RIGHTS AND LIABILITIES OF MEMBERS]
17. No rights of membership to be exercised till due payments are made.– No person shall exercise the rights of a member of a society unless or until he has made such payment to the society in respect of membership, or acquired such interest in the society as may be prescribed by the rules or the by-laws of such society.
30[17-A. Special provisions for membership of resource societies.– Notwithstanding anything contained in this Act and any other law for the time being in force–
(i) every application made by any person for membership of an Agricultural Credit Society shall be accompanied by a declaration specifying the immovable property on which he agrees to have a charge created for the dues of the society; and no such person shall be admitted as a member or shall exercise rights of a member of such society unless he makes such declaration;
(ii) any member of an Agricultural Credit Society may at any time make a declaration as in clause(i) regarding immovable property on which he agrees to have a charge created for the dues of the society of which he is a member;
(iii) a declaration made under clause(i) or (ii) may be varied at any time by a member with the consent of the society in favour of which such charge is created;
(iv) no member of an Agricultural Credit Society so long as he continues to remain such member shall alienate the whole or any part of the property specified in the declaration made under clause(i) or (ii);
(v) any alienation of any property specified in the declaration made under clause (i) or (ii) by such member shall be void;
(vi) subject to the prior claim of 31[Government] in respect of land revenue or any money recoverable as arrears of land revenue, there shall be a first charge in favour of the society on the property specified in the declaration under clause (i) or (ii) in respect of and to the extent of any debt or other outstanding demand owing by such member to the society;
(vii) an entry regarding a charge on immovable property created by a declaration under clause (i) or (ii) or any variation made therein under clause (iii) shall be made in the record of rights maintained under Chapter X-A of the 32[Sind] Land Revenue Code, 1879, 33[or the relevant provisions of any other law relating to land revenue in force in the area,] notwithstanding anything contained in the said Chapter.
Explanation–For the purposes of this section an ‘Agricultural Credit Society’ means a resource society of which the primary object is the creation of funds to be lent to its members and of which a majority of the members are agriculturists and of which no member is a registered society and the liability of which is limited.]
34[17-B. Expulsion of a member.– (1) A society may recommend to the Registrar to expel from its membership a member who is a persistent defaulter of the dues of the society or who commits any act prejudicial to the interests of the society:
Provided that the managing committee of the society shall, after affording the member an opportunity of hearing, place the matter before the general body of the society and approval thereof shall be communicated to the Registrar.
(2) The Registrar may expel such a member from the society after affording him an opportunity of hearing.
(3) The Registrar shall, before passing the expulsion order, determine the amount payable, if any, by the society to the member and may direct that the expulsion order would take effect from the date of payment of the amount to such member or its deposit in the account of the Registrar.
(4) The member shall cease to be member of the society from the date when the expulsion order of the Registrar takes effect:
Provided that the provisions of this section shall not apply to a member of a housing society who has made full payment towards the cost of land and the requisite development charges.]
18. Votes of members.– (1) No member of any society shall have more than one vote in its affairs, provided that in the case of an equality of votes the chairman shall have a casting vote.
(2) A Society which has invested any part of its funds in the shares of another society, may appoint one of its members to vote in the affairs of such other registered society.
35[18-A. General body and managing committee.– (1) The powers and management of a society shall vest in its general body consisting of all its members.
(2) A society shall have a managing committee, constituted in accordance with the rules and the by-laws, which shall exercise such powers and functions as may be delegated to it by the general body.
(3) Subject to any general or special order of the Provincial Government, the Registrar may, on such terms and conditions as he may deem fit, appoint not more than two experts on the managing committee of a society for the development and proper management of the society.
(4) The Registrar may require a society to obtain approval of its general body, in any matter concerning the business of the society, before proceeding further in the matter.]
36[37[18-B]. Disqualification for being, and for voting at an election of Director, Manager or other officer of the society.– A member of the society to which the provisions of this section have been applied by the Provincial Government by notification in the Official Gazette shall be disqualified for being, and for voting at an election of, a Director, Manager or other officer of the society–
(a) if he has taken a loan from the society which has been outstanding for six months or more after it has become payable and has not been re-paid upto the day immediately preceding the date of the election, or
(b) if he has taken a loan from the society which is repayable by installments and the amount of three or more installments has been outstanding for six months or more from the date on which the amount of the last installment became payable and has not been re-paid upto the day immediately preceding the date of the election.
Explanation–The date on which the loan or installment becomes payable is the date specified in the bond or any other instrument in writing evidencing the loan but does not include any extension thereof.]
19. Restrictions on transfer of share or interest.– (1) The transfer or charge of the share or interest of a member in the capital of a society shall be subject to such conditions as to maximum holding as may be prescribed by this Act or by the rules.
(2) A member shall not transfer any share held by him or his interest in the capital or property of any society or any part thereof unless–
(a) he has held such share or interest for not less than one year; and
(b) the transfer or charge is made to the society or to a member of the society or to a person whose application for membership has been accepted by the society.
DUTIES OF SOCIETIES]
39[20. Address of societies.– (1) Every society shall have a registered office which shall be the address of the society.
