(1) Notices of a meeting of the committee to elect a representative shall be given to all members at least ten days before such election.
(2) The notice shall be sent to the members of the Managing Committee by post under certificate of posting. In addition the notice of such election meeting shall also be affixed on the notice board of the society or the branches of the society, if any :
Provided that in primary society notice shall be given by the circulation amongst the members, instead of by post under certificate of posting.
1. Clause (l) substituted by SRO-236 of 2013 dated 25.04.2013.
2. Substituted ibid for “Secretary Cooperative Societies”.
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(3) The election in a primary society shall only be held in the presence of the Co-opertaive Supervisor having jurisdiction over that society; notice of the election meeting shall be sent at least ten days in advance to the Supervisor.
(4) For a Marketing Society the election would be conducted in the presence of the Assistant Registrar having jurisdiction.
(5) The Chairman or President of the society shall invite nominations in writing at the meeting itself. The nominations could be duly seconded. Thereafter voting, if necessary would be by show of hands.
(6) The results of the election would be declared immediately after the voting in the presence of the members and recorded in the minute book. The representative of the Co-operative Department present at the election shall sign the results so recorded.
23. Procedure for filling up vacancy in the Board/Committee of the Cooperative society .–– Any interim vacancy caused in the Board/Committee of a Cooperative Society arising due to death, resignation, expulsion or incurring any of the disqualifications as laid down in the Act/Rules/Bye-laws may be filled by Cooption by the Board/Committee of that society from the constituency to which the Ex-member belonged. 1[x x x x].
24. Remuneration payable to new committee or Administrator. ––(1) The remuneration payable to a committee or Administrators appointed under section 30 shall be such as the Registrar may from time to time determine.
(2) The amount of such remuneration and the other costs, if any, incurred in relation to the management of the Co-operative Society by the committee or the Administrators shall be payable from the funds of the society.
25. Disqualification for membership/appointment/election of committee . ––
(1) No person shall be eligible for appointment/election as a member of the committee of Co-operative Society, if,––
(a) he is in default to the society in respect of any loan taken by him, for such period as is specified in the bye-laws of the society, or in any case for a period exceeding three months ;
(b) he has directly or indirectly, any interest in any subsisting contract made with the society or in any property sold or purchased by the
1. Words “In case the number of vacancies do not exceed fifty percent the vacancies can be filled by Co-option” omitted by SRO-236 dated 25.04.2013.
19 society or in any other transaction of the society, except in an investment made or in any loan taken from the society ;
(c) no person other than the *[State Government] should be member of the committee of more than two apex or central societies ;
(d) no person who is a money lender or a shopkeeper whose interests conflict or are likely to conflict with the objects of the society and carries his business or trade within the area of operation of the society shall be eligible for election as a member of the committee or an officer thereof ;
(e) subject to the provisions of this rule no person shall be or shall continue to be an office bearer of any society for a consecutive period of more than 3 years :
Provided that a person who has held the office of any society for 3 years shall not be eligible for being re-elected or re-appointed as an office bearer until a period of 3 year has elasped from the date of vacating his office as such officer :
Provided that where in a society the number of office bearers not eligible for re-election or re-appointment under provision to sub-rule (e) exceeds half the total number of office bearers of the society, the number of such office bearers who shall be ineligible for re-election or re-appointment shall be equal to only half the total number of office bearers of the society.
The names of such ineligible office bearers shall be determined by lots by such authority and in such manner as may be prescribed :
Provided further that any person holding the office of president, Vice- President, Chairman, Vice-Chairman, Secretary or Assistant Secretary shall in no case be eligible for being re-elected or re-appointed to any of these offices until a period of 3 years has elaspsed from the date of such election or nomination.
Explanation.–– For purposes of clause (e) :––
(i) If any person resigns his office as an office bearer or member within 12 months prior to the expiry of the consecutive period of 3 years in the office he shall be deemed to have completed the said period of 3 years.
* Now Union territory Government.
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(ii) The expression “person” shall not include the Government or a Co-operative Society.
(iii) The expression “office bearer” shall not include a whole time paid employee of the society.
(f) Notwithstanding anything contained in any law for the time being in force a person shall be disqualified for appointment as or for being office bearer of the society if he is a member of the committee of another society of the same type or of two societies of different types :
Provided that nothing in this clause shall be deemed to disqualify a member of the committee of a (primary) society for appointment as or for being a member of either two central societies of different types and one (Apex Society) or of one Central Society and two Apex societies :
Provided further that no person shall be the President, Vice-President, Chairman, Vice-Chairman, Secretary or Assistant Secretary of more than one society at a time.
(g) In the case of societies which gives loans to members for purchasing machinery implements, equipments, commodities or other goods no member, whose near relation is dealer in such goods or is a Director of the company or a partner of a firm carrying one business in such goods shall be eligible for being elected or appointed as a member of the committee of such society.
