZETTE EXTRAORDINARY

(8) The Registrar may withdraw the responsibility of inquiry from the officer to whom

it is entrusted, and to hold the inquiry himself or entrust it to any other person as he deems

fit.

87. (1) On the application of a creditor of a society who,—

(a) satisfies the Registrar that there is a debt which is due, and that he has

demanded payment thereof and has not received satisfaction within reasonable time;

and

(b) deposits with the Registrar such sum as the Registrar may require as security

for the costs of any inspection of the books of the society,

the Registrar may, if he thinks it necessary or expedient, inspect or direct a person authorised

by him by order in writing in this behalf to inspect the books of the society.

(2) The Registrar shall communicate the result of any such inspection to the applicant,

and to the society whose books have been inspected.

(3) The Registrar may withdraw any inspection from the officer to whom it is entrusted,

and to carry out the inspection himself or entrust it to any other person as he deems fit.

88. (1) The Registrar or the person authorised by him in this behalf shall have the right

to inspect the books of any society and shall have free access to the books, accounts,

documents, securities, cash and other properties belonging to, or in the custody of, the

society.

(2) Every person who is or has at any time been an officer or employee of the society

and every member and past member of the society shall furnish such information in regard to

such transactions and working of the society as the Registrar or the person authorised by

him may require.

(3) Where a society is indebted to any co-operative financing bank, such bank shall

have the right to inspect the books of that society and the inspection may be made either by

an officer of the bank authorised by the Committee of such bank or by a member of its paid

staff certified by the Registrar as competent to undertake such inspection.

(4) The officer or member so inspecting shall at all reasonable times, have free access

to the books, accounts, documents, securities, cash and other properties belonging to or in

the custody of the society and may also call for such information, statements and returns, as

may be necessary, to ascertain the financial condition of the society and the safety of the

sums lent to it by the bank.

(5) Where a society is a member of a federal society recognised by the Union territory

Administration under section 95 such federal society shall have the right to inspect the

books of that society and the inspection may be made either by an officer or endorsee of the

federal society authorised by the Committee of such federal society or by a paid employee of

such federal society certified by the Registrar as competent to undertake such inspection.

(6) The officer or employee referred to in sub-section (5) shall at all reasonable times

have free access to the books, accounts, documents, securities, cash and other properties

belonging to, or in the custody of the society and may also call for such information,

statements and returns, as may be necessary.

89. (1) Where in the course of an audit under section 84 or an inquiry under section 86

or an inspection under section 87 or section 88, it is brought to the notice of the Registrar that

a paid officer or servant of a society has committed or has been otherwise responsible for

misappropriation, breach of trust or other offence, in relation to the society, the Registrar

may, if in his opinion, there is prima facie evidence against such paid officer or servant and

the suspension of such paid officer or servant is necessary in the interest of the society,

direct the Committee of the society pending the investigation and disposal of the matter, to

Inspection of

books of

indebted

society.

Inspection of

books by

Registrar or

financing bank

or federal

society.

Suspension of

officer or

servant of

society.

THE LAKSHADWEEP GAZETTE EXTRAORDINARY

place or cause to be placed such paid officer or servant under suspension from such date

and for such period as may be specified by him.

(2) On receipt of a direction from the Registrar under sub-section (1), the Committee of

the society shall, notwithstanding any provision to the contrary in the bye-laws, place or

cause to be placed the paid officer or servant under suspension forthwith.

(3) The Registrar may direct the Committee to extend from time to time, the period of

suspension and the paid officer or servant suspended shall not be reinstated except with the

previous sanction of the Registrar.

(4) If the Committee fails to comply with the direction issued under sub-section (1), the

Registrar may make an order placing such paid officer or servant under suspension from

such date and for such period as he may specify in the order and thereupon the paid officer

or servant, as the case may be, shall be under suspension.

90. (1) Where an inquiry is held under section 86 or an inspection is made under

section 88, the Registrar may apportion the costs, or such part of the costs, as he may think

just, between the society, the members or creditors demanding the inquiry or inspection, the

officers or former officers and the members or past members or the estates of the deceased

members of the society and pass such order within a period of six months from the date of

submission of inquiry report:

Provided that,—

(a) no order of apportionment of the costs shall be made under this section,

unless the society or persons or the legal representative of the deceased person liable

to pay the costs thereunder, has or have been heard, or have had a reasonable

opportunity of being heard; and

(b) the Registrar shall state in writing the grounds on which the costs are

apportioned.

(2) No expenditure from the funds of a society shall be incurred for the purpose of

defraying any costs in support of any appeal preferred by any person other than the society

against an order made under the foregoing sub-section.

91. Any sum imposed as penalty under section 68,75,76,81,85 or 86 or awarded by way

of costs under section 90 may, on an application by the Registrar or a person authorised by

him in that behalf to a Judicial Magistrate having jurisdiction in the place where the person

from whom the penalty or costs are recoverable resides or carries his business, be recovered

by the Judicial Magistrate as if it were a fine imposed by himself and such Magistrate shall

proceed to recover the same in the same manner as if it were a fine imposed by himself.

92. (1) If the result of any inquiry held under section 86 or inspection made under

section 87 or section 88, discloses any defects in the constitution, working or financial

condition or the books of a society, the Registrar may bring such defects to the notice of the

society and the Registrar may also make an order directing the society or its officers to take

such action as may be specified in the order to remedy the defects, within the time specified

therein.

(2) The society concerned may make an appeal against an order made by the Registrar

under sub-section (1) to the Administrator within two months from the date of the

communication of the order to the society.

(3) The Administrator may, in deciding the appeal, annul, reverse, modify or confirm

the order of the Registrar.

(4) Where the society fails to rectify the defects as directed by the Registrar and where

no appeal has been made to the Administrator under sub-section (2) or where on the appeal

so made the Administrator has not annulled, reversed or modified the order, the Registrar

may himself take steps to have the defects rectified, and may recover the cost from the

officers of the society who, in his opinion, have failed to rectify the defects.

Cost of

inquiry and

inspection.

Mode of

recovery of

sums imposed

as penalty or

awarded as

costs.

Registrar to

bring defects

disclosed in

inquiry or

inspection to

notice of

society.

THE LAKSHADWEEP GAZETTE EXTRAORDINARY

93. (1) Where, in the course of or as a result of an audit under section 84, or an inquiry

under section 86 or an inspection under section 87 or section 88, or the winding up of a

society, the Registrar is satisfied on the basis of the report made by the auditor or the person

authorised to make inquiry under section 84, or the person authorised to inspect the books

under section 87 or section 88 or the Liquidator under section 110, that any person who has

taken any part in the organisation or management of the society or any deceased, or past or

present officer of the society has, within a period of five years prior to the date of

commencement of such audit or date of order for inquiry, inspection or winding up, misapplied

or retained, or become liable or accountable for, any money or property of the society, or has

been guilty of misfeasance or breach of trust in relation to the society, the Registrar or a

person authorised by him in that behalf may investigate the conduct of such person or

persons and after framing charges against such person or persons, and after giving a

reasonable opportunity to the person concerned and in the case of a deceased person to his

representative who inherits his estate, to answer the charges, make an order requiring him to

repay or restore the money or property or any part thereof, with interest at such rate as the

Registrar or the person authorised under this section may determine, or to contribute such

sum to the assets of the society by way of compensation in regard to the misapplication,

retention, misfeasance or breach of trust, as he may determine:

Provided that, proceedings under this sub-section, shall be completed by the authorised

person within a period of two years from the date of issue of order by the Registrar:

Provided further that, the Registrar may, after recording the reasons therefor, extend

the said period for a maximum period of six months:

Provided also that, the Administrator may, on the report of the Registrar or suo motu,

for the reasons to be recorded in writing, extend the said period as may be required, from time

to time, to complete the proceedings under this sub-section.

(2) The Registrar or the person authorised under sub-section (1) in making any order

under this section, may provide therein for the payment of the costs or any part thereof of

such investigation, as he thinks just, and he may direct that such costs or any part thereof

shall be recovered from the person against whom the order has been issued.

(3) This section shall apply, notwithstanding that the act is one for which the person

concerned may be criminally responsible.

94. The Registrar or the person authorised by him, when acting under section 86, 87, 88

or section 93 shall have the power to summon and enforce the attendance of any person to

give evidence or to compel the production of any document or other material object by the

same means and in the same manner as is provided in the case of a civil court under the Code

of Civil Procedure, 1908.

95. (1) The Union territory Administration may constitute Committees or recognise

one or more co-operative federal societies in such manner as may be prescribed and subject

to such conditions as the Union territory Administration may determine, for the supervision

of a society or a class of societies and may frame rules for making grants to any such

Committee or federal society.

(2) The Union territory Administration may, by general or special order, require a

society or a class of societies to make contribution of such sum every year as may be fixed by

the Registrar towards the recoupment of expenditure which the Union territory Administration

or any person authorised or a Committee in that behalf has incurred or is likely to incur, in

respect of the supervision of societies.

(3) A society to which sub-section (2) is applicable shall pay to such authority such

fee as may be prescribed within a reasonable time and, if it fails to pay such fee within a

reasonable time, the authority may recover it as if it were an arrear of land revenue.

Power of

Registrar to

assess damages

against

delinquent,

promoter, etc.

Power to

enforce

attendance,

etc.

Constitution

or recognition

of federal

society to

supervise

working of

societies.

5 of 1908.

THE LAKSHADWEEP GAZETTE EXTRAORDINARY

CHAPTER IX

PROCEDURE FOR DECIDING DISPUTES.

96. (1) Notwithstanding anything contained in any other law for the time being in

force, any dispute touching the constitution, management, business, election of the Committee

or its officers or conduct of general meetings of a society shall be referred by any of the

parties to the dispute, or by a federal society to which the society is affiliated, or by a creditor

of the society, to the Registrar if the parties thereto are amongst the following, namely:—

(a) a society, its Committee, any past Committee, any past or present officer, any

past or present agent, any past or present servant or nominee, heir or legal representative

of any deceased officer, deceased agent or deceased servant of the society, or the

liquidator of the society;

(b) a member, past member or a person claiming through a member, past member

or a deceased member of a society, or a society which is a member of the society;

the society, or with whom the society has or had transactions under the provisions of

section 49, and any person claiming through such a person;

(d) a surety of a member, past member or a deceased member, or a person other

than a member who has been granted a loan by the society under section 49, whether

such a surety is or is not a member of the society; and

(e) any other society, official assignee or the Liquidator of such a society.

(2) When any question arises whether for the purposes of sub-section (1) a matter

referred to for decision is a dispute or not, the question shall be considered by the Registrar,

whose decision shall be final.

Explanation.—For the purposes of this sub-section,—

(a) a dispute shall include—

(i) a claim by a society for any debt or demand due to it from a member, past

member or the nominee, heir or legal representative of a deceased member, whether

such a debt or demand be admitted or not;

(ii) a claim by a surety for any sum or demand due to him from the principal

borrower in respect of a loan by a society and recovered from the surety owing

to the default of the principal borrower, whether such a sum or demand be

admitted or not;

(iii) a claim by a society for any loss caused to it by a member, past

member, or deceased member, by any officer, past officer or deceased officer, by

any agent, past agent or deceased agent, or by any servant, past servant or

deceased servant, or by its Committee, past or present whether such loss be

admitted or not; and

(iv) a refusal or failure by a member, a past member or a nominee, heir or

legal representative of a deceased member, to deliver possession to a society of

land or any other asset resumed by it for breach of conditions of the assignment;

and

(b) the expression “agent” includes, in the case of a housing society, an architect,

engineer or contractor engaged by the society.

97. (1) Notwithstanding anything contained in the Indian Limitation Act, 1963, but

subject to the specific provisions made in this Regulation, the period of limitation in the case

of a dispute referred to the Registrar under section 96 shall—

(a) when the dispute relates to the recovery of any sum, including interest

thereon due to a society by a member thereof, be computed from the date on which

such member dies or ceases to be a member of the society;

Disputes.

Limitation.

36 of 1963.

THE LAKSHADWEEP GAZETTE EXTRAORDINARY

(b) when the dispute is between a society or its Committee, and any past

Committee, any past or present officer, or past or present agent, or past or present

servant or the nominee, heir or legal representative of a deceased officer, deceased

agent or deceased servant of the society, or a member, or past member, or the nominee,

heir or legal representative of a deceased member, and when the dispute relates to any

act or omission on the part of either party to the dispute, be six years from the date on

which the act or omission with reference to which the dispute arose, took place;

management or business of a society which has been ordered to be wound up under

section 107, or in respect of which a nominated Committee or special officer has been

appointed under section 81, be six years from the date of the order issued under

section 107, or section 81, as the case may be; and

(d) when the dispute is in respect of an election of any office-bearer of a society,

be two months from the date of the declaration of the result of such election.

(2) The period of limitation in the case of any dispute other than those mentioned in

sub-section (1) which are required to be referred to the Registrar under section 96 shall be

regulated by the provisions of the Indian Limitation Act, 1963, as if the dispute were a suit,

and the Registrar were a civil court.

(3) Notwithstanding anything contained in sub-sections (1) and (2), the Registrar may

admit dispute after the expiry of the period of limitation, if the applicant satisfies him that he

had sufficient cause for not referring the dispute within such period, and the dispute so

admitted shall be a dispute which shall not be barred on the ground that the period of

limitation had expired.