(2) A society shall not change its address without the prior approval of the Registrar:
Provided that before seeking the approval of the Registrar, the society shall inform its members’ creditors and where applicable, the society of which it is a member, by post and also through two national daily Newspapers, as to the proposed change of the address.
(3) The approval of the Registrar shall immediately be communicated by the society to its members’ creditors and the society of which it is a member.]
21. Copy of Act etc., to be open to inspection.– Every society shall keep open to inspection at all reasonable times at the registered address of the society–
(a) a copy of this Act.
(b) a copy of the rules governing such society.
(c) a copy of the by-laws of such society, and
(d) a register of its members.
22. Audit.– 40[(1) The Registrar shall, by himself, an auditor or a committee of auditors appointed by him, through general or special order in this behalf, specifying the period for completion, audit the accounts of every society once at least in a year:
Provided that no person shall audit the accounts of a society for two consecutive years.]
41[(1-A) The Registrar may, by general or special order, determine the fee payable to the auditor or the committee of the auditors, as the case may be, and the fee so determined shall be payable by the society.]
(2) The audit under sub-section (1) shall include an examination of overdue debts, if any, the verification of cash balance and securities, and a valuation of the assets and liabilities of the society.
(3) The Registrar or other person auditing the accounts of any society shall have free access to the books, accounts and vouchers of such society and shall be allowed to verify its cash balances and securities.
The Directors, Managers, and other officers of the society shall furnish to the Registrar or other person appointed to audit the accounts of a society all such information as to its transactions and working as the Registrar or such person may require.
(4) The Registrar and every other person appointed to audit the accounts of a society shall have power, when necessary–
(i) to summon at the time of his audit any officer, agent, servant or member of the society who he has reason to believe can give valuable information in regard to any transaction of the society or the management of its affairs, or
(ii) to require the production of any book or document relating to the affairs of any cash or securities belonging to the society by the officer, agent, servant, or member in possession of such book, document, cash or securities.
42[22-A. Power of Registrar to exercise powers under section 50-A in the course of an audit.– Where, in the course of an audit under section 22 it appears to the Registrar that there exists any such ground as is specified in section 50-A, he may, of his own motion or on the application of the person authorised by him under section 22, exercise the powers specified in section 50-A].
43[22-B. Internal audit committee.– (1) Every housing and producers’ society, in addition to the audit of accounts under section 22, shall also get the accounts audited by an internal audit committee comprising at least three members of the society other than the members of its managing committee as may be appointed by the general body with their consent.
(2) The report of the internal audit committee shall be submitted by the society or the committee to the Registrar within one month of the receipt or compilation of such report.]
PRIVILEGES OF SOCIETIES]
23. Societies to be bodies corporate.– The registration of a society shall render it a body corporate by the name under which it is registered, with perpetual succession and a common seal, and with power to hold property, to enter into contracts, to institute, and defend suits and other legal proceedings and to do all things necessary for the purposes of its constitution.
24. Prior claim of society.– Subject to any prior claim of 45[Government] in respect of land revenue or any money recoverable as land revenue or of a landlord in respect of rent or any money recoverable as rent,
(a) any debt or outstanding demand owing to a society by any member or past member 46[or, in the case of a society authorised under sub-section (1) of section 34 to make loans to non-members, by a non-member] shall be a first charge (i) upon crops or other agricultural produce raised in whole or in part with a loan taken from the society by 47[such member, past member or non-member], and (ii) upon any 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 48[such member, past member or non-member] in whole or in part from any loan whether in money or goods given, him by the society:
Provided that nothing contained in this clause shall effect the claims of any bonafide purchaser or transferee for value without notice of any such crops or other agricultural produce, cattle, fodder for cattle or raw materials for manufacture or workshops, or agricultural or industrial implements; and
(b) any outstanding demands or dues payable to a housing society by any member or past member in respect of rent, shares, loans, or purchase money or any other rights or amounts payable to such society shall be a first charge upon his interest in the immovable property of the society.
25. Charge and set-off in respect of shares or interest of member.– A society shall have a charge upon the share or interest in the capital and on the deposits of a member or past member and upon any dividend, bonus or profits payable to a member or past member in respect of any debt due from such member or past member to the society, and may set-off any sum credited or payable to a member or past member in or towards payment of any such debt.
26. Shares or interest not liable to attachment.– Subject to the Provisions of section 25, the share or interest of a member in the capital of a society or in any provident fund established under section 41 of this Act shall not be liable to attachment or sale under any decree or order of a Court of justice in respect of any debt or liability incurred by such member, and 49[neither the Official Assignee under the Insolvency (Karachi Division 50[* * *]) Act, 1909 nor a receiver under the Provincial Insolvency Act, 1920, shall] be entitled to or have any claim on such share or interest.