(h) (i) No person shall be eligible for election or appointment as an office bearer of the Co-operative Society or as a representative of a Co-operative Society in any other Co-operative Society or to vote at a meeting held for the purpose of electing the members of the Managing Committee of a society, if he is :––
(a) in arrears to any society in respect of any loan taken by him, for a period exceeding three months ; or
(b) found guilty of embezzlement or misappropriating of funds or stocks of any Co-operative Society.
(ii) Where a person while being an office bearer of Co-operative Society incurs any of the disqualifications specified in clauses (h), (i) he shall forthwith cease to be an office bearer of such society.
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Explanation .–– For the purpose of this clause the expression “office bearer” shall include Storekeeper and paid Secretary of the Co-operative Society.
(i) He is a member of any Panchyat, Institution, other local bodies, Legislative Assembly, *[Council] and Parliament shall not be eligible to contest the election of any “office”/“officer bearer” of the society.
(j) He is concerned or participates in the profits or any contract with the society.
(k) He has been convicted for an offence involving moral turpitude.
(l) He holds any office or place of profit under the society except the fulltime paid employee on the Board/Committee in ex-officio capacity.
(m) He has been a member of the society for less than twelve months immediately proceeding the date of election or appointment.
(n) He has taken loan or goods on credit from the society or is otherwise indebted to the society and has defaulted after receipt of due notice.
(o) He is a person against whom any amount due under a decree, decision or order is pending recovery under the Act.
(p) He is retained or employed as a legal practitioner on behalf of or against the society.
(q) He has been convicted for any offence under the Act.
(r) If he abstains from more than three consecutive meetings of the Board/ Committee of Management.
(s) The society represented by him is classified in the audit below “C” category.
(t) His family member is a paid employee of the society ; and
(u) He has not fulfilled all the obligations laid down in the Act, Rules and Bye-laws.
* Due to abolition of the J&K Legislative Council the word “Council” has become redandunt.
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(2) A member of the committee of a Co-operative Society shall cease to hold his office as such if he incurs any of the classifications mentioned in the sub-rule (1) :
Provided further that if the General Body meeting of a Co-operative Society is not convened by the Board/Committee in time, the entire Board/Committee will incur disqualification in terms of sub-rule (1) of this rule, and arrangements for holding elections of the Board/Committee in such an event shall be made by the Registrar in accordance with the provisions of the Act, Rules and Bye-laws.
(3) The Chairman or any other office bearer shall cease to hold such office in case a motion of non-confidence is passed at a meeting of the Committee/Board by two-third majority of the total number of committee members who are for the time being entitled to sit and vote at any meeting of the Committee/Board against the officer or such Chairman, or any office bearer, as the case may be.
The requisition for such special meeting shall be signed by not less than onethird of the total number of members of the committee who are for the time being entitled to sit and vote at any meeting of the committee and shall be delivered to Registrar.
26. Officers and employees of Co-operative Societies. ––(1) No Co-operative Society shall appoint any person as its paid officer or employee in any category of service, unless he possesses the qualification and furnishes the security as specified by the Registrar from time to time for such category of service in society, or for class of societies to which it belongs.
27. Prohibition against being interested in contracts etc. ––(1) No officer of Co-operative Society shall have an interest, directly or indirectly otherwise than as such officer :––
(a) in any contract made with the society ; or
(b) in any property sold or purchased by the society ; or
(c) in any other transaction of the society except as investment made or as loan taken from the society or the provision of resident accommodation by the society to any paid employees of the society.
(2) No officer of a Co-operative Society shall purchase, directly or indirectly, any property of a member of the society said for the recovery of his dues to the society.
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CHAPTER –– V Properties and Funds of Co-operative Societies
28. Co-operative Education Fund .–– Every Co-operative Society shall contribute such amount not exceeding five percent, as may be directed by the Registrar from time to time out of its net profits of the year to the Co-operative Education Fund to be administered by the State Co-operative Union, or if there is no such union, by a committee appointed by the Registrar. The contribution payable by a society shall be charge on funds of the society and shall be recoverable in the manner provided in section 53. The State Co-operative Union or the committee shall prepare regulations with the approval of the Registrar for the stabilization and administration of the Fund. Such regulations shall among other things provided for the contribution to the All India Co-operative Union.
29. Disposal of unappropriated profits.–– Any profits not appropriated in the manner specified in the Act, the Rules and the Bye-laws shall forthwith be credited by a Co-operative Society to its reserve fund.
30. Investment of Funds . ––(1) A Co-operative Society may with previous sanction of the Registrar, invest the whole or any portion of its funds in the purchase of lease of land or in the acquisition, construction or renewal of any building that may be necessary to conduct its business. The amount of the funds so invested shall be recouped on such terms as may be determined in each case by the Registrar.