98. (1) If the Registrar is satisfied that any matter, referred to him is a dispute, within the

meaning of section 96 the Registrar shall, subject to the rules to be made in this behalf, decide

the dispute himself, or refer it for disposal to a nominee, or a board of nominees, appointed by

the Registrar:

Provided that no person who is connected with a dispute or with the society at any

stage or has previously inspected the society or audited its accounts shall be appointed as

a nominee or as member of the board of nominees to settle the dispute.

(2) Where any dispute is referred under sub-section (1) for decision to the Registrar’s

nominee or board of nominees, the Registrar may at any time, for reasons to be recorded in

writing withdraw such dispute from his nominee, or board of nominees, and may decide the

dispute himself, or refer it again for decision to any other nominee, or board of nominees,

appointed by him.

(3) Notwithstanding anything contained in section 96, the Registrar may, if he thinks

fit, suspend proceedings in regard to any dispute, if the question at issue between a society

and a claimant or between different claimants, is one involving complicated question of law

or fact, until the question has been tried by a regular suit instituted by one of the parties or

by the society and if any such suit is not instituted within two months from the Registrar’s

order suspending proceedings, the Registrar shall take action as is provided in

sub-section (1).

99. (1) The Registrar or his nominee or board of nominees, hearing a dispute under

section 96 shall hear the dispute in the manner prescribed and shall have power to summon

and enforce attendance of witnesses including the parties interested or any of them and to

compel them to give evidence, and to compel the production of documents by the same

means and as far as possible in the same manner as provided in the case of a civil court by the

Code of Civil Procedure, 1908.

(2) Except where a dispute involves complicated question of law or fact, no legal

practitioner in his capacity as a legal practitioner or as a person holding a power of attorney

shall be permitted to appear on behalf of any party at the hearing of a dispute.

36 of 1963.

Settlement of

disputes.

Procedure for

settlement of

disputes and

power of

Registrar, his

nominee or

board of

nominees.

5 of 1908.

THE LAKSHADWEEP GAZETTE EXTRAORDINARY

(3) If the Registrar or his nominee or board of nominees is satisfied that a person,

whether he be a member of the society or not, has acquired any interest in the property of a

person, who is a party to a dispute, he may order that the person who has acquired the

interest in the property may join as a party to the dispute and any decision that may be

passed on the reference by the Registrar or his nominee or board of nominees shall be

binding on the party so joined, in the same manner as if he were an original party to the

dispute.

(4) Where a dispute has been instituted in the name of the wrong person or where all

the defendants have been not included, the Registrar or his nominee or board of nominees

may, at any stage of the hearing of the dispute if satisfied that the mistake was bona fide,

order any other person to be substituted or added as a plaintiff or a defendant, upon such

terms as he thinks just.

(5) The Registrar or his nominee or board of nominees may, at any stage of the

proceedings, either upon or without the application of either party, and on such terms as may

appear to the Registrar, his nominee or board of nominees, as the case may be, to be just,

order that the name of any party in proper joined whether as plaintiff or defendant be struck

out, and that the name of any person who ought to have been joined whether as plaintiff or

defendant, or whose presence before the Registrar, his nominee or board of nominees, as the

case may be, may be necessary in order to enable the Registrar, his nominee or board of

nominees effectually and completely to adjudicate upon and settle all the questions involved

in the dispute, be aided.

(6) Any person who is a party to the dispute and entitled to more than one relief in

respect of the same cause of action may claim all or any of such reliefs, but if he omits to claim

all such reliefs, he shall not forward a claim for any relief so omitted, except with the leave of

the Registrar, his nominee or board of nominees.

(7) Notwithstanding anything contained in sub-sections (1) to (6), the following

disputes or class of disputes, if the plaintiff so desires, shall be decided summarily by the

Registrar, or his nominee or board of nominees, in such manner as may be prescribed,

namely:—

(a) any dispute for recovery of debt upon promissory note, hundi, bill of exchange

or bond, with or without interest, whether agreed upon under such instrument or

under bye-laws;

(b) any dispute for recovery of a fixed sum of money or, the nature of debt in with

or without interest, arising on a written contract;

quality and quantity are admitted in writing; or

(d) any dispute for recovery of dues payable by a member of a housing society

towards contribution for construction of the house or any dispute in respect of

repayment of any loan, interest on loan, ground rent, local authority taxes, sinking

fund, water charges, electrical charges, maintenance and upkeep charges or charges

for other services rendered by the society and the interest on such arrears, payable

under the written agreement or under bye-laws.

(8) The defendant shall not be entitled to defend the dispute unless he obtains leave

from the Registrar or his nominee or board of nominees, as the case may be, in such manner

as may be prescribed.

(9) The Registrar or his nominee or board of nominees may grant the leave under

sub-section (8) on such conditions, as he or it thinks fit.

(10) The Registrar or his nominee or board of nominees shall not refuse the leave to

defend the dispute unless he or it satisfies that the facts disclosed by the defendant do not

indicate that he has substantial defense to raise or that the defense intended to be put up by

him is frivolous or vexatious.

THE LAKSHADWEEP GAZETTE EXTRAORDINARY

(11) Where the defendant fails to obtain such leave or fails to appear or defend the

dispute in pursuance of such leave, the averments made in the plaint and documents produced

therewith shall be deemed to have been admitted by the defendant:

Provided that the Registrar or his nominee or board of nominees in his or its discretion

may require any fact so admitted to be proved otherwise than by such admission.

(12) Where the conditions on which leave to defend is granted are not complied with

by the defendant, the Registrar or his nominee or board of nominees, as the case may be, may

pass an award against him, as if he has not been granted such leave.

(13) The Registrar or his nominee or as the case may be, board of nominees may under

special circumstances set aside the award, passed by him or it and if necessary, stay or set

aside the execution, and may grant leave to the defendant to appear and defend the disputes,

if it seems reasonable so to do and on such terms as he or it thinks fit.

100. (1) Where a dispute has been referred to the Registrar or his nominee or board of

nominees under section 98 or section 110, or whereas the Registrar or the person authorised

under section 93 hears a person against whom charges are framed under that section,

the Registrar or his nominee or board of nominees, or as the case may be, the person

so authorised under section 93 if satisfied on inquiry or otherwise that a party to such

dispute or against whom proceedings are pending under section 93 with intent to defeat,

delay or obstruct the execution of any award or the carrying out of any order that may be

made,—

(a) is about to dispose of whole or any part of his property; or

(b) is about to remove the whole or any part of his property from the jurisdiction

of the Registrar, may, unless adequate security is furnished, direct conditional attachment

of the said property and such attachment shall have the same effect as if made by a

competent civil court.

(2) Where a direction to attach property is issued under sub-section (1), the Registrar

or his nominee or board of nominees or the person authorised under section 93 shall issue a

notice calling upon the person whose property is so attached to furnish such security within

such period as may be specified in the notice and if the person fails to provide the security

so demanded, the Registrar or his nominee or board of nominees or, as the case may be, the

person authorised under section 93 may confirm the order and, after the decision in the

dispute or the completion of the proceedings referred to in sub-section (1) may direct the

disposal of the property so attached towards the claim if awarded.

(3) Attachment made under this section shall not affect the rights subsisting prior to

the attachment of the property of persons not parties to the proceedings in connection with

which the attachment is made, or bar any person holding a decree prior to such attachment

against the person whose property is so attached from applying for the sale of the property

under attachment in execution of such decree.

101. (1) When a dispute is referred to the Registrar for decision, he or his nominee or

board of nominees as the case may be, may, after giving a reasonable opportunity to the

parties to the dispute to be heard, make an award on the dispute, on the expenses incurred by

the parties to the dispute in connection with the proceedings and the fees and expenses

payable to the Registrar or his nominee or board of nominees, as the case may be and such

an award shall not be invalid merely on the ground that it was made after the expiry of the

period fixed by the Registrar, for deciding the dispute and shall, subject to appeal or review

or revision, be binding on the parties to the dispute.

(2) The Registrar, his nominee or the board of nominees, as the case may be, may

before hearing the parties, require any party or parties to such dispute to deposit such sum

as may, in his or its opinion, be considered reasonable to meet the expenses including the

payment of fees, that may be payable to the Registrar, his nominee or the board of nominees

as the case may be, in pursuance of the award to be made under sub-section (1).

Attachment

before award.

Decision of

Registrar or

his nominee

or board of

nominees.

THE LAKSHADWEEP GAZETTE EXTRAORDINARY

(3) The Registrar may, having regard to the nature of the cause of action or subject

matter of dispute, the nature of relief that may be claimed in a dispute and such other matters,

specify by a general or special order, the scale of fees and expenses that may be made

payable to him or his nominee or the board of nominees, as the case may be, by or under an

award made under sub-section (1).

102. Any party aggrieved by any decision of the Registrar or his nominee or board of

nominees, as the case may be, under section 101 or in an order passed under section 100 may,

within sixty days from the date of the decision or order, appeal to the Tribunal:

Provided that the Appellate Tribunal may entertain any appeal after the expiry of sixty

days, if it is satisfied that there was a sufficient cause for not filing it within that period.

103. Every order passed by the Registrar or a person authorised by him under

section 93, or by the Registrar, his nominee or board of nominees under section 100 or 101,

every order passed by a Liquidator under section 110, every order passed by the Administrator

in appeal against orders passed under section 110, and every order passed in revision under

section 128, shall, if not carried out,—

(a) on a certificate signed by the Registrar or a Liquidator, be deemed to be a

decree of a civil court, as defined in clause (2) of section 2 of the Code of Civil

Procedure, 1908 and shall be executed in the same manner as a decree of such court; or

(b) be executed according to the provisions of the Land Revenue Code or any

corresponding law in force and the rules made thereunder for the time being in force for

the recovery of arrears of land revenue:

Provided that, any application for the recovery in such manner of any such sum shall

be made to the Collector, and shall be accompanied by a certificate signed by the Registrar,

or by any Assistant Registrar to whom the said power has been delegated by the Registrar

and such application shall be made within twelve years from the date fixed in the order and if

no such date is fixed, from the date of the order.

104. Any private transfer or delivery of, or encumbrance or charge on property made

or created after the issue of the certificate of the Registrar, Liquidator or Assistant Registrar,

as the case may be, under section 103 shall be null and void as against the society on whose

application the said certificate was issued.

105. (1) When in execution of an order sought to be executed under section 103 any

property cannot be sold for want of buyers, if such property is in property occupancy of the

defaulter, or of some person in his behalf, or of some person claiming under a title created by

the defaulter subsequently to the issue of the certificate of the Registrar, Liquidator or the

Assistant Registrar, under clause (a) or clause (b) of section 103, the court or the Collector or

the Registrar, as the case may be, may direct that the said property or any portion thereof

shall be transferred to the society which has applied for the execution of the said order, in the

manner prescribed.

(2) Where property is transferred to the society under sub-section (1), or is sold under

the provisions of section 103, the court, the Collector or the Registrar, as the case may be,

may, in accordance with the rules, place the society or the purchaser, as the case may be, in

possession of the property transferred or sold.

(3) Subject to the rules made in this behalf, and to any rights, encumbrances, charges

or equities lawfully subsisting in favour of any person, such property or portion thereof shall

be held under sub-section (1) by the said society on such terms and conditions as may be

agreed upon between the court, the Collector or the Registrar, as the case may be, and the

said society subject to the general or special orders of the Administrator, the Collector or the

Registrar may delegate to an officer, not below the rank of an Assistant or Deputy Collector

Appeal against

decision of

Registrar or

his nominee

or board of

nominees.

Money how

recovered.

5 of 1908.

Private

transfer of

property made

after issue of

certificate

void against

society.

Transfer of

property

which cannot

be sold.

THE LAKSHADWEEP GAZETTE EXTRAORDINARY

or an Assistant Registrar powers exercisable by the Collector or the Registrar under this

section.

106. (1) Notwithstanding anything contained in sections 96, 98 and 103, on an

application made by a society undertaking the financing of crops and seasonal finance as

defined under any law for the time being in force, or undertaking medium term finance for the

recovery of arrears of any sum advanced by it to any of its members on account of the

financing of crops, seasonal finance or medium term finance and on its furnishing a statement

of accounts in respect of the arrears, the Registrar may, after making such inquiries as he

deems fit, grant a certificate for the recovery of the amount stated therein to be due as arrears.

Explanation.—For the purposes of this sub-section, the expression “medium term

finance” means advancing of loans for any purpose of production relating to agriculture,

fishery, animal husbandry, poultry, dairy and industry such loans being repayable otherwise

than in the manner specified in the definitions of the expressions “financing of crops” and

“seasonal finance” under any law for the time being in force.

(2) If a society referred to in sub-section (1) fails to make an application under that

sub-section, then, if such society is a member of any co-operative financing bank such

co-operative financing bank may direct such society to take such action and if the society

fails to take action in pursuance of such direction, the co-operative financing bank may itself

make an application under sub-section (1) on behalf of the society.

(3) Where the Registrar is satisfied that a society or the co-operative financing bank to

which such society is affiliated has failed to make an application under sub-section (1) or, as

the case may be, under sub-section (2) in respect of such arrears the Registrar may, of his

own motion, after making such inquiries as he deems fit, grant a certificate for the recovery of

the amount stated therein to be due as such arrears, and such a certificate shall be deemed to

have been issued as if on an application made by the society concerned.

(4) A certificate granted by the Registrar under sub-section (1) or sub-section (3) shall

be final and a conclusive proof of the arrears stated to be due therein, which shall be

recoverable according to the provisions of the Land Revenue Code or any other law for the

time being in force and of the rules made thereunder for the recovery of land revenue.