27. Transfer of interest on death of member.– (1) On the death of a member of a society such society may within a period of one year from the death of such member transfer the share or interest of the deceased member to a person or persons nominated in accordance with the by-laws of the society, if duly admitted a member of the Society, in accordance with the rules or the by-laws of the society, or, if there is no person so nominated, to such person as may appear to the Committee to be the heir or legal representative of the deceased member if duly elected a member of the society, or may pay to such nominee, heir or legal representative, as the case may be, a sum representing the value of such member’s share or interest as ascertained in accordance with the rules or by-laws:
Provided that such nominee, heir or legal representative, as the case may be, may require that payment shall be made by the society within one year from the death of the member of the value of the share or interest of such member ascertained as aforesaid.
51[Provided further that the nominee, heir or legal representative shall distribute the amount received by him among the heirs of the deceased.]
(2) A society shall subject to the provisions of section 25 and unless prevented by an order of a competent court pay to such nominee, heir or legal representative, as the case may be, all other moneys due to the deceased member from the society.
(3) All transfers and payments made by a society in accordance with the provisions of this section shall be valid and effectual against any demand made upon the society by any other person.
28. Liability of past member.– The liability of a past member for the debts of a society as they existed at the time when he ceases to be a member, shall continue for a period of two years from the date of his ceasing to be a member.
52[29. Liability of the estate of deceased member.– The estate of a deceased member shall be liable for the debts of the society, at the time of his death, for a period of one year.]
30. Register of members.– Any register or list of members or shares kept by any society shall be prima facie evidence of any of the following particulars entered therein:-
(a) the date at which the name of any person was entered in such register or list as a member;
(b) the date at which any such person ceased to be a member.
31. Admissibility of copy of entry as evidence.– (1) A copy of any entry in any book, register or list regularly kept in the course of business in the possession of a society shall, if duly certified in such manner as may be prescribed by the rules, be admissible in evidence of the existence of the entry and shall be admitted as evidence of the matters and transactions therein recorded in every case where, and to the same extent to which the original entry would, if produced, have been admissible to prove such matters.
(2) In the case of such societies as 53[the Provincial Government] by general or special order may 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, unless by order of the Court or a Judge made for special cause.
32. Exemption from compulsory registration of instruments relating to shares 54[etc] of society.– Nothing in section 17, sub-section (1), clauses (b) and (c), of the 55[* * *]Registration Act, 190856, shall apply to–
(1) any instrument relating to shares in a society notwithstanding that the assets of the society consist in whole or in part of immovable property; or
(2) any debenture 57[participation term certificate 58[term] finance certificate, musharika certificate, modaraba certificate and such other instruments as may be approved by the State Bank of Pakistan], 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 59[such instruments]; or
(3) any endorsement upon or transfer of any debenture 60[participation term certificate, term finance certificate, musharika certificate, modaraba certificate, and such other instruments as may be approved by the State Bank of Pakistan], issued by any society.
33. Power to exempt from income-tax, stamp-duty, registration and court fees.– (1) The 61[Central Government], by notification in the 62[Official Gazette], may, in the case of any society or class of societies, remit the income-tax or super-tax payable in respect of the profits of the society, or of the dividends or other payment received by the members of the society on account of profits or in respect of interest 63[or return] on securities held by the society.
(2) The 64[Provincial Government] by notification in the 65[Official Gazette], may, in the case of any society or class of societies, remit–
(a) the stamp-duty with which, under any law for the time being in force, instruments executed by or on behalf of a society or by an officer or member and relating to the business of the society, or any class of such instruments 66[or security bonds executed by or on behalf of officers or servants of a society] or awards of the Registrar or arbitrators under this Act are respectively chargeable; and
(b) any fee payable under the law of registration and of court fees for the time being in force.67[* * *]
33-A. Provincial Government may give loans or guarantee interest 68[or return].– With such safeguards as may be prescribed by rules in this behalf 69[the Provincial Government] may give loans to societies or guarantee the payment of 70[the principal of debentures issued by them or of interest 71[or return] thereon or both].
PROPERTY AND FUNDS OF SOCIETIES]
34. Restrictions on loans.– (1) Except with the general or special sanction of the Registrar 73[and subject to such terms and conditions as he may impose] a society shall not make a loan to any person other than a member.
(2) Save with the sanction of the Registrar, a society with unlimited liability shall not lend money on the security of movable property.
(3) 74[The Provincial Government] may, by general or special order, prohibit or restrict the lending of money on mortgage of immovable property by any society or class of societies.
75[(4) Where the Registrar has accorded sanction to a financing bank under sub-section (1) to make loans to non-members, a society which is a member of such financing bank may, subject to the terms of the sanction and such other terms and conditions as the Registrar may impose, act as an agent of the financing bank and as such agent carry out, on or without the payment of any commission, all or any transactions connected with any loan made or to be made by the financing bank].
35. Restrictions on borrowing 76[and donations].– A society shall receive deposits 77[, donations, grants] and loans from persons who are not members only to such extent and under such conditions as may be prescribed by the rules or by the bye-laws of the society.
36. Restrictions on other transactions with non-members.– Consumers’, producers’ and housing societies may to the extent permitted by their by-laws trade with persons who are not members, but the transactions of a resource society with persons other than members except as provided under section 34 or 35 shall be subject to such prohibitions and restrictions, if any, as 78[the Provincial Government] may by rules prescribe.