(2) The provision of sub-rule (1) shall not apply :––
(a) to immovable property purchased :––
(i) by a Co-operative Society at a sale held in execution of a decree obtained by it, for the recovery of any sum due to it, or
(ii) by a financing bank at a sale held in execution of a decree obtained by a Co-operative Society financed by it, for the recovery of any sum due to such society or at a sale brought about by the liquidator of such society.
(b) to the purchase or lease of lands or purchase, construction or renewal of buildings by a Co-operative Society whose objections according to its bye-laws include such purchase, lease, construction or renewal.
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(3) No recoupment of the amount invested under this rule shall be necessary when the investment is made :––
(a) by a Co-operative Society from its building fund constituted out of profits, or
(b) by a Co-operative Society, other than a credit society in which the Share Capital raised from the member is intended to build up the special kind of business for which it has been registered.
(4) Nothing in this rule shall apply to the investment of the reserve fund of a Co-operative Society and such investment shall be governed by rule 31.
31. Object and Investment of reserve fund. ––(1) A reserve fund maintained by a Co-operative Society shall belong to the society and is intended to meet unforseen losses. It shall be indivisible and no member shall have any claim to share in it.
(2) A Co-operative Society shall not invest or deposit its reserve fund except in one or more of the modes mentioned in clause (a) to (d) of section 59 of the Act :
Provided that the Registrar may by general or special order, permit any Cooperative Society or any class of Co-operative Society to invest the reserve fund or a portion thereof in its own business.
(3) No Co-operative Society whose reserve fund has been separately invested or deposited shall draw upon pledge or otherwise employ such fund, except with the sanction of the Registrar previously obtained in writing.
32. Disposal of reserve fund on winding up of Co-operative Society. ––
(1) On the winding up of a Co-operative Society, the reserve fund together with other funds constituted by the society in accordance with its bye-laws, shall be applied by the liquidator to the discharge of such labilities of the society as may remain undischarged out of the assets of the society in the following order, namely:––
(a) the debts of the society ;
(b) the paid up share capitals ; and
(c) the dividend upon paid up share capital at the rates not exceeding six percent for any period or periods for which dividend has not been paid or such dividend to the maximum rates for any period for which dividend at a rate lower than the maximum specified has been paid. No 25 dividend shall, however, be paid on share capital if the bye-laws of the society do not provide for payment of dividend.
(2) Any surplus funds remaining after the payment in sub-rule (1) shall be utilized in the following manner and subject to the following conditions, namely :––
(a) in the case of a Co-operative Society other than a financing Bank:––
(i) the surplus funds shall be applied to such object of public utility as may be selected by the General Body of the dissolved society at a meeting and approved by the Registrar. It shall be competent for the liquidator to constitute a trust to carry out such object and to require the General Body to select a trustee or trustees from among the ex-members or other persons. If the General Body does not select a trustee or trustees or if the selection of a trustee or trustees by the General Body is not acceptable to the liquidator, the liquidator may himself appoint a trustee or trustees. The trustee or trustees, as the case may be, shall execute a deed in such form as the Registrar may from time to time specify. A trust created under this sub-rule/clause shall be governed by the provisions of the law relating to the public charitable trusts, for the time being in force ;
(ii) if within thirty days after the issue of notice by the liquidator appointed to wind up the affairs of the society the General Body fails to make any selection that is approved by the Registrar, the Registrar may place the surplus funds on deposit or otherwise with a financing bank working in the area in which the society which is being wound up carried on its operations, until a new Co-operative Society with similar object is registered in such area, in which case the funds shall be carried to the reserve funds of such society. If in the opinion of he Registrar, there is no prospect of a new society being formed in such area within a reasonable time, the Registrar shall assign the amount to the bad debt reserve or the reserve fund of the financing bank working in such area ;
(b) in the case of financing bank the surplus funds shall be assigned by the Registrar to the reserve fund or funds of any other financing banks to which the societies working in the area in which the financing bank which is being wound up carried on its operations, are affiliated. If there is no financing bank working in such area, the Registrar shall invest the amount in the State Co-operative Bank until a new financing 26 bank is formed in such area, in which case the funds shall be credited to the reserve fund of such financing bank.
33. Restrictions on borrowings by Co-operative Societies. ––(1) Subject to the provision of sub-rule (2) a Co-operative Society shall not receive deposits and loan, whether from members or non-members which exceed the limit fixed, from time to time, by the Registrar in this behalf for the society or for class of societies to which it belongs.
(2) A Co-operative Society which accepts deposits and loans from members only and has no liability to any person other than the members, may receive such deposits and loans in excess of the limit referred to in sub-rule (1) if the excess amount is deposited in a Co-operative Bank to which it is affiliated or is invested in Government or other securities specified in *[section 20 of the Trusts Acts, Samvat 1977 ] :
Provided that the amount so deposited or invested or any part thereof, is not withdrawn otherwise or utilised except for the repayment of the deposits accepted in excess of the aforesaid limit.