(5) It shall be lawful for the Collector and the Registrar to take precautionary measures

specified under Land Revenue Code or any other law for the time being in force, until the

arrears due to the society together with interest and any incidental charges incurred in the

recovery of such arrears, are paid, or security for payment of such arrears is furnished to the

satisfaction of the Registrar.

CHAPTER X

LIQUIDATION

107. (1) Except as otherwise provided in sub-section (2), if the Registrar,—

(a) after an inquiry has been held under section 86, or an inspection has been

made under the provisions of section 87 or section 88 or on the report of the auditor

auditing the accounts of the society;

(b) on receipt of an application made upon a resolution carried by three-fourths

of the members of a society present at a special general meeting called for the purpose; or

(i) has not commenced working;

(ii) has ceased working;

(iii) possesses shares or member’s deposits not exceeding five thousand

rupees; or

Recovery of

crop loans.

Winding up.

THE LAKSHADWEEP GAZETTE EXTRAORDINARY

(iv) has ceased to comply with any conditions as to registration and

management in this Regulation or the rules or the bye-laws,

he may, after giving the society an opportunity of making a representation, by order, direct it

to be wound up.

(2) Notwithstanding anything contained in sub-section (1), in case where the members

of the society, after having discharged liabilities towards the debt and assets of the society,

upon a resolution carried by three-fourths majority of the members of the society present at

a special general meeting called for the purpose, suo motu resolves to wind up the society

and conveys such resolution to the Registrar and the Registrar shall, after disposing of the

surplus assets in accordance with the provisions of section 115, cancel the registration of

such society under section 21.

(3) Where an interim order is made on a ground specified in clause (a) or

sub-clause (iv) of clause (c) of sub-section (1), a copy thereof shall be communicated, in the

prescribed manner, to the society calling upon it to submit its explanation to the Registrar

within a period of one month from the date of issue of such order.

(4) The Registrar, after giving an opportunity to the society of being heard, shall make

a final order, vacating or confirming the interim order.

108. (1) When an interim or final order is made under section 107 for the winding up of

a society, the Registrar may, in accordance with the rules made under this Regulation appoint

a person to be the Liquidator of the society and fix his remuneration.

(2) Where an interim order is made, the officers of the society shall hand over to the

Liquidator the custody and control of all the property, effects and actionable claims to which

the society is or appears to be entitled, and of all books, records and other documents

pertaining to the business of the society and, shall have no access to any of them.

(3) When a final order is made confirming the interim order, the officers of the society—

(a) shall hand over to the Liquidator the custody and control of any property,

effects and actionable claims and any books, records, and other documents pertaining

to the business of the societies which for any reason are not handed over to the

liquidator under sub-section (2) at the time when an interim order was made; and

(b) shall vacate their offices and while winding up order remains in force, the

General Body of the society shall not exercise any powers.

(4) The Liquidator shall, subject to the general control of the Registrar, exercise all or

any of the powers mentioned in section 110 and the Registrar may remove him from his office

and appoint another in his place, without assigning any reason.

(5) The whole of the assets of the society shall on the appointment of the Liquidator

vest in him and notwithstanding anything contained in any law for the time being in force, if

any immovable property is held by him on behalf of the society, the title over the land shall

be complete as soon as the mutation of the name of his office is effected and no court shall

question the title on the ground of dispossession, want of possession or physical delivery

of possession.

(6) In the event of the interim order being vacated, the Liquidator shall hand over the

property, effects, actionable claims, books, records and other documents of the society to

the officers who had delivered the same to him and the acts done, and the proceedings taken

by the Liquidator, shall be binding on the society, and such proceedings shall, after the

interim order has been vacated under section 107 be continued by the officers of the society.

109. (1) The Committee, or any member, of the society ordered to be wound up, may

within two months from the date of the communication to the society of the order made under

section 107 appeal, if the order is made by the Registrar, Additional Registrar or Joint Registrar

to the Administrator, or if the order is made by any other person on whom the powers of the

Registrar are conferred, to the Registrar:

Appointment

of Liquidator.

Appeal against

order of

winding up.

THE LAKSHADWEEP GAZETTE EXTRAORDINARY

Provided that no appeal shall lie against an order issued under sub-clauses (i), (ii) or

(iii) of clause (c) of sub-section (1) of section 107:

Provided further that, no appeal shall lie against an order passed by the Registrar on

appeal.

(2) No appeal under this section shall be entertained from a member unless it is

accompanied by such sum as security for the costs of hearing the appeal, as may be prescribed.

110. The Liquidator appointed under section 108 shall have power, subject to the rules

and the general supervision, control and direction of the Registrar,—

(a) to institute and defend suits and other legal proceedings, civil or criminal, on

behalf of the society, in the name of his office;

(b) to carry on the business of the society, so far as may be necessary for the

beneficial winding up of the same;

society by public auction or private contract, with power to transfer the whole or part

thereof to any person or body corporate, or sell the same in parcels;

(d) to raise on the security of the assets of the society, any money required;

(e) to investigate all claims against the society and, subject to the provisions of

this Regulation, to decide questions of priority arising out of such claims, and to pay

any class or classes of creditor in full or rateable according to the amount of such

debts, the surplus being applied in payment of interest from the date of liquidation at

a rate to be approved by the Registrar, but not exceeding the contract rates;

(f) to make any compromise or arrangement with creditors or persons claiming to

be creditors, or having or alleging themselves to have any claim, present or future,

whereby the society may be rendered liable;

(g) to compromise all calls or liabilities to calls and debts and liabilities capable of

resulting in debts, and all claims present or future, certain or contingent, subsisting or

supposed to subsist between the society and a contributory or alleged contributory or

other debtor or person apprehending liability to the society, and all questions in any

way relating to or affecting the assets or the winding up of the society, on such terms

as may be agreed, and take any security for the discharge of any such call, liability,

debt, or claim, and give a complete discharge in respect thereof;

(h) to determine, from time to time, after giving an opportunity to answer the

claim, the contribution to be made or remaining to be made by the members or past

members or by the estate, nominees, heirs or legal representatives of deceased members,

or by any officer, past officer or the estate or nominees, heirs or legal representatives

of a deceased officer to the assets of the society, such contribution being inclusive of

debts due from such members or officers;

(i) to make applications under section 103;

(j) to get disputes referred to the Registrar for decision by himself or his nominee

or board of nominees;

(k) to determine by what persons and in what proportion the costs of the liquidation

shall be borne;

(l) to fix the time or times within which the creditors shall prove their debts and

claims or be included for the benefits of any distribution made before those debts or

claims are proved;

(m) to summon and enforce the attendance of witnesses and to compel the

production of any books, accounts, documents, securities, cash or other properties

Powers of

Liquidators.

THE LAKSHADWEEP GAZETTE EXTRAORDINARY

belonging to or in the custody of the society by the same means and in the same

manner as provided in the case of a civil court under the Code of Civil Procedure,1908;

(n) to do all acts, and to execute in the name and on behalf of the society, all

deeds, receipts and other documents, as may be necessary to such winding up; and

(o) to take such action as may be necessary under section 20, with the prior

approval of the Registrar, if there is reason to believe that the society can be

reconstructed.

111. (1) After the expiry of the period for appeal under section 109 against the order

made under sub-section (3) of section 107, or where the appeal has been dismissed, the order

for winding up shall be effective and shall operate in favour of all creditors and of all the

contributories of the society as if it has been made on the joint petition of creditors and

contributories.

(2) When a winding up order becomes effective, the Liquidator shall proceed to realise

the assets of the society, by sale or otherwise, and no dispute shall be commenced, or if

pending at the date of the winding up order, be proceeded with, against the society, except

by leave of the Registrar and subject to such terms as the Registrar may impose and the

Registrar may of his own motion, however, entertain or dispose of any dispute by or against

the society.

112. Save as expressly provided in this Regulation, no civil court shall take cognizance

of any matter connected with the winding up or dissolution of a society under this Regulation

and when a winding up order has been made no suit or other legal proceedings shall lie or be

proceeded with against the society or the Liquidator, except by leave of the Registrar, and

subject to such terms as he may impose:

Provided that, where the winding up order is cancelled, the provisions of this section

shall cease to operate so far as the liability of the society and of the members thereof to be

sued is concerned, but they shall continue to apply to the person who acted as Liquidator.

113. (1) The Liquidator shall, during his tenure of office, at such times as may be

prescribed, but not less than twice each year, present to the Registrar an account in the

prescribed form of his receipt and payments as the Liquidator and the Registrar shall cause

the accounts to be audited in such manner as he thinks fit and for the purpose of audit, the

Liquidator shall furnish the Registrar with such vouchers and information as he, or the

person appointed by him, may require.

(2) The Liquidator shall cause a summary of audited accounts to be prepared, and shall

send a copy of such summary to every contributory.

(3) The Liquidator shall pay such fees as the Registrar may direct, for the audit of the

accounts of books kept by him in the manner prescribed.

(4) The Liquidator shall be held liable for any irregularities which might be discovered

in the course or as a result of audit in respect of transactions subsequent to his taking charge

of the affairs of the society, and may be proceeded against as if it were an act against which

action could be taken under section 93:

Provided that no such action shall be taken unless the irregularities have caused or are

likely to cause loss to the society, and have occurred due to gross negligence or want on

omission by the Liquidator, in carrying out the duties and functions.

114. (1) The winding up proceedings of a society shall be closed within five years from

the date of the order of the winding up, unless the period is extended by the Registrar:

Provided that the Registrar shall not grant any extension for a period exceeding one

year at a time and five years in the aggregate, and shall, immediately after the expiry of ten

years from the date of the order for winding up of the society, deem that the liquidation

proceedings have been terminated, and pass an order terminating the liquidation proceedings.

5 of 1908.

Effect of

order of

winding up.

Bar of suit in

winding up and

dissolution

matters.

Audit of

Liquidator's

accounts.

Termination

of liquidation

proceedings.

THE LAKSHADWEEP GAZETTE EXTRAORDINARY

Explanation.—For the purposes of this sub-section, it is hereby clarified that in the

case of a society which is under liquidation at the date of the commencement of this Regulation,

an order for the winding up of the society shall be deemed for the purpose of this section to

have been passed on the said date.

(2) Notwithstanding anything contained in sub-section (1), the Registrar shall terminate

the liquidation proceedings on receipt of the final report from the Liquidator and the final

report of the Liquidator shall state that the liquidation proceedings of the society have been

closed, and also state how the winding up has been conducted and the property and claims

of the society have been disposed of, and shall include a statement showing a summary of

the account of the winding up including the cost of liquidation, the amount, if any, standing

to the credit of the society, after paying off its liabilities including the share or interest of

members, and shall suggest how the surplus should be utilised.

(3) The Registrar, on receipt of the final report from the Liquidator, shall direct the

Liquidator to convene a general meeting of the members of the society for recording the

report.

115. Any surplus assets, as shown in the final report of the Liquidator of a society

which has been wound up, shall not be divided, amongst its members but shall be devoted

to any object or objects provided in the bye-laws of the society, if they specify that such a

surplus shall be utilised for the particular purpose and where the society has no such

bye-laws the surplus shall vest in the Registrar, who shall hold it in trust and shall transfer it

to the reserve fund of a new society registered with a similar object, and serving more or less

an area which the society to which the surplus belonged was serving:

Provided that, where no such society exists or is registered within three years of the

cancellation of the registration of the society whose surplus is vested in the Registrar, the

Registrar may distribute the surplus in the manner he thinks best, among any or all of the

following, namely:—

(a) an object of public utility and of local interest as may be recommended by the

members in general meeting held under section 114 or where the society has ceased to

function and its record is not available or none of its members is forthcoming, as the

Registrar thinks proper;

(b) a federal society with similar objects to which the cancelled society was

eligible for affiliation; and

other law for time being in force.

CHAPTER XI

INSURED CO-OPERATIVE BANK

116. Notwithstanding anything contained in this Regulation, in the case of an insured

co-operative bank,—

(a) an order for winding up or an order sanctioning a scheme of compromise or

arrangement or of amalgamation or reconstruction (including division or reorganisation)

of the bank may be made only with the previous sanction in writing of the Reserve

Bank;

(b) an order for winding up the bank shall be made by the Registrar if so required

by the Reserve Bank in the circumstances referred to in section 13D of the Deposit

Insurance and Credit Guarantee Corporation Act, 1961 or any other law for the time

being in force;

by the Reserve Bank including supersession and winding up of the co-operative bank

and shall appoint a special officer or a Liquidator as the case may be within a period of

one month of being so advised by the Reserve Bank;

Disposal of

surplus assets.

6 of 1890.

Order for

winding up,

reconstruction,

supersession

of Committee,

etc., of insured

co-operative

bank not to be

made without

sanction or

requisition of

Reserve Bank.

47 of 1961.

THE LAKSHADWEEP GAZETTE EXTRAORDINARY

(d) if so required by the Reserve Bank in the public interest or for preventing the

affairs of the bank being conducted in a manner detrimental to the interests of the

depositors or for securing the proper management of the bank, an order shall be made

by the Registrar for supersession of the Committee and the appointment of a special

officer in place thereof for such period or periods not exceeding five years in the

aggregate, as may from time to time be specified by the Reserve Bank, and the special

officer so appointed shall, after the expiry of his term of office, continue in office until

the day immediately preceding the date of the first meeting of the new Committee of

such bank;

(e) an order for winding up of the bank or an order sanctioning a scheme of

compromise or arrangement or of amalgamation or reconstruction (including division

or reorganisation) or an order for the supersession of the Committee of the bank and

the appointment of a special officer in place thereof made with the previous sanction in

writing or on the requisition of the Reserve Bank shall be final and shall not be liable to

be called in question in any manner in any court; and

(f) the Liquidator or such bank or the transferee bank, as the case may be, shall

be under an obligation to pay the Deposit Insurance Corporation established under

the Deposit Insurance and Credit Guarantee Corporation Act, 1961 or any other law for

time being in force, in the circumstances, to the extent and in the manner referred to in

section 21 of that Act.