34. Transactions with Non-members.–– No Co-operative Society shall enter into any transaction with a person other than a member except for the furtherance of the business of the society and those referred to in sections 61 and 62 unless: ––
(a) the bye-laws of the society permit it to enter into such transaction, and
(b) previous sanction of the Registrar has been obtained by the society and also permitted by the resulting of society.
35. Restrictions on grant of loans by a Co-operative Society against its own shares.–– No Co-operative Society shall grant loans or make advance against the society of its own shares.
36. Maintenance of fluid resources.–– Every Co-operative Society of accepting deposits and granting cash credits shall maintain fluid resources in such form and according to such standards as may be fixed by the Registrar from time to time by general or special order.
CHAPTER –– VI Audit
37. Subject matter of audit.–– (1) The audit under sub-section (1) of section 64 shall include in addition to the matters specified in sub-section (2) of the said * Now section 20 of the Indian Trust Act, 1882.
27 section, the following particulars :––
(a) a verification of the balance at the credit of the depositors and creditors and of the amount due from the society’s debtors of such proportion thereof as may be fixed by the Registrar,
(b) an examination of the transactions of the member of its committee,
(c) an examination of the statement of accounts of the society to be prepared by the committee in such form as may be determined by the Registrar,
(d) a certificate of the profits actually realised, and
(e) any other matter that may be directed by the Registrar.
38. Audit fees. ––(1) Every co-operative society shall pay to the Government a fee for the audit of its accounts for each co-operative year in accordance with the scale fixed by the Registrar with the previous approval of the Government, in respect of the class of societies to which it belongs.
(2) All fees payable under this rule shall be recoverable in the manner specified in section 156 of the Act.
(3) The Registrar may subject to such condition as may be laid down by the Government remit the whole or any part of the fees payable under sub-rule (1) by a particular society or by a particular class of societies for any year or other specified period.
(4) All the fees collected under sub-rule (1) shall be credited in the Treasury provided that the Registrar Co-operative Societies may with the approval of the Government retain a part of the amount collected for payments to be made to auditors (other than the said staff of the Department) appointed for audit of important Co-operative Societies like Co-operative Bank, Apex Marketing and State Cooperative Union.
CHAPTER –– VII Reference of Disputes to Arbitration and Settlement of Disputes
39. (1) Reference of Disputes to arbitration. ––(i) The Registrar/authority may on receipt of the reference of a dispute under sections 70, 71 & 72:–– 28
(a) decide the dispute himself, or
(b) transfer it for disposal to any person who has been invested by the Government with powers in that behalf,
(c) refer it for disposal to an arbitrator.
(ii) The Registrar may withdraw any reference transferred under clause (b) of sub-rule (i) or referred under clause (c) of that sub-rule and decide it himself.
(iii) The Registrar or any other person to whom a dispute is referred for decision under this rule may pending the decision of the dispute make such interlocutory orders, as he may deem necessary in the interests of justice.
(2) Procedure for arbitration.–– A reference to the Registrar/authority of any dispute under sections 70 (1), 71 (1) and 72 (1) of the Act shall be in writing.
(3) The period of limitation for referring a dispute touching the constitution, management for the business of a Co-operative Society under sub-section (1) of section 70, sub-section (1) of section 71 and sub-section (1) of section 72 of the Act, shall be regulated by the provisions of *[the Jammu and Kashmir Limitation Act, Samvat 1995 (IX of 1995)] as if the dispute were a suit and the Registrar/authority/ arbitrator a civil court.
(4) Where on receipt of a reference under sub-rule (1), the Registrar/authority decides under clause (c) of sub-rule (1) of Rule 39 to refer it for disposal by arbitrator, the reference shall be made to one arbitrator appointed by the Registrar.
(5) The Registrar/authority/arbitrator deciding the dispute shall record a brief note of the evidence of the parties and witnesses who attend and upon the evidence so recorded and after consideration of any documentary evidence produced by the parties, a decision or award as the case may be, shall be given in accordance with justice, equity and good conscience by such Registrar/authority/arbitrator. The decision or award given shall be reduced in writing. In the absence of any party duly summoned to attend, the dispute may be decided ex-parte.
(6) (a) The Registrar/authority/arbitrator shall have power to require the persons referring a dispute under sub-section (1) of section 70, sub-section (1) of section 71 and sub-section (1) of section 72 of the Act to deposit in advance the fee specified by the Registrar/authority/arbitrator for deciding the dispute.
(b) The Registar/authority/arbitrator deciding a dispute under sections 70, 71 and 72 of the Act and sub-rule (1) of this rule shall have power to order the expenses * Now Limitation Act, 1963.
29 incurred in determining such dispute to be paid either out of the funds of the society or by such party or parties to the dispute, as he may think fit.
The Registrar/authority/arbitrator may, in his discretion, remit the whole or any part of the fee collected under clause (a).
40. Mode of service of summons.–– Mode of service of summons will be as per procedure mentioned in *[J&K Civil Procedure Code] and the procedure laid down in rules of these rules.
CHAPTER –– VIII Winding up and Dissolution of Co-operative Societies
41. Procedure to be adopted by liquidator.–– Where a liquidator has been appointed under sub-section (1) of section 75 of the Act, the following procedure shall be adopted :––
(a) The appointment of the liquidator shall be notified by the Registrar in the **[Government Gazette].
(b) The liquidator shall, as soon as the orders of winding up of the society takes effect, publish by such means as he may think proper a notice requiring all claims against the society the winding up of which has been ordered, to be submitted to him within two months of publication of the notice. All liabilities recorded in the account book of society shall be deemed to see facts to have been duly submitted to him under this clause.
(c) The liquidator shall after setting the assets and liabilities of the society as they stood on the date on which the order for winding up is made, proceed next to determine the contribution to be made by each of its members, past members, or by the estates or nominees, heirs or legal representatives of the deceased members or by any office bearer or former office bearer to the assets of other society under clauses (b) and
(e) of sub-section (2) of section 76 of the Act, should necessity arise, however, he may also make a subsidiary order regarding such contribution and such order shall be enforceable in the same manner as the original order.
* Now Code of Civil Procedure, 1908.
** Now Official Gazette.
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(d) The liquidator shall submit to the Registrar a quarterly report in such form as the Registrar may specify, showing the progress made in the liquidation of the society.
(e) The liquidator may empower any person, by general or special order in writing to make collections and to grant valid receipts on his behalf.
(f) All funds in the charge of the liquidator shall be deposited in the Government Treasury or in the Post-Office Saving Bank or in a Cooperative Bank or with such other Bank or persons as may be approved by the Registrar and shall stand in his name.
(g) The Registrar shall fix the amount of remuneration, if any, to be paid to the liquidator, the remuneration shall be included in the cost of liquidation which shall be paid out of the assets of the society in priority to all other claims.
(h) The liquidator shall have power to call for meetings of members of the society under liquidation.
(i) At the conclusion of the liquidation, a General meeting of the society which has wound up shall be called at which the liquidator or any person authorised by him by special or general order in writing in this behalf shall summarize the result of his proceedings and shall take a vote as to the disposal of any surplus funds in the manner prescribed in Rule 32.
(j) If any liability cannot be discharged by the liquidator owing to the whereabouts of the claims not being known or for any other cause, the amount covered by such undischarged liabilities may be deposited in a Co-operative Bank and shall be available for meeting the claims of the persons concerned.
(k) A liquidator may at any time, be removed by the Registrar and he shall on such removal be bound to hand over all the property and documents relating to the society under liquidation to such persons as the Registrar may direct.
(l) The liquidator shall keep such books and accounts as may from time to time be required by the Registrar who may at any time cause such books and accounts to be audited.
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(m) All the books and records of a society whose registration has been cancelled, and the proceedings of liquidation may be destroyed by the Registrar after the expiry of the three years from the completion of the liquidation.
CHAPTER –– IX Housing Societies
42. Procedure for sanctioning loan. ––(a) All loan applications shall be in such form as may be prescribed by the HOUSEFED and the Housing Society. The procedure for sanction of loan shall be regulated by the terms and conditions prescribed by the HOUSEFED from time to time.
(b) The HOUSEFED and Housing Society shall make loan applications available to the borrowers on payment of the prescribed fee.
(c) The intending borrower after completing all the formalities shall submit the application to the Housing Society, which will consider the same and forward the same to the HOUSEFED for sanction of loan. The Housing Society shall forward each loan application to the HOUSEFED within 30 days from the date of its receipt.
(d) The HOUSEFED shall consider each case for sanction of loan under its bye-laws. In case the loan application is rejected the applicant shall be informed within 30 days from the date of its receipt from the society.
43. Manner of effecting distraint etc. ––(a) When distraint is to be effected the Board/Committee of the society may apply to the sale officer appointed under section 135 of the Act to arrange the sale of the movable property. The sale officer shall after giving previous notice to the decree holder proceed to the place, where the defaulter resides or the property to be distrained is situated and serve a demand notice upon the defaulter stating therein that the amount as mentioned in the demand notice be paid to the decree holder at once. If the amount due together with the expenses is not paid, the sale officer shall distraint the property of the defaulter immediately, deliver him a list of inventory of the property to be distrained with an intimation of place and hour at which distrained property will be brought to sale. If the defaulter is absent, the sale officer shall serve the demand notice on some adult male member of his family or his authorised agent. When such service cannot be effected, the sale officer shall affix copy of the demand notice at same conspicuous part of his last known place of residence. He shall then proceed to make the distraint and affix a list of the property attached on the last known place of residence of the defaulter endorsing thereon the place where the property may be lodged or kept and intimate him the place, day and time of sale.