Explanation.—For the purposes of this section, the expression—

(a) “insured co-operative bank” means a society which is an insured bank under

the provisions of the Deposit Insurance and Credit Guarantee Corporation Act, 1961 or

any other law for the time being in force;

(b) “transferee bank” in relation to an insured co-operative bank means a

co-operative bank—

(i) with which such insured co-operative bank is amalgamated;

(ii) to which the assets and liabilities of such insured co-operative bank

are transferred; or

(iii) into which such insured co-operative bank is divided or converted

under sub-section (1) of section 17.

117. (1) In case of a co-operative society carrying on the business of banking, the

provisions of the Banking Regulation Act, 1949, as amended from time to time, shall also

apply in relation to banking activities.

(2) In case of any conflict between the provisions of this Regulation and the provisions

of the Banking Regulation Act, 1949, the provisions of the latter along with the rules,

regulations, directions or instruction issued thereunder by the Reserve Bank from time to

time shall apply.

118. A Committee of co-operative bank shall ensure that—

(a) information is furnished every month to the Registrar in such form as may be

prescribed, regarding the loans taken from the bank by each Committee member, members

of the family and companies with which he is associated, in any manner;

(b) the bank is registered as an insured bank under the Deposit Insurance and

Credit Guarantee Corporation Act, 1961 or any other law for the time being in force;

disclosed in the course of audit of the bank or otherwise are remedied;

(d) action to recover loans given by the bank is taken within one year from the

date when repayment of the same has become due;

47 of 1961.

Ensurance of

certain things

by Committee

of co-

operative

bank.

47 of 1961.

Application of

provisions of

Act No. 10 of

1949 and its

overriding

effect.

47 of 1961.

THE LAKSHADWEEP GAZETTE EXTRAORDINARY

(e) no financial loss is caused to the bank and any debt due to the bank which is

not recovered within a period of one year from the date when it has become due shall

be recovered;

(f) civil and criminal proceedings against a person who, in the opinion of the

Committee, has misappropriated any fund of the bank are initiated; and

(g) the provisions of sections 18 and 24 of the Banking Regulation Act, 1949 as

applicable to co-operative societies and of section 63 of this Regulation are complied

with and if in its opinion any of the said provisions is contravened, such contravention

is forthwith reported to the Registrar.

119. (1) No person, other than a society registered, or deemed to be registered, under

this Regulation, and a person or his successor in interest of any name or title under word

which he traded or carried on business at the date on which this Regulation comes into force,

shall without the prior sanction of the Administrator, function, trade or carry on business

under any name or title of which the word “Co-operative” or its equivalent in any Indian

language, forms part.

(2) Every person contravening the provisions of the foregoing sub-section shall on

conviction, be punished with fine which may extend to twenty-five thousand rupees.

120. (1) It shall be an offence under this Regulation, if—

(a) any person makes a declaration referred to in section 26 which he knows or

has reason to believe to be false;

(b) if the officer or officers authorised under sub-section (3) of section 37 fail to

discharge the functions as provided in the said section;

contravention of sub-section (2) of section 51 or any person knowingly acquires, or

abets the acquisition of, such property;

(d) any employer or any director, manager, secretary or other officer or agent

acting on behalf of such employer without sufficient cause, fails to comply with

sub-section (2) of section 53;

(e) a Committee of a society or an officer or member thereof fails to invest funds

of such society in the manner required by section 62;

(f) any person, collecting the share money for a society or information, does not

within a reasonable period deposit the same in the State Co-operative Bank, or a

Central Co-operative Bank, or in any Nationalised Bank, or a postal savings bank;

(g) any person, collecting the share money for a society or information, makes

use of the funds so raised for conducting any business or trading in the name of a

society to be registered or otherwise;

(h) any person before, during or after the election of members of the Managing

Committee or office bearers, adopts corrupt practice;

(i) a retiring Chairperson to whom a direction has been issued under

sub-section (2) of section 72 fails to comply with such direction;

(j) a Committee of a society or a member thereof fails to comply with the provisions

of section 73;

(k) a Committee of a society, or an officer or member thereof, fails to comply with

the provisions of sub-section (2), (3) or (4) of section 75;

(l) any officer or member of a society who is in possession of information, books

and records, fails to furnish such information or produce books and papers, or give

10 of 1949.

Prohibition of

use of word

"Co-

operative".

Offences.

THE LAKSHADWEEP GAZETTE EXTRAORDINARY

assistance to a person appointed or authorised by the Administrator of Union territory

or the Registrar under sections 22, 66, 68, 78, 81, 84, 86, 87, 88, 99 or 108;

(m) any officer of a society fails to handover the custody of books, records,

cash, security and other property belonging to the society of which he is an officer, to

a person appointed under sections 22, 66, 78, 81 or 108;

(n) a Committee of a society or any officer or a member thereof fails without any

reasonable excuse to comply with orders made under section 81 or to give any notice,

or to send any return or document, do or allow to be done anything, which the Committee,

officer or member is by this Regulation required to give, send, do or allow to be done;

(o) a Committee of a society or an officer or member thereof wilfully neglects or

refuses to do any act or to furnish any information required for the purposes of this

Regulation by the Registrar or other person duly authorised by him in writing in this

behalf;

(p) a Committee of a society, or any officer or member thereof, wilfully makes a

false return, or furnishes, false information, or fails to maintain proper accounts;

(q) any person wilfully or without any reasonable excuse disobeys any summons,

requisition or lawful written order issued under provisions of this Regulation;

(r) an officer or a society fails to comply with the order made by the Registrar

under section 83;

(s) an officer, member, agent or servant of a society fails to comply with the

requirements of sub-section (4) of section 84;

(t) an officer or a member of a society wilfully fails to comply with any decision,

award or order passed under section 98;

(u) a member of a society fraudulently disposes of property over which the

society has a prior claim, or a member or officer or employee or any person disposes of

his property by sale, transfer, mortgage, gift or otherwise, with the fraudulent intention

of evading the dues of the society;

(v) an officer of a society wilfully recommends or sanctions for his own personal

use or benefit or for use or benefit of a person in whom he is interested, a loan in the

name of any other person;

(w) an officer or member of a society destroys, mutilates, tampers with, or otherwise

alters, falsifies or secretes or is privy to the destruction, mutilation, alteration, falsification

or secreting of any books, papers or securities or makes, or is privy to the making of

any false or fraudulent entry in any register, book of account or document belonging

to the society;

(x) if a Committee of co-operative bank fails to comply with the provisions of any

of the clauses (a) to (g) of section 118;

(y) if a Committee fails to ensure that the information under clause (a) of

section 118 is true; and

(z) if a Committee fails to ensure that a report under clause (g) of section 118 is

true.

(2) Where an offence under this Regulation has been committed by a Committee of a

society, every person who at the time the offence was committed, was a member of such

Committee shall be deemed to be guilty of the offence and shall be liable to be proceeded

against and punished accordingly:

Provided that nothing contained in this sub-section shall render any such person

liable to any punishment as provided in this Regulation, if he proves that the offence was

THE LAKSHADWEEP GAZETTE EXTRAORDINARY

committed without his knowledge or that he exercised all due diligence to prevent the

commission of such offence.

121. (1) Every employer or officer, member, agent or servant of a society, or any other

person, who commits an offence under section 118 shall, on conviction, be punished,—

(a) if it is an offence under clause (a) of that section, with fine which may extend

to fifty thousand rupees;

(b) if it is an offence under clause (b) of that section, with imprisonment for a term

which may extend to six months or with fine which may extend to one lakh rupees or

with both;

which may extend to one year or with fine which may extend to one lakh rupees or with

both;

(d) if it is an offence under clause (d) of that section, with imprisonment for a term

which may extend to six months or with fine which may extend to one lakh rupees or

with both;

(e) if it is an offence under clause (e) of that section, with imprisonment for a term

which may extend to one year or with fine which may extend to one lakh rupees or with

both;

(f) if it is an offence under clause (f) of that section, with imprisonment for a term

which may extend to two years or with fine which may extend to two lakh rupees or

with both; and

(g) if it is an offence under clause (g) of that section, with imprisonment for a term

which may extend to one year or with fine which may extend to one lakh rupees or with

both.

(2) Every employer or officer, member, agent or servant of a society, or any other

person, who commits an offence under section 120 shall, on conviction, be punished,—

(a) if it is an offence under clause (a) of that section, with simple imprisonment

which may extend to six months or with fine which may extend to ten thousand rupees

or with both;

(b) if it is an offence under clause (b) of that section, with fine which may extend

to twenty-five thousand rupees;

which may extend to six months or with fine which may extend to five thousand rupees

or with both;

(d) if it is an offence under clause (d) of that section, with imprisonment for a term

which may extend to one month or with fine which may extend to fifty thousand rupees

or with both;

(e) if it is an offence under clause (e) of that section, with fine which may extend

to fifty thousand rupees;

(f) if it is an offence under clause (f) of that section, with fine which may extend

to fifty thousand rupees;

(g) if it is an offence under clause (g) of that section, with imprisonment for a

term which may extend to one year or with fine which may extend to fifty thousand

rupees, or with both;

(h) if it is an offence under clause (h) of that section, with imprisonment for a

term which may extend to six months or with fine which may extend to ten thousand

rupees or with both;

Punishments

for offences

under sections

118 and 120.

THE LAKSHADWEEP GAZETTE EXTRAORDINARY

(i) if it is an offence under clause (i) of that section, with imprisonment which

may extend to one month or with fine which may extend to twenty-five thousand

rupees or with both;

(j) if it is an offence under clause (j) of that section, with imprisonment for a term

which may extend to six months or with fine which may extend to ten thousand rupees

or with both;

(k) if it is an offence under clause (k) of that section, with fine which may extend

to twenty-five thousand five hundred rupees;

(l) if it is an offence under clause (l) of that section, with imprisonment for a term

which may extend to three months or with fine which may extend to twenty-five

thousand rupees or with both;

(m) if it is an offence under clause (m) of that section, with fine which may extend

to twenty-five thousand rupees;

(n) if it is an offence under clause (n) of that section, with fine which may extend

to twenty-five thousand rupees;

(o) if it is an offence under clause (o) of that section, with imprisonment for a term

which may extend to one month or with fine which may extend to twenty-five thousand

rupees or with both;

(p) if it is an offence under clause (p) of that section, with imprisonment for a term

which may extend to one year or with fine which may extend to fifty thousand rupees

or with both;

(q) if it is an offence under clause (q) of that section, with imprisonment for a term

which may extend to six months or with fine which may extend to ten thousand rupees

or with both;

(r) if it is an offence under clause (r) of that section, with imprisonment for a term

which may extend to one year or with fine which may extend to twenty-five thousand

rupees or with both;

(s) if it is an offence under clause (s) of that section, with fine which may extend

to twenty-five thousand rupees;

(t) if it is an offence under clause (t) of that section, with imprisonment for a term

which may extend to six months or with fine which may extend to twenty-five thousand

rupees or with both;

(u) if it is an offence under clause (u) of that section, with imprisonment for a term

which may extend to six months or with fine which may extend to fifty thousand rupees

or with both;

(v) if it is an offence under clause (v) of that section, with imprisonment for a term

which may extend to two years or with fine which may extend to twenty-five thousand

rupees or with both;

(w) if it is an offence under clause (w) of that section, with imprisonment for a

term which may extend to three years or with fine which may extend to ten thousand

rupees or with both; and

(x) if it is an offence under clauses (x), (y) and (z) of that section, with imprisonment

for a term which may extend to three years or with fine which may extend to ten

thousand rupees or with both.

(3) No prosecution for an offence under section 120 shall be instituted in respect of the

same facts on which a penalty has been imposed by the Registrar under any provisions of

this Regulation.

122. (1) No court inferior to that of a Judicial Magistrate of first class shall try any

offence punishable under this Regulation.

(2) Notwithstanding anything contained in the Code of Criminal Procedure, 1973, it

shall be lawful for a Judicial Magistrate of first class to pass a sentence or fine on any person

Cognizance of

offences.

2 of 1974.

THE LAKSHADWEEP GAZETTE EXTRAORDINARY

convicted of an offence under section 120 as provided under section 121, in excess of his

powers under section 32 of that Code.

(3) No prosecution under this Regulation shall be lodged, except with the previous

sanction of the Registrar.

CHAPTER XII

APPEALS, REVIEW AND REVISION

123. (1) The Administrator shall constitute a Tribunal called the Co-operative Tribunal

to exercise the functions conferred on the Tribunal by or under this Regulation.

(2) The Tribunal shall consist of a President and such number of other members not

exceeding four.

(3) The qualifications, experience, the terms and conditions for appointment of the

President and other members shall be such as may be prescribed.

(4) The Administrator may terminate the appointment of any member of the Tribunal

before the expiry of the term of his office if such member—

(a) is adjudged as an insolvent;

(b) engages during his term of office in any paid employment outside the duties

of his office unless such employment is authorised by the Administrator;

made by or on behalf of the Union territory Administration or participates in any way

in the profit thereof or in any benefit or emoluments arising therefrom otherwise than

as a member;

(d) has become physically or mentally incapable of acting as a member:

Provided that the member shall not be removed from his office on the grounds

specified under clause (b) or clause (c) of this sub-section except by an order made by

the Administrator after an inquiry made by the Judge of the concerned High Court

having jurisdiction in such manner as may be prescribed; or

(e) is convicted of an offence involving moral turpitude.