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(b) After the distrain is made, the sale officer may arrange for the custody of the property attached with the decree holder. If the sale officer requires the decree holder to undertake the custody of the property, the later shall be bound to do so and any loss incurred owing to his negligence shall be made good by the decree holder. If the attached property is live stock, the decree holder, who is the custodian of the distrained property shall be responsible for providing necessary feed and fodder etc. to the live stock. The sale officer may at the instance of the defaulter or any person claiming any interest in such property leave it in the village or place, where it was attached in the charge of defaulter or any other person, if he enters into an agreement prescribed by the HOUSEFED or the Housing Society with one or more sufficient securities for production of the distrained property when called for.
(c) The distrain shall be made after sunrise and before the sunset.
(d) The value of the distrained property shall be as nearly as possible proportionate to the sum due by the defaulter together with interest and all other expenses incidental to the distrain retention and sale.
(e) If the crop or ungathered products of the land belonging to the defaulter are attached the sale officer may cause them to be sold when harvested and store them in a proper place till the time these are finally sold. In the later case the expenses of thrashing and storage shall be defrayed by the defaulter.
1[(f) The procedure adopted for search of the premises shall be as per subrule (5) (h) of rule 53.]
(g) The sale officer shall not use the distrained property for his person. He shall provide necessary fodder and feed to the cattle or the live stock and expenses incurred therein, shall be defrayed by the defaulter.
(h) The sale officer on the day previous to and on the day of the sale cause proclamation of the time and place of the intended sale to be made by the beat of drum in the village/town or mohalla in which the defaulter resides and in such other place or places as the sale officer may consider necessary to give due publicity of the sale. The sale of the distrained property will be made after the expiration of 15 days from the services of notice as provided under rule :
Provided that the property seized is subject to speedy and natural decay or the expenses of keeping it in the custody are likely to exceed its value, the sale officer may sell it at any time before the expiry of the said period of 15 days unless the amount due is cleared by the defaulter.
1. Sub-rule (f) of rule 43 recast vide SRO-1 of 2005 dated 04.01.2005.
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(i) At the appointed time the property shall be put up in one or more lots as the sale officer may consider advisable and shall be disposed off at the highest bid :
Provided that it shall be open to the sale officer to decline the highest bid where the price offered is unduly low or for any other reasons to be recorded in writing. Where the property is sold for the more than the amount due, the excess amount after deducting the interest and expenses of process, and other incidental charges shall be paid to the defaulter :
Provided further, that the sale officer may adjourn the auction to any other day and hour after recording his reasons for such adjournment or postponement.
(j) The property shall be paid for in cash at the time of sale, or soon thereafter as the officer holding the sale shall determine and the purchaser shall not be permitted to carry away any part of the property unless and until he has paid the full amount.
Where the purchaser fails to make the payment in full within the prescribed period shall be resold.
(k) Where prior to the day and time fixed for sale the defaulter or any person acting in his behalf or any person claiming any interest in the property distrained pays the full amount due including interest, and other cost incurred in making the attachment of the property, the sale officer shall cancel the order of distrain and release the property in favour of such persons. The articles of movable property exempted from attachment under section 60 of the *[Code of Civil Procedure, 1977] shall not be attached or put to sale under these rules.
1[Note:–– After the sale has been effected the recovery officer shall grant certificate to this effect which shall not be called in question in any suit or legal proceedings as per rule 53, sub-rule (14) (v) and (vi).]
44. (a) Where the movable property to be attached is salary or allowance or wages of a public servant or a railway company or local authority or a firm or a company, the sale officer, may order that the amount shall be subject to the provisions of section 60 of the *[Code of Civil Procedure 1977 (Act No. X of 1977)] be withheld from such salary or allowance or wages as the said sale officer may direct and upon service of the order, the officer or other person whose duty is to disburse such salary or allowance or wages shall withheld and remit to the sale officer, the amount due in lump sum or in monthly installments, as the case may be.
(b) When the property to be attached consists of the share or interest of the defaulter is movable property belonging to him and other person as co-sharer, the * Now Code of Civil Procedure, 1908.
1. Added by SRO-1 of 2005 dated 04.01.2005.
34 attachment shall be made by a notice to the defaulter, prohibiting him from transferring his share or his interest or charging it in any manner.
(c) Where the property to be attached is negotiable instrument either deposited in court or in the custody of public officer, the attachment will be made by actual seizure and the instrument shall be brought to the office of the sale officer for conducting the sale.
(d) Where the property to be attached is a decree for the payment of money or for sale in endorsement of a mortgage or charge, the attachment shall be made if the decree sought to be attached was passed by Registrar or arbitrator appointed under section 72 of the Act.
(e) Where the Registrar or any other authority or arbitrator makes an order under clause (d) he shall on the application of the decree holder proceed to execute the attached decree and apply the net proceeds in satisfaction of the decree sought to be executed.
(f) The holder of decree sought to be executed by the attachment of another decree of the nature specified in clause (d) shall be deemed to be the representative of the holder of the attached decree in any manner for the holder thereof.
(g) Where the property attached in the execution of a decree of the nature referred to in clause (f) the attachment shall be made through a notice by the sale officer to the holder of such decree, prohibiting him from transferring or charging the same in any way.
(h) On the application of the holder of a decree sought to be executed by the attachment of another decree, the sale officer making an order of attachment under this sub-rule shall give notice of such order to the judgement debtor bound by the attached decree and no payment or adjustment of the attached decree shall be made by the judgement debtor in contravention of such order after receipt of the notice thereof.
(i) The immovable property shall not be sold in execution of a decree unless such property has been previously attached :
Provided that where the decree has been obtained on the basis of a mortgage of such property it shall not be necessary to attach it.
45. For the attachment and sale or sale without attachment of immovable property the following conditions shall be observed :–– 35
(a) The application presented for the sale of immovable property shall contain full description of the immovable property to be sold.
(b) Upon the receipt of application, the sale officer shall serve a demand notice upon the defaulter showing the amount due including expenses if any, and in case of non payment thereof within the prescribed period, he shall notify the particulars of properties to be attached and sold or to be sold without attachment as the case may be. The sale officer shall serve or cause to be served a copy of the demand notice upon the defaulter or upon some adult male member of his family at his usual place of residence, or upon his authorised agent or if such personal service is not possible, he shall affix a copy thereof on some conspicuous part of the immovable property about to be attached and sold or sold without attachment as the case may be :
Provided that where the sale officer is satisfied that a defaulter with intent to defeat or delay the execution proceedings against him is about to dispose whole or any part of his property, the demand notice issued by the sale officer shall not allow any time to the defaulter for payment of the amount due by him and the property of the defaulter shall be attached forthwith.
(c) If the defaulter fails to pay the amount specified in the demand notice within the time allowed the sale officer shall proceed to attach and sell or sell without attachment, as the case may be, the immovable property noted in the application for execution in the following manner :––
(i) Where attachment is required before the sale, the sale officer shall serve an attachment notice on the defaulter. Where personal service is not possible the fact of attachment may be proclaimed by the beat of drum or other customary mode at some place adjacent to such property and set at such other places as the sale officer may consider necessary to give due publicity to the attachment. The attachment notice shall set forth that unless the amount due with interest and expenses be paid within the date mentioned thereon the property will be sold ;
(ii) Proclamation of sale shall be published by affixing a notice in the office of the sale officer and the Tehsil office at least thirty days before the date fixed for the sale and also by the beat of drum in the village or town consecutive days previous to the date of sale and on the day of sale notice shall also be given to the decree holder and the defaulter. The proclamation shall state the time 36 and place of sale and specify as fairly and accurately as possible,––
(1) The property to be sold.
(2) Any encumbrance to which the property is liable ;
(iii) The amount of recovery for which the sale is ordered ; and
(iv) Other matters which the sale officer considers essential for a purchase to know in order to judge the nature and value of the property.
(d) When immovable property is sold under these rules the sale shall be subject to the prior encumbrance on the property, if any. The decree holder shall, when the amount for realization of which the sale is held exceeds Rs. 100/- furnish to the sale officer within such time as may be fixed by him encumbrance certificate from the Registration Department for a period of not less than twelve years prior to the date of attachment of the property sought to be sold. The time for production of encumbrance certificate may be *{extended at the discretion of the sale officer or the recovery officer as the case may be.} The sale shall be by public auction to the highest bidder, provided that it shall be open to the sale officer to decline to accept the highest bid where the price offered appears to be unduly low or for other reasons to be recorded in writing.
The sale officer may in his discretion, adjourn the sale to another specified day and hour by recording his reasons for such adjournment.
Where the sale adjourned for a longer period than 7 days, a fresh proclamation under clause (e) shall be made. The sale shall be held after expiry of not less than fifteen days calculated from the date on which notice of the proclamation was affixed in the office of the sale officer.
The time and place on sale shall be at the place where the property to be sold is located.
(e) A sum of money equal to 25 percent of the price of the immovable property shall be deposited by the purchaser in the hands of the sale officer at the time of the acceptance of bid and in default of such deposit the property shall forthwith be re-sold :
Provided that were the decree holder is the purchaser and is entitled to set off the purchase money under clause (h) the sale officer shall dispense with the requirement of this rule.
* The words within braces have been added to make the sentence meaningful. The Administrative Department may have a view. .....(Author/Incharge Codification Branch).
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(f) The remainder of the purchase money and the amount required for the stamp duty for the sale certificate shall be paid within 15 days from the date of sale.
(g) In default of payment within the period mentioned in the preceding clause the deposit made by the highest bidder including other expenses, if any, shall be forfeited to the decree holder and the defaulting purchaser shall forfeit all claims to the property, or to any part of the deposit sum for which it may subsequently be sold.