(5) Any vacancy in the membership of the Tribunal shall be filled by the Administrator.

(6) The powers and functions of the Tribunal may be exercised and discharged by the

Benches constituted by the President from amongst the members of the Tribunal including

himself.

(7) Such Benches shall consist of two or more members.

(8) Where a matter is heard by three members the opinion of the majority shall prevail,

and the decision shall be in accordance with the opinion of the majority and where a matter

is heard by an even number of members, and the members are equally divided, if the President

be one of the members, the opinion of the President shall prevail and in other cases the matter

shall be referred for hearing to the President and shall be decided in accordance with his

decision:

Provided that any interlocutory application may be heard by one or more members

who may be present.

(9) Subject to the previous sanction of the Administrator, the Tribunal shall frame such

regulations consistent with the provisions of this Regulation and rules made thereunder, for

regulating its procedure and the disposal of its business and they shall be published in the

Official Gazette.

(10) The Tribunal may call for and examine the record of any proceeding in which an

appeal lies to it, for the purpose of satisfying itself as to the legality or propriety of any

Constitution

of Co-

operative

Tribunal.

THE LAKSHADWEEP GAZETTE EXTRAORDINARY

decision or order passed and if in any case, it appears to the Tribunal that any such decision

or order should be modified, annulled or reversed, the Tribunal may pass such order thereon

as it may deem just.

(11) Where an appeal is made to the Tribunal under section 102, it may, in order to

prevent the ends of justice being defeated, make such interlocutory order spending the

decision of the appeal as may appear to it to be just and convenient, or such orders as may

be necessary for the ends of justice, or to prevent the abuse of the process of the Tribunal.

(12) An order passed, in appeal, or in revision under sub-section (10), or in review

under section 124, by the Tribunal, shall be final and conclusive, and shall not be called in

question in any civil court or revenue court.

(13) The Tribunal hearing an appeal under this Regulation shall exercise all the powers

conferred upon an appellate court by section 97 and Order 41 in the First Schedule of the

Code of Civil Procedure, 1908.

124. (1) The Tribunal may, either on the application of the Registrar, or on the application

of any party interested, review its own order in any case, and pass in reference thereto such

order as it thinks just:

Provided that no such application made by the party interested shall be entertained,

unless the Tribunal is satisfied that there has been discovery of new and important matter of

evidence, which after the exercise of due diligence was not within the knowledge of the

applicant or could not be produced by him at the time when its order was made, or that there

has been some mistake or error apparent on the face of the record, or for any other sufficient

reasons:

Provided further that no such order shall be varied or revised, unless notice has been

given to the parties interested to appear and be heard in support of such order.

(2) An application for review under sub-section (1) by any party shall be made within

ninety days from the date of the communication of the order of the Tribunal.

125. (1) In exercising the functions conferred on it by or under this Regulation, the

Tribunal shall have the same powers as are vested in a civil court in respect of—

(a) proof of facts by affidavit;

(b) summoning and enforcing the attendance of any person and examining him

on oath;

(d) issuing commissions for the examination of witnesses; and

(e) any other matter which may be prescribed.

(2) In the case of any such affidavit, any officer appointed by the Tribunal in this

behalf may administer the oath to the deponent.

126. (1) An appeal against an order or decision under sections 4, 9, 11, 13, 17, 20, 22, 40,

and 81 shall lie,—

(a) if made or sanctioned or approved by the Registrar or an Additional

Registrar or Joint Registrar on whom powers of the Registrar are conferred, to the

Administrator; or

(b) if made or sanctioned by any person other than the Registrar or a Deputy

Registrar or Assistant Registrar on whom the powers of the Registrar are conferred, to

the Registrar.

(2) An appeal against an order of a Liquidator under section 110 shall lie—

(a) to the Administrator if the order was made with the sanction or approval of

the Registrar; and

5 of 1908.

Review of

orders of

Tribunal.

Tribunal to

have power of

civil court.

Appeals.

THE LAKSHADWEEP GAZETTE EXTRAORDINARY

(b) to the Registrar in any other case.

(3) An appeal against an order or decision under sections 81, 90, 93 and any order

passed by the Registrar for paying compensation to a society, and any other order for which

an appeal to the Tribunal has been provided under this Regulation, shall lie to the Tribunal.

(4) An appeal under sub-section (1), (2) or (3) shall be filed within two months of the

date of the communication of the order or decision.

(5) The procedure to be followed in presenting and disposing of appeals under this

section or under any other provisions of this Regulation shall be such as may be prescribed.

(6) Save as provided in this Regulation, no appeal shall lie against any order, decision

or award passed in accordance with this Regulation and every such order, decision or award

shall be final, and where any appeal has been provided for, any order passed on appeal shall

be final and no further appeal shall lie against it.

127. In all cases in which it is provided under this Regulation that an appeal may be

filed against any decision or order within a specified period, the appellate authority may

admit an appeal after the expiry of such period, if the appellant satisfies the appellate authority

that he had sufficient cause for not preferring the appeal within such period.

128. The Administrator and the Registrar may call for and examine the record of any

inquiry or the proceedings of any other matter of any officer subordinate to them, except

those referred to in sub-section (10) of section 123, for the purpose of satisfying themselves

as to the legality or propriety of any decision or order passed, and as to the regularity of the

proceedings of such officer and if in any case, it appears to the Administrator, or the Registrar,

that any decision or order or proceedings so called for should be modified, annulled or

reversed, the Administrator or the Registrar, as the case may be, may after giving persons

affected thereby an opportunity of being heard pass such order thereon as it or he may deem

just.

CHAPTER XIII

MISCELLANEOUS

129. The Administrator may, by general or special order to be published in the Official

Gazette, direct any society or any class of society not to render contract in relation to such

matters concerning such society or the class of any society and to make purchases for such

amount by following the e-tender process.

130. (1) Unless otherwise provided by this Regulation, all sums due from a society or

from an officer or member or past member or a deceased member of a society as such to the

Union territory Administration, may be recovered as arrears of land revenue.

(2) Sums due from a society to the Union territory Administration and recoverable

under sub-section (1) may be recovered—

(i) from the property of the society;

(ii) in the case of a society of which the liability of the members is limited, from

the members or past members or from their estate if they have died, subject to the limit

of their liability; and

(iii) in the case of societies with unlimited liability from the members or past

members or their estate, if they have died.

(3) The liability under this section shall in all cases be subject to the provisions of

section 38.

Extension of

period of

limitation of

appellate

authority in

certain cases.

Power of

Administrator

and Registrar

to call for

proceedings of

subordinate

officers to

pass orders

thereon.

Power of

Administrator

to give

directions for

e-tender

process.

Recovery of

sums due to

Union

territory

Administration.

THE LAKSHADWEEP GAZETTE EXTRAORDINARY

131. Notwithstanding anything contained in the Transfer of Property Act, 1882 and

the Indian Registration Act 1908, it shall be lawful for a member of a Co-operative Farming

Society to transfer to the society any land held by him or the whole or part of his interest in

any land by an agreement and in such manner as may be prescribed.

132. (1) The Registrar or any officer subordinate to him and empowered by him in this

behalf may, subject to such rules as may be made by the Administrator but without prejudice

to any other mode of recovery provided by or under this Regulation, recover—

(a) any amount due under a decree or order of a civil court, obtained by a

society;

(b) any amount due under a decision, award or order of the Registrar, his nominee

or the board of nominees or Liquidator or Tribunal;

(d) any sum ordered to be paid under this Regulation as a contribution to the

assets of the society,

together with interest, if any, due on such amount or sum and the costs of recovering the

same, by the attachment and sale or by sale without attachment of the property of the person

against whom such decree, decision, award or order has been obtained or passed.

(2) The Registrar or the officer empowered by him shall be deemed when exercising the

powers under sub-section (1) or when passing any order on any application made to him for

such recovery, to be a civil court for the purposes of the Code of Civil Procedure, 1908.

133. The Administrator may, by general or special order, to be published in the Official

Gazette, and for the reasons to be recorded in writing, exempt any society or class of societies

from any of the provisions of this Regulation, or may direct that such provisions shall apply

to such societies with such modifications not affecting the substance thereof as may be

specified in the order:

Provided that, no order to the prejudice of any society shall be passed, without an

opportunity being given to such society to represent its case.

134. The Administrator may, by notification in the Official Gazette, and subject to such

conditions, as it may think fit to impose, delegate—

(a) any power exercisable by it under this Regulation except the power under

sub-section (1) of section 126, and section 139 thereof to the Registrar; and

(b) all of any of the powers of the Registrar under this Regulation to any

Committee constituted or to any co-operative federal society recognised under

section 95 or to an officer of such society or to any panchayat constituted under any

law relating to panchayats for the time being in force.

135. (1) No society shall open a branch or a place of business outside the Union

territory, and no co-operative society registered under any law in any other State shall open

a branch or a place of business in the Union territory without the permission of the Registrar.

(2) Every co-operative society registered under any law in any other State, and permitted

to open a branch or a place of business in the Union territory under sub-section (1) or which

has a branch or a place of business in the Union territory before the commencement of this

Regulation, shall, within three months from the date of the opening of such branch or place

of business or from the date of the commencement of this Regulation, as the case may be, file

with the Registrar a certified copy of the bye-laws and amendments and, if these be not in

English a certified translation thereof in English or Hindi and shall submit to the Registrar

such returns and information as are submitted by similar societies registered under this

Competency

of a member

to transfer

land or

interest

therein to

society.

4 of 1882.

16 of 1908.

Registrar's

powers to

recover

certain sums

by attachment

and sale of

property.

5 of 1908.

Power to

exempt

societies from

provisions of

Regulation.

Delegation of

powers of

Administrator

and of

Registrar.

Branches, etc.,

of societies

outside Union

territory.

THE LAKSHADWEEP GAZETTE EXTRAORDINARY

Regulation in addition to those which may be submitted to the Registrar of that State where

such society is registered.

(3) The provisions of sub-sections (1) and (2) shall not apply to co-operative societies

to which the provisions of the Multi-State Co-operative Societies Act, 2002 applies.

(4) Nothing in sub-section (1) shall affect a society which has a branch or a place of

business outside the Union territory at the commencement of this Regulation.

136. The Registrar, a person exercising the powers of the Registrar, an official assignee

under section 22, a custodian under section 66, co-operative election officer under

section 68, a person authorised to audit the accounts of a society under section 84, or to hold

an inquiry under section 86, or to make an inspection under section 87 or section 88, and a

person appointed as a special officer under section 81 or section 116, or as a nominee or

board of nominees under section 98, or as a Liquidator under section 108, and all members of

the Tribunal shall be deemed to be public servants within the meaning of section 21of the

Indian Penal Code.

137. No suit, prosecution or other legal proceeding shall lie against the Registrar or

any officer of society or any member or officer of Appellate Tribunal for anything which is in

good faith done or intended to be done under this Regulation or rules made thereunder.

138. (1) Save as expressly provided in this Regulation, no civil court or revenue court

shall have any jurisdiction in respect of—

(a) the registration of a society or its bye-laws, or the amendment of its bye-laws,

or the dissolution of the Committee of a society, or the management of the society on

dissolution thereof;

(b) any dispute required to be referred to the Registrar, or his nominee, or board

of nominees, for decision; or

(2) While a society is being wound up, no suit or other legal proceeding relating to the

business of such society shall be proceeded with or instituted against the society or any

member thereof, or any matter touching the affairs of the society, except by leave of the

Registrar, and subject to such terms as he may impose.

(3) All orders, decisions or awards passed in accordance with this Regulation or the

rules, shall, subject to the provisions for appeal or revision in this Regulation, be final and no

such order, decision or award shall be liable to be challenged, set aside, modified, revised or

declared void in any court upon the merits, or upon any other ground whatsoever except for

want of jurisdiction.

139. (1) The Administrator may, by notification in the Official Gazette and subject to

the condition of previous publication, make rules not inconsistent with the provisions of this

Regulation to carry out the provisions and purposes of this Regulation.

(2) Every rule made by the Administrator under this Regulation shall be laid, as soon as

may be after it is made, before each House of Parliament, while it is in session, for a total

period of thirty days which may be comprised in one session or in two or more successive

sessions, and if, before the expiry of the session immediately following the session or the

successive sessions aforesaid, both Houses agree in making any modification in the rule or

both Houses agree that the rule should not be made, the rule shall thereafter have effect only

in such modified form or be of no effect, as the case may be; so, however, that any such

modification or annulment shall be without prejudice to the validity of anything previously

done under that rule.

140. The provisions of the Companies Act, 2013, shall not apply to societies registered,

or deemed to be registered under this Regulation.

39 of 2002.

Registrar and

other officers

to be public

servants.

45 of 1860.

Protection of

action taken

in good faith.

Bar of

jurisdiction of

courts.

Power to

make rules and

its laying

before

Parliament.

Act no. 18 of

2013 not to

apply.

THE LAKSHADWEEP GAZETTE EXTRAORDINARY

141. (1) If any difficulty arises in giving effect to the provisions of this Regulation, the

Administrator may, by order published in the Official Gazette make such provisions not

inconsistent with the provisions of this Regulation as may appear to him to be necessary or

expedient for the removal of that difficulty:

Provided that no such order shall be made under this section after the expiry of one

year from the date of commencement of this Regulation.

(2) Every order made under this section shall be laid, as soon as may be after it is made,

before each House of Parliament.

142. (1) The Laccadive, Minicoy and Amindivi Islands Cooperative Societies

Regulation, 1960 (hereafter in this section referred to as the said Regulation) is hereby

repealed:

Provided that such repeal shall not affect—

(i) the previous operation of the said Regulation so repealed, or anything duly

done or suffered thereunder;

(ii) any right, privilege, obligation or liability acquired, accrued or incurred under

the said Regulation so repealed;

(iii) any penalty, forfeiture or punishment incurred in respect of any offence

committed against the said Regulation so repealed; or

(iv) any investigation, proceedings, legal proceedings or remedy in respect of

any such right, privilege, obligation, liability, penalty, forfeiture or punishment as

aforesaid,

and any such investigation, proceedings, legal proceedings or remedy may be instituted,

continued or enforced and any such penalty, forfeiture or punishment may be imposed, as if

this Regulation had not been promulgated.

(2) The mention of particular matters referred to in sub-section (1) shall not be held to

prejudice or affect the general application of section 6 of the General Clauses Act, 1897 with

regard to the effect of repeal.

————

DROUPADI MURMU,

President.

————

K. BISWAL,

Additional Secretary to the Govt. of India.

Power to

remove

difficulties.

10 of 1897.

Repeal and

savings.

Reg. 5 of

1960.

THE LAKSHADWEEP GAZETTE EXTRAORDINARY

Short title,

extent and

commencement.

THE LAKSHADWEEP VALUE ADDED TAX REGULATION, 2022

NO. 1 OF 2022

Promulgated by the President in the Seventy-third Year of the Republic of India.

A Regulation to provide for a tax system on the goods excluded from the Union Territory

Goods and Services Tax Act, 2017 and to widen the tax base by levying tax on sale of

the said goods at every point of sale, making the levy of tax transparent and for

matters connected therewith or incidental thereto.

In exercise of the powers conferred by article 240 of the Constitution, the President is

pleased to promulgate the following Regulation made by her:—

CHAPTER I

PRELIMINARY

1. (1) This Regulation may be called the Lakshadweep Value Added Tax

Regulation, 2022.

(2) It extends to the whole of the Union territory of Lakshadweep.

(3) The provisions of this Regulation shall come into force on such date as the

Administrator may, by notification in the Official Gazette, appoint.

MINISTRY OF LAW AND JUSTICE

(Legislative Department)

New Delhi, the 19th September, 2022/Bhadra 28, 1944 (Saka)

NOTIFICATION

F. No.100/01/2019-PST dated 29.09.2022: In exercise of powers conferred under Sub

Section 3 of Section 1 of the Lakshadweep Value Added Tax Regulation, 2022, the Administrator,

Union Territory of Lakshadweep, hereby appoints the date of publication in the official gazette of

Lakshadweep as the date on which the Lakshadweep Value Added Tax Regulation, 2022 shall come

into force.

Sd/-

Special Secretary (Planning, Statistics & Taxation)

THE LAKSHADWEEP GAZETTE EXTRAORDINARY

2. (1) In this Regulation, unless the context otherwise requires,—

(a) "accountant" means—

(i) a chartered accountant as defined in clause (b) of sub-section (1) of

section 2 of the Chartered Accountant's Act, 1949;

(ii) a cost accountant as defined in the Cost and Works Accountants

Act, 1959;

(iii) an auditor appointed under section 139 of the Companies Act, 2013;

(b) "adequate proof" means such documents, testimony or other evidence as

may be prescribed;

section 73;

(d) "business" includes—

(i) the provision of any services, but excluding the services provided by

an employee;

(ii) any trade, commerce or manufacture;

(iii) any adventure or concern in the nature of trade, commerce or

manufacture;

(iv) any transaction in connection with, or incidental or ancillary to, such

trade, commerce, manufacture, adventure or concern; and

(v) any occasional transaction in the nature of such service, trade,

commerce, manufacture, adventure or concern,

whether or not—

(A) there is volume, frequency, continuity or regularity of such transaction;

(B) service, trade, commerce, manufacture, adventure or concern is carried on

with a motive to make gain or profit; and

adventure or concern;

(e) "business premises" includes—

(i) the address of a dealer, registered with the Commissioner;

(ii) any building or place used by a person for the conduct of his business,

except for those parts of the building or place used principally as a residence;

(iii) any place from where a dealer carries on business through an agent

(by whatever name called), the place of business of such agent and a warehouse,

godown or such other place where a dealer stores his goods;

(f) "capital goods" means plant, machinery and equipment used, directly or indirectly,

in the process of trade or manufacturing or for execution of works contract in Lakshadweep;

(g) "casual trader" means a person who, whether as principal, agent or in any

other capacity undertakes occasional transactions in the nature of business involving

buying, selling, supply or distribution of goods or conducting any exhibition-cum-sale

in Lakshadweep whether for cash, deferred payment, commission, remuneration or

other valuable consideration;

(h) "Commissioner" means the Commissioner of Value Added Tax appointed

under sub-section (1) of section 66;

Definitions.

38 of 1949.

23 of 1959.

18 of 2013.

THE LAKSHADWEEP GAZETTE EXTRAORDINARY

(i) "dealer" means any person who, for the purposes of or consequential to his

engagement in or in connection with or incidental to or in the course of his business,

buys or sells goods in Lakshadweep directly or otherwise, whether for cash or for

deferred payment or for commission, remuneration or other valuable consideration

and includes,—

(i) a factor, commission agent, broker, del credere agent or any other

mercantile agent by whatever name called, who for the purposes of or

consequential to his engagement in or in connection with or incidental to or in

the course of the business, buys or sells or supplies or distributes any goods on

behalf of any principal or principals whether disclosed or not;

(ii) a non-resident dealer or as the case may be, an agent, residing in the

State of a non-resident dealer, who buys or sells goods in Lakshadweep for the

purposes of or consequential to his engagement in or in connection with or

incidental to or in the course of the business;

(iii) a local branch of a firm or company or an association of persons,

outside Lakshadweep where such firm, company, association of persons is a

dealer under any other sub-clause of this definition;

(iv) a club, association, society, trust, or co-operative society, whether

incorporated or unincorporated, which buys goods from or sells goods to its

members for price, fee or subscription, whether or not in the course of business;

(v) an auctioneer, who sells or auctions goods whether acting as an agent

or otherwise or, who organises the sale of goods or conducts the auction of

goods whether or not he has the authority to sell the goods belonging to any

principal, whether disclosed or not and whether the offer of the intending

purchaser is accepted by him or by the principal or a nominee of the principal;

(vi) a casual trader;

(vii) any person who, for the purposes of or consequential to his

engagement in or in connection with or incidental to or in the course of his

business disposes of any goods as unclaimed or confiscated, or as unserviceable

or scrap, surplus, old, obsolete or as discarded material or waste products by

way of sale;

(viii) Customs Department of the Government of India administering

Customs Act, 1962;

(ix) Departments of the Central Government, the State Governments and

the Union territory Administrations;

(x) local authorities, Panchayats, Municipalities, Development Authorities

and Cantonment Boards;

(xi) Public Charitable Trusts;

(xii) incorporated or unincorporated societies, clubs or other associations

of persons;

(xiii) each autonomous or statutory body or corporation or company or

society or any industrial, commercial, banking, insurance or trading undertaking,

corporation, institution or company whether or not of the Union Government or

any of the State Governments or of a local authority;

(xiv) shipping and construction companies, air transport companies, airlines

and advertising agencies;

52 of 1962.

THE LAKSHADWEEP GAZETTE EXTRAORDINARY

(j) "fair market value" means the value at which goods of like kind and quality are

sold or would be sold in the same quantities between unrelated parties in the open

market in Lakshadweep;

(k) "goods" means goods specified in the First Schedule, as amended from time

to time;

(l) "goods vehicle" means a motor vehicle, vessel, boat, animal and any other

form of conveyance used for carrying goods;

(m) "Government" means the Administration of Union territory of Lakshadweep

headed by the Administrator appointed by the President under article 239 of the

Constitution;

(n) "import" means sale or purchase in the course of the import of goods into the

territory of India if the sale or purchase either occasions such import or is effected by

transfer of document of title to the goods before the goods have crossed the customs

frontiers of India and includes procurement of goods from outside the Lakshadweep

either as a result of purchase or otherwise.

Explanation.—In the case of goods arriving in Lakshadweep from a foreign

country through customs, the "import of the goods in Lakshadweep" shall occur at

the place where the goods are cleared by Customs for home consumption;

(o) "importer" shall include—

(i) a person who brings his own goods into Lakshadweep;

(ii) a person on whose behalf another person brings goods into

Lakshadweep;

(iii) in the case of a sale occurring in the circumstances referred to in

sub-section (2) of section 6 of the Central Sales Tax Act, 1956, the person in

Lakshadweep to whom the goods are delivered;

(p) "input tax", in relation to the purchase of goods, means the proportion of the

price paid by the buyer for the goods which represents tax for which the selling dealer

is liable under this Regulation;

(q) "Lakshadweep" means the Union territory of Lakshadweep;

(r) "manufacture" with its grammatical variations and cognate expressions, means

producing, making, extracting, altering, ornamenting, finishing or otherwise processing,

treating or adapting any goods, but does not include any such process or mode of

manufacture as may be prescribed;

(s) "net tax" means the amount calculated for a tax period under section 11;

(t) "non-resident" means a person who has no fixed place of business or residence

in Lakshadweep;

(u) "notification" means the notification published in the Official Gazette and

the expressions "notify" and "notified" shall be construed accordingly;

(v) "Official Gazette" means the Lakshadweep Gazette;

(w) "prescribed" means prescribed by rules made by the Government under this

Regulation;

(x) "registered dealer" means a dealer registered under this Regulation;

(y) "related person" means a person who is related to another person (referred

to in this definition as a "dealer") if the person—

(i) is a relative of the dealer;

74 of 1956.

THE LAKSHADWEEP GAZETTE EXTRAORDINARY

(ii) is a partnership of which the dealer is a partner;

(iii) is a company in which the dealer [either alone or in conjunction with

another person who is, or persons who are, related to the dealer under

sub-clauses (i), (ii), (iv), (v) and (vi)].—directly or indirectly holds forty per cent.

or more of outstanding voting stock or shares;

(iv) is a person who [either alone or in conjunction with another person

who is, or other persons who are, related to the person under sub-clauses (i),

(ii), (iii), (v) and (vi)].—directly or indirectly owns forty per cent. or more of

outstanding voting stock or shares of the dealer;

(v) is a company in which forty per cent. or more of outstanding voting

stock is held directly or indirectly by a person [either alone or in conjunction

with another person who is, or other persons who are, related to the person

under sub-clauses (i), (ii), (iii), (iv) and (vi)] who also holds forty per cent. or

more of the outstanding voting stock or shares of the dealer; or

(vi) is controlled by the dealer or a person whom the dealer controls, or is

a person who is controlled by the same person who controls the dealer;

(z) "relative" means a relative as defined in clause (77) of section 2 of the

Companies Act, 2013;

(za) "sale" with its grammatical variations and cognate expression, means any

transfer of property in goods by one person to another for cash or for deferred payment

or for other valuable consideration (not including a grant or subvention payment made

by one Government agency or department, whether of the Central Government or of

any State Government, to another) and includes—

(i) a transfer of goods on hire purchase or other system of payment by

instalments, but does not include a mortgage or hypothecation of, or a charge or

pledge on goods;

(ii) supply of goods by a society (including a co-operative society), club,

firm, or any association to its members for cash or for deferred payment or for

commission, remuneration or other valuable consideration, whether or not in the

course of business;

(iii) transfer of property in goods by an auctioneer referred to in

sub-clause (v) of clause (i), or sale of goods in the course of any other activity in

the nature of banking, insurance who in the course of their main activity also sell

goods repossessed or re-claimed;

(iv) transfer, otherwise than in pursuance of a contract, of property in any

goods for cash, deferred payment or other valuable consideration;

(v) transfer of the right to use any goods for any purpose (whether or not

for a specified period) for cash, deferred payment or other valuable consideration;

(vi) supply, by way of or as part of any service or in any other manner

whatsoever, of goods, being food or any other article for human consumption or

any drink (whether or not intoxicating), where such supply or service is for cash,

deferred payment or other valuable consideration;

(vii) every disposal of goods referred to in sub-clause (vii) of clause (i) of

this sub-section and the words "sell", "buy" and "purchase" wherever appearing

with all their grammatical variations and cognate expressions, shall be construed

accordingly;

(zb) "sale price" means the amount paid or payable as valuable consideration

for any sale, including—

18 of 2013.

THE LAKSHADWEEP GAZETTE EXTRAORDINARY

(i) the amount of tax, if any, for which the dealer is liable under section 3;

(ii) in relation to the delivery of goods on hire purchase or any system of

payment by instalments, the amount of valuable consideration payable to a

person for such delivery including hire charges, interest and other charges

incidental to such transaction;

(iii) in relation to transfer of the right to use any goods for any purpose

(whether or not for a specified period), the valuable consideration or hiring

charges received or receivable for such transfer;

(iv) any sum charged for anything done by the dealer in respect of goods

at the time of, or before, the delivery thereof;

(v) amount of duties levied or leviable on the goods under the Central

Excise Act, 1944 or the Customs Act, 1962, or the Lakshadweep excise regulation

whether such duties are payable by the seller or any other person;

(vi) amount received or receivable by the seller by way of deposit (whether

refundable or not) which has been received or is receivable whether by way of

separate agreement or not, in connection with, or incidental to or ancillary to the

sale of goods; and

(vii) in relation to works contract means, the amount of valuable

consideration paid or payable to a dealer for the execution of the works contract,

less—

(a) any sum allowed as discount which goes to reduce the sale price

according to the practice, normally, prevailing in trade;

(b) the cost of freight or delivery or the cost of installation in cases

where such cost is separately charged and the words "purchase price"

with all their grammatical variations and cognate expressions, shall be

construed accordingly:

Provided that where the dealer makes sale of goods imported into the territory of

India, the sale price shall be higher of the following—

(a) the valuable consideration received or receivable by the dealer;

(b) value determined by the Custom authorities for payment of custom

duty at the time of the import of such goods;

(zc) "Schedule" means the Schedules appended to this Regulation;

(zd) "tax" means tax payable under this Regulation;

(ze) "taxable quantum" means the quantum of amount referred to in sub-section (2)

of section 18;

(zf) "tax invoice" means the invoice referred to in section 50;

(zg) "tax period" means the period prescribed in the rules made under this

Regulation;

(zh) "tax fraction" means the fraction calculated in accordance with formula,

r / (r+100) where 'r' is the percentage rate of tax applicable to the sale under this

Regulation;

(zi) the expression, "in the course of " includes activities done for the purposes

in connection with or incidental to, and activities done as part of the preparation for

the activity and the termination of the activity;

(zj) "transporter" means any person who, for the purposes of or in connection

with or incidental to or in the course of his business transports or causes to transport

goods, and includes any person whose business consists of or includes operating a

1 of 1944.

52 of 1962.

THE LAKSHADWEEP GAZETTE EXTRAORDINARY

railway, shipping company, air cargo terminal, inland container depot, container freight

station, courier service or airline;

(zk) "turnover" means the aggregate of the amounts of sale price received or

receivable by the person in any tax period, reduced by any tax for which the person is

liable under section 3;

(zl) "turnover of purchases" means the aggregate of the amounts of purchase

price paid or payable by a person in any tax period, excluding any input tax;

(zm) "value of goods" means the fair market value of the goods at that time

including insurance charges, excise duties, countervailing duties, tax paid or payable

under the Central Sales Tax Act, 1956 in respect of the sale, transport charges, freight

charges and all other charges incidental to the transaction of the goods;

(zn) "works contract" includes any agreement for carrying out for cash or for

deferred payment or for valuable consideration, the building construction, manufacture,

processing, fabrication, erection, installation, fitting out, improvement, repair or

commissioning of any movable or immovable property;

(zo) "year" means the financial year from the first day of April to the last day of

March.

(2) Unless otherwise specified in this Regulation—

(a) expressions referring to "writing" shall include printing, typing, lithography,

photography and other methods of representing or reproducing words in a visible

form; and

(b) with reference to a person who is unable to sign his name, the word "signature"

shall include his thumb impression or other mark duly attested to signify his signature.

(3) The words and expressions not defined in this Regulation but defined in the Indian

Contract Act, 1872 shall have the meanings respectively assigned to them in that Act.

CHAPER II

LEVY OF TAX

3. (1) Subject to the other provisions of this Regulation, every dealer who is—

(a) registered under this Regulation; or

(b) required to be registered under this Regulation,

shall be liable to pay tax calculated in accordance with this Regulation, at the time and in the

manner provided in this Regulation.

(2) Every dealer who has become liable to pay tax under this Regulation on the sale of

goods shall continue to be so liable unless his taxable turnover during the preceding twelve

months, or such further period as may be prescribed, has remained below the taxable quantum

and on the expiry of the twelve months or such further period his liability to pay tax shall

cease:

Provided that any dealer whose liability to pay tax under this Regulation ceases for

any other reason may apply earlier for the cancellation of his registration, and on such

cancellation, his liability to pay tax shall cease:

Provided further that a dealer shall remain liable to pay tax until the date on which his

registration is cancelled.

(3) Every dealer whose liability to pay tax under this Regulation has ceased or whose

registration has been cancelled, shall, if his turnover calculated from the commencement of

any year, including the year in which the registration has been cancelled, again exceeds the

taxable quantum on any day within such year be liable to pay such tax on and from the date

74 of 1956.

9 of 1972.

Levy of tax.

THE LAKSHADWEEP GAZETTE EXTRAORDINARY

on which his turnover again exceeds the taxable quantum, on all sales effected by him on and

after that day.

(4) Where it is found that any person registered as a dealer ought not to have been so

registered, then notwithstanding anything contained in this Regulation, such person shall

be liable to pay tax for the period during which he was registered.

(5) If any person who transports goods or holds goods in custody for delivery to or on

behalf of any person, on being required by the Commissioner so to do, fails—

(a) to furnish any information in his possession in respect of the goods; or

(b) to permit inspection thereof,

then without prejudice to any other action which may be taken against such person, a

presumption may be raised that the goods in respect of which he has failed to furnish

information or permit inspection, are owned by him and are held by him for sale in Lakshadweep

and the provisions of this Regulation shall apply.

(6) If any person who, whether as principal, agent or in any other capacity organises

any exhibition-cum-sale in Lakshadweep and fails—

(a) to furnish any information in respect of the goods brought or kept in stock or

sold by any participant before or during or after the exhibition-cum-sale; or

(b) to ensure that all the participants in the exhibition-cum-sale have obtained

registration under this Regulation and paid due tax; or

records of the participants; or

(d) to permit inspection of the accounts and records of the organiser in respect

of the exhibition-cum-sale,

then, without prejudice to any other action which may be taken against such participant, a

presumption may be raised that the goods of the participant who fails to obtain registration

under this Regulation or the goods in respect of which the participant has failed to furnish

information or failed to permit inspection, are owned by the organiser and are held by him for

sale in Lakshadweep and the provisions of this Regulation shall apply.

4. (1) The rates of tax as specified in the First Schedule shall be payable on the taxable

turnover of a dealer in respect of goods description of which have been given in that

Schedule.

(2) The Government may, by notification, if it deems necessary, amend the rates of tax

as specified in the First Schedule.

5. For the purposes of this Regulation, "taxable turnover" means the turnover of a

dealer during the tax period which remains after deducting therefrom—

(a) the turnover of sales not subject to tax under section 7; and

(b) the turnover of sales of goods declared exempt under section 6.

6. The goods to be listed in the Second Schedule shall be exempted from tax subject to

the conditions and exceptions set out in the said Schedule.

7. Nothing contained in this Regulation or the rules made thereunder shall be deemed

to impose or authorise the imposition of tax on any sale of goods when such sale takes

place—

(a) in the course of inter-State trade or commerce; or

(b) outside Lakshadweep; or

Rates of tax.

Taxable

turnover.

Sale exempt

from tax.

Certain sales

not liable to

tax.

THE LAKSHADWEEP GAZETTE EXTRAORDINARY

territory of India; or

(d) in accordance with the notification issued by the Central Government in

exercise of its powers under section 3 of the Foreign Aircraft (Exemption from Taxes

and Duties on Fuel) Act, 2002, no tax shall be levied on sales of the fuel and lubricants

which are filled into receptacles forming part of any aircraft registered in a country

other than India, if—

(i) the said country is a party to the Convention on International and Civil

Aviation, 1944;

(ii) the said country has entered into an Air Services agreement with

India; and

(iii) the aircraft is operating on a scheduled or non-scheduled service to or

from India.

8. (1) Subject to such conditions as may be prescribed, this section shall apply where,

in relation to the sale of goods by any dealer,—

(a) that sale has been cancelled;

(b) the nature of that sale has been fundamentally varied or altered;

with the recipient, whether due to the offer of a discount or for any other reason;

(d) the goods or part of the goods sold have been returned to the dealer within

six months of the date of sale; or

(e) the whole or part of the price owed by the buyer for the purchase of the

goods has been written-off by the dealer as a bad debt,

and the dealer has—

(i) provided a tax invoice in relation to that sale and the amount shown therein as tax

charged on that sale is not the tax properly chargeable on that sale; or

(ii) furnished a return in relation to a tax period in respect of which tax on that

sale is attributable, and has accounted for an amount of tax on that sale that is not the

amount properly chargeable on that sale.

(2) Where a dealer has accounted for an incorrect amount of tax as contemplated in

sub-section (1), that dealer shall make an adjustment in calculating the tax payable by that

dealer in the return for the tax period during which it has become apparent that the tax is

incorrect, and if—

(a) the tax payable in relation to that sale exceeds the tax actually accounted for

by the dealer, the amount of that excess shall be deemed to arise in the tax period in

which the adjustment is made, and shall not be attributable to any prior tax period; or

(b) the tax actually accounted for exceeds the tax payable in relation to the sale,

the amount of that deficiency shall be subtracted from the tax payable by the dealer in

the tax period in which the adjustment is made, and shall not be attributable to any

prior tax period.

(3) Where a dealer sells goods that have been used in part for making—

(a) sales that are subject to tax under this Regulation or sales that are not liable

to tax under section 7; and

(b) partly for other purposes, the amount of tax on the sale of the goods shall be

the greater of—

(i) A— (A x B / C); or

(ii) A— B;

36 of 2002.

Adjustments of

tax.

THE LAKSHADWEEP GAZETTE EXTRAORDINARY

where—

A = the tax for which the dealer would be liable in respect of the sale apart

from this section;

B = the amount by which the tax credit of the dealer in respect of the goods

was reduced under sub-section (4) of section 9;

C = the amount of the tax credit before reduction under sub-section (4)

of section 9.

9. (1) No tax credit shall be allowed—

(a) in the case of the purchase of goods for goods purchased from a person who

is not a registered dealer;

(b) for the purchase of non-creditable goods as listed in the Third Schedule;

a building owned or occupied by the person;

(d) for goods purchased from a dealer who has elected to pay tax under section 16;

(e) for goods purchased from a casual trader;

(f) to the dealers or class of dealers unless the tax paid by the purchasing dealer

has actually been deposited by the selling dealer with the Government or has been

lawfully adjusted against output tax liability and correctly reflected in the return filed

for the respective tax period.

(2) The amount of the tax credit to which a dealer is entitled in respect of the purchase

of goods shall be the amount of input tax arising in the tax period reduced in the manner

described in sub-sections (3), (5) and (7).

(3) Where a dealer has purchased goods and the goods are to be used partly for the

purpose of making the sales referred to in sub-section (1) and partly for other purposes, the

amount of the tax credit shall be reduced proportionately.

(4) The method used by a dealer to determine the extent to which the goods are used

in the manner specified in sub-section (4) of section 10, shall be fair and reasonable in the

circumstances:

Provided that the Commissioner may—

(a) after giving reasons in writing, reject the method adopted by the dealer and

calculate the amount of tax credit; and

(b) prescribe methods for calculating the amount of tax credit or the amount of

any adjustment or reduction of a tax credit in certain instances.

(5) Notwithstanding anything to the contrary contained in sub-section (1), where—

(a) a dealer has purchased goods (other than capital goods) for which a tax

credit arises under sub-section (1);

(b) the goods or goods manufactured out of such goods are to be exported from

Lakshadweep by way of transfer to a—

(i) non-resident consignment agent; or

(ii) non-resident branch of the dealer; and

of the tax credit shall be reduced by the prescribed percentage.

Explanation.—For the removal of doubts, it is hereby clarified that no tax credit shall

be allowed for the purchase of goods from an unregistered dealer.

Tax credit.

THE LAKSHADWEEP GAZETTE EXTRAORDINARY

(6) The tax credit may be claimed by a dealer only if he holds a tax invoice at the time the

prescribed return for the tax period is furnished.

(7) Notwithstanding anything to the contrary contained in sub-section (1), where—

(a) a dealer has purchased goods (other than capital goods) for which a tax

credit arises under sub-section (1); and

(b) the goods or goods manufactured out of such goods are to be exported from

Lakshadweep by way of sale made under sub-section (1) of section 8 of the Central

Sales Tax Act, 1956, the amount of the tax credit shall be reduced by the prescribed

percentage.

(8) Subject to the provisions of sub-sections (1) and (2), the tax credit of goods to be

used for sale, as defined in sub-clause (v) of clause (zb) of sub-section (1) of section 2, shall

be allowed as follows:—

(a) 1/4th of the input tax on such goods arising in the tax period, in the same tax

period;

(b) balance 3/4th of such input tax, in equal proportions, in corresponding tax

periods, in three immediately successive financial years.

10. (1) Where any purchaser has been issued with a credit note or debit note in terms

of section 51 or if he returns or rejects goods purchased, as a consequence of which the tax

credit claimed by him in any tax period in respect of which the purchase of goods relates,

becomes short or excess, he shall compensate such short or excess by adjusting the amount

of the tax credit allowed to him in respect of the tax period in which the credit note or debit

note has been issued or goods are returned.

(2) If goods which have been purchased were—

(a) intended to be used for the purposes specified under sub-section (1) of

section 9 and are subsequently used, fully or partly, for purposes other than those

specified under the said sub-section; or

(b) intended for purposes other than those specified under sub-section (1) of

said section 9, and are subsequently used, fully or partly, for the purposes specified in

the said sub-section,

the tax credit claimed in respect of such purchase shall be reduced or increased (as the case

may be) for the tax period during which the said utilisation otherwise has taken place.

(3) Where—

(a) goods were purchased by a dealer;

(b) the dealer claimed a tax credit in respect of the goods, and did not reduce the

tax credit by the prescribed percentage; and

(i) by way of a sale made as per the provisions of sub-section (1) of

section 8 of the Central Sales Tax Act, 1956; or

(ii) other than by way of a sale, to a branch of the registered dealer or to

a consignment agent,

the dealer shall reduce the amount of tax credit originally claimed by the prescribed proportion.

(4) If goods which have been purchased by a dealer were—

(a) intended to be used for the purposes specified under sub-section (1) of

section 9; and

(b) are subsequently incorporated into the structure of a building owned or

occupied by the person,

the tax credit claimed in respect of such purchase shall be reduced in the tax period during

which such incorporation takes place.

74 of 1956.

Adjustment of

tax credit.

74 of 1956.

THE LAKSHADWEEP GAZETTE EXTRAORDINARY

(5) Where the goods which have been purchased by a dealer are sold at a price lower

than the price at which it was purchased by the dealer, the tax credit on such purchases shall

be reduced proportionately in the tax period during which the goods are sold.

11. (1) The net tax payable by a dealer for a tax period shall be determined by the

formula: Net tax = O — I — C

Where—

O = the amount of tax payable by the person at the rates stipulated in section 4

in respect of the taxable turnover arising in the tax period, adjusted to take into account

any adjustments to the tax payable required by section 8.

I = the amount of the tax credit arising in the tax period to which the person is

entitled under section 9, adjusted to take into account any adjustments to the tax credit

required by section 10.

C = the amount, if any, brought forward from the previous tax period under

sub-section (2).

(2) Where the net tax of a dealer calculated under sub-section (1) amounts to a negative

value, the dealer shall—

(a) adjust the said amount in the same tax period against the tax payable by him

under the Central Sales Tax Act, 1956 if any; and

(b) be entitled to carry forward the amount remaining after application under

clause (a) of sub-section (2) to next calendar month or tax period, as the case may be,

of the same year, or claim a refund of the amount remaining after application under

clause (a) of sub-section (2) at the end of a tax period of the same year and the

Commissioner shall deal with the refund claim in the manner described in section 38

and section 39.

(3) No tax shall be payable under this Regulation by a contractor on the amount

representing the value of the goods supplied by the contractee to the contractor in the

execution of works contract in which the ownership of such goods remains with the contractee

under the terms of the contract and the amount representing the value of the goods supplied

by the contractee to the contractor does not form part of the contract and is not deductible

from the amount payable to the contractor by the contractee for the execution of the works

contract.

12. (1) Subject to the provisions of sub-sections (2), (3) and (4), the amount of the

turnover and the turnover of purchases of a dealer which arises during any tax period shall

be the amount recorded in the accounts of the dealer where those accounts are regularly and

systematically prepared and maintained, give a true and fair view of his dealings, and are

employed by the dealer in determining the turnover of the dealer's business for commercial or

income-tax purposes.

(2) The Commissioner may by notification—

(a) permit certain classes of dealer to record turnover based on amounts paid or

received; and

(b) require certain classes of dealer to record turnover based on amounts payable

or receivable.

(3) Where a dealer wishes to change the method of determining the turnover and

turnover of purchases, he may only make the change with the consent of the Commissioner

and on such terms and conditions as the Commissioner may impose.

(4) The Government may prescribe the time at which a dealer shall treat the—

(a) turnover;

Net tax.

74 of 1956.

Time at which

amount of

turnover,

turnover of

purchases and

adjustments

arise.

THE LAKSHADWEEP GAZETTE EXTRAORDINARY

(b) turnover of purchases; and

as arising for a class of transactions.

CHAPTER III

SPECIAL REGIMES

13. Where a provision in this Chapter is inconsistent with a provision in Chapter II, the

provision in this Chapter shall, to the extent of the inconsistency, prevails.

14. (1) Within a period of four months of the commencement of this Regulation, all

registered dealers wishing to claim the credit referred to in sub-section (2), shall furnish to

the Commissioner a statement of their trading stock, raw materials and packaging materials

for trading stock (in this section referred to as "opening stock").

(2) For the avoidance of doubt, no tax credit under sub-section (2) can be claimed—

(a) for finished goods manufactured out of tax paid on raw material or capital

goods;

(b) in a statement furnished more than four months after the commencement; or

(3) Every dealer wishing to claim a tax credit in excess of one lakh rupees on opening

stock shall furnish with the statement a certificate signed by an accountant in the prescribed

form certifying that the net credit claim made is true and correct.

15. (1) The provisions of this section shall apply where—

(a) a registered dealer sells second hand goods;

(b) the registered dealer has purchased goods from a resident seller who was

not registered under this Regulation;

form or otherwise or as raw material for incorporation or division into trading stock;

(d) the registered dealer shall be liable to pay tax under section 3 on the sale of

the goods or the goods into which they were incorporated, as the case may be; and

(e) the registered dealer has adequate proof of the amount paid for the goods.

(2) In the circumstances mentioned in sub-section (1), the registered dealer shall be

entitled to a tax credit for the purposes of section 9 of the least of—

(a) the input tax borne by the resident seller when he purchased the goods;

(b) the tax fraction of the original cost of the goods to the resident seller;

purchase by the registered dealer; or

(d) the tax fraction of the consideration paid by the registered dealer for the

goods.

(3) Where the amount paid by the registered dealer for the goods exceeds two thousand

rupees, the tax credit shall be allowed in the tax period when the goods are sold by the

registered dealer or the goods into which they have been incorporated are sold by the

registered dealer.

16. (1) Notwithstanding anything contrary to this Regulation, every dealer whose—

(a) turnover in the year preceding the commencement; or

Priority.

Treatment of

stock brought

forward during

transition.

Second hand

goods.

Composition

of scheme for

specified

dealers.

THE LAKSHADWEEP GAZETTE EXTRAORDINARY

(b) turnover in the current year, does not exceed five lakh rupees or such other

amount as may be specified by the Government by notification in the Official Gazette,

shall have an option to pay tax under this section:

Provided that this sub-section shall not apply to dealers procuring goods from any

place outside Lakshadweep or selling or supplying goods to any place outside Lakshadweep

at any time during the year in which he opts to pay tax under this sub-section or if he is a

registered dealer in the Lakshadweep under the Central Sales Tax Act, 1956:

Provided further that in case the Government has notified a composition scheme for a

class of dealers under sub-section (12), such dealers shall not have an option to pay tax

under this sub-section.

(2) At the time of making application for registration under section 19 of this Act, the

dealer covered under sub-section (1) shall be required to specify if he intends to pay tax

under this section:

Provided that once the dealer chooses to pay tax under this section, the option may be

reversed only after the end of the year for which the option is made, by application to the

Commissioner within such time and in such manner as may be prescribed:

Provided further that where a dealer chooses to reverse his option to pay tax under this

section, he shall be eligible to claim credit of the tax paid under this Regulation on the trading

stock, raw material and packaging material held by him in Lakshadweep on the date when

such reversal takes effect subject to the conditions contained in section 20 in so far as they

are applicable.

(3) In case a person who elects to pay tax under this section whose turnover in the year

preceding the commencement of this Regulation does not exceed five lakh rupees or such

other amount as may be specified by the Government by notification in the Official Gazette,

he shall be required to specify the election to pay tax under this section within such time and

in such manner as may be prescribed.

(4) Where a dealer elects to pay tax under this section, the dealer's net tax shall be the

amount determined at the rate of one paisa in the rupee of the turnover of the dealer.

(5) A dealer who elects to pay tax under this section shall—

(a) not purchase goods from a person who is not registered under this Regulation;

(b) not compute his net tax under section 11;

(d) not be entitled to issue tax invoice;

(e) not be allowed to collect any amount by way of tax under this Regulation; and

(f) continue to retain tax invoices and retail invoices for all of his purchases as

required under section 48.

(6) In case a person—

(a) whose turnover in the year preceding the commencement of this Regulation

does not exceed five lakh rupees or such other amount as may be specified by the

Government by notification in the Official Gazette; and

(b) who has opted to pay tax under this section in terms of sub-section (3) of this

section,

he shall be required to pay tax on the goods held on the date of the commencement of this

Regulation at the rates specified in section 4 on the fair market value of goods where such

goods have not borne any tax under the Lakshadweep.

74 of 1956.

THE LAKSHADWEEP GAZETTE EXTRAORDINARY

(7) The tax due under sub-section (6) shall be paid at any time before the person

specifies his intention to pay tax under this section.

(8) The proof of payment of tax referred to in sub-section (6) along with a statement of

opening stock and finished goods in such form as may be prescribed shall be furnished to

the Commissioner at the time the person specifies his intention to pay tax under this section.

(9) Subject to the other provisions, where a registered dealer pays tax at the rates

specified in section 4, he may choose to pay tax under this section only from the beginning

of the following year:

Provided that such registered dealer shall be required to pay tax at the rates specified

in section 4 on the goods held by him on the first day of the said following year.

(10) If the turnover of a dealer who elects to pay tax under this section exceeds five

lakh rupees or such other amount as may be specified by the Government by notification in

the Official Gazette, he shall be liable to pay tax under section 3 on and from the day his

taxable turnover exceeds five lakh rupees or such other amount as may be specified by the

Government by notification in the Official Gazette and shall be entitled to claim credit of the

input tax paid under this Regulation on goods held by him in Lakshadweep on such day:

Provided that such dealer has intimated the Commissioner within seven days of his

becoming liable to pay tax under section 3 in the prescribed form and has furnished such

other information to the Commissioner as may be prescribed.

(11) The Commissioner may notify a dealer or a class of dealers who shall not be

entitled to opt for payment of tax under this section.

(12) Notwithstanding anything to the contrary contained in this Regulation, the

Government may—

(a) by notification in the Official Gazette, notify schemes of composition, subject

to such conditions and restrictions as may be specified therein, of tax payable by a

class of dealers or classes of dealers and different types of schemes may be notified for

different classes of dealers;

(b) specify, in any scheme of composition of tax payable by the class of dealers

or classes of dealers, different rates of taxes for different class or classes of dealers but,

in such scheme, the net tax liability of the dealer opting to pay tax thereunder shall not

exceed eight paise in the rupee of the turnover of the dealer.

(13) (a) Notwithstanding anything to the contrary contained in this Regulation, a

casual trader shall—

(i) at least three days before commencing business in Lakshadweep, inform the

Commissioner of such particulars of his business in such form and manner as may be

prescribed;

(ii) deposit security in cash or in the form of bank draft as may be fixed by the

Commissioner which shall not exceed estimated liability to pay tax for seven days or

such lesser period for which the casual trader is conducting the business in

Lakshadweep;

(iii) pay tax daily on the sales made during the previous day;

(iv) furnish to the Commissioner, immediately after conclusion of his business in

Lakshadweep, a return in the prescribed form and manner; and

(v) not issue any tax invoice.

(b) The Commissioner shall, after verification of information furnished to him under

clause (a) of sub-section (1) and after getting security under clause (b) of that sub-section,

shall register the casual trader.

THE LAKSHADWEEP GAZETTE EXTRAORDINARY

to him for use as the declaration referred to in sub-section (4) of section 61 for bringing

goods for sale in Lakshadweep and for taking the unsold goods out of Lakshadweep and the

casual trader shall render complete account of the used forms and surrender the unused

forms along with the return referred to in section 26.

(d) The Commissioner shall, after examination of the return furnished by the casual

trader, the forms and the accounts maintained by him including the retail invoices issued,

assess him to tax within five days and shall serve upon him a notice of assessment and after

adjusting any tax and any other dues payable under this Regulation, refund the balance

amount of security to him in case security is deposited in the form of cash deposit.

(e) The casual trader shall pay immediately the amount mentioned in the notice of

assessment.

(f) On being satisfied that the amount due has been paid, the Commissioner shall

release the security or balance security, as the case may be.

(g) Notwithstanding anything contained in this Regulation, the taxable quantum in

respect of a casual trader shall be nil.

17. If—

(a) a registered dealer sells or gives goods to a related person;

(b) the terms or conditions of the transaction have been influenced by the

relationship; and

entitled to a tax credit for the purchase, or the amount of the tax credit would be

reduced under sub-section (3) of section 9,

the transaction shall be deemed to be a sale made by the registered dealer and the sale price

of the goods shall be deemed to be their fair market value.

CHAPTER IV

REGISTRATION AND SECURITY

18. (1) Every dealer is required to apply for registration under this Regulation if—

(a) the dealer's turnover in the year preceding the commencement exceeded the

taxable quantum; or

(b) the dealer's turnover in the current year exceeds the taxable quantum; or

under the Central Sales Tax Act, 1956:

Provided that a dealer dealing exclusively in goods mentioned in the First Schedule

shall not be required to register.

(2) For the purposes of this Regulation, "taxable quantum" of a dealer shall be two lakh

rupees, or such other amount as may be notified by the Government by notification in the

Official Gazette:

Provided that a dealer who imports for sale any goods into Lakshadweep, the taxable

quantum shall be "Nil" or such other amount as may be notified by the Government.

(3) The taxable quantum of a dealer shall not include turnover from—

(a) the sales of capital assets;

(b) the sales made in the course of winding up the dealer's activities; and

Transactions

between

related parties.

Mandatory and

voluntary

registration.

74 of 1956.

THE LAKSHADWEEP GAZETTE EXTRAORDINARY

(4) Any person who is not required by sub-section (1) to be registered but who—

(a) is a dealer; or

(b) intends from a particular date to undertake activities which would make him

a dealer,

may apply for registration.

19. (1) An application for registration shall be made in such form, within such time,

containing such particulars and information and accompanied by such fee, security and