(h) Every re-sale of immovable property in default of payment of the amount mentioned in clause (h) within the period allowed for such payment shall be made after issuing a fresh proclamation in the manner prescribed for conducting the sale.
(i) Where a decree holder purchases the property the purchase money and the amount due on the decree shall be set off against one another to the satisfaction of the sale officer.
(j) Where prior to the date fixed for a sale, the defaulter or any person acting on his behalf or any person claiming an interest in the property to be sold tenders payment of the full amount together with interest, and other expenses incurred in bringing the property to sale, including the expenses of attachment if any, the sale officer shall forthwith release the property after cancelling the order of attachment.
46. Where immovable property has been sold by the sale officer any person either owing such property or holding an interest therein by virtue of a title acquired before such sale may apply to have the sale set aside on his depositing the due amount with the sale officer subject to the condition :––
(a) of payment to the highest bidder a sum equal to 5% of the purchase money, and
(b) For the payment to the decree holder the amount of arrears specified in the proclamation of sale together with interest thereon and the expenses of attachment if any,––
(i) if such payments are made within thirty days from the date of sale, the sale officer shall pass an order setting aside the sale and shall repay to the highest bidder, the purchase money together with 5% additional sum.
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(ii) Provided that if more than one person has made the highest bid the offer of the first depositor to set aside the sale shall be accepted.
47. If any lawful purchaser of immovable property is resisted and prevented by any person in taking over the possession of the property purchased any court of competent jurisdiction on application and production of the certificate of sale shall cause the proper process to be issued for the purpose of putting such purchaser in possession in the same manner as if the immovable property purchased has been decreed to the purchaser by the decision of the court.
48. It shall be lawful for the sale officer to sell the whole or any part of the immovable property of the defaulter in discharge of money due.
49. Every person making payment towards, any amount due for recovery payment of which has been made he shall be issued proper receipt by the sale officer. Such receipt shall state the name of the person making the payment and the subject matter in respect of which the payment is made.
50. (a) Where any claim is preferred to, or any objection is made to the attachment of any property attached under these rules on the grounds that such property is not liable to such attachment the sale officer shall investigate the objections and dispose of the same on merits :
Provide that no such investigation shall be made when the sale officer considers that the claim or objection is frivolous.
(b) Where the property to which the claim or objection relates has been advertised for sale, the sale officer may postpone the sale pending the investigation of the claim or objection.
51. Where a defaulter dies before the decree has been fully satisfied, application under these rules may be made against the legal representatives of the deceased and thereupon all the provisions of these rules shall apply as if such legal representatives were defaulters, where the decree is executed against legal representatives, they shall be liable only to the extent of the property of the deceased which has come to his hands. For the purpose of ascertaining such liability, the sale officer executing the decree may, of his own motion or on the application of the decree holder, compel such legal representatives to produce such accounts as he thinks fit.
52. Issue of debentures. ––(a) The HOUSEFED may issue debentures for the purpose of raising funds under section 115 of the Act with prior permission of the 39 Govt., and the trustee. The Registrar, Co-operative Societies will be the sole trustee for which necessary documents will be executed by the HOUSEFED.
(b) The debentures will be of Rs. 500.00 each and the rate of interest will be 10% per annum as specified by the HOUSEFED from time to time with the previous approval of the trustee. The debentures shall be issued for a period of 20 years. For earlier redemption three months advance notice shall be issued.
(c) The Government will stand guarantee for the repayment of the principal and interest on debentures to the extent of rupees one crore. This amount may be increased with the increase of the assets of HOUSEFED.
CHAPTER –– X Execution of Awards, Decrees, Orders and Decisions
53. Procedure in execution of award etc.––(l) Any decree holder requiring the provisions of clause (c) of section 153 of the Act to be applied shall apply to the Recovery Officer within whose jurisdiction the defaulter resides or the property of the defaulter is situated.
(2) Every such application shall be made in the form specified by the Registrar and shall be signed by the decree holder may indicate whether he wishes to proceed against the immovable property mortgaged to the decree holder or other immovable property or to secure the attachment of immovable property.
(3) On receipt of such application, the Recovery Officer shall verify the correctness and genuineness of the particulars set forth in the application with the records, if any, in the office of the Registrar and prepare a demand notice in writing in duplicate in the form specified by the Registrar setting forth the name of the defaulter and the amount due and forward it fit to a sale officer.
(4) Unless the decree holder has expressed a desire that proceedings should be taken in a particular order as laid down in sub-rule (2) execution shall ordinary be taken in the following manner :––
(i) Movable property of the defaulter shall be first proceeded against but this shall not preclude the immovable property being proceeded against simultaneously in case if necessary ;
(ii) If there is no movable property, or if the sale proceeds of the movable property, or properties attached and sold are insufficient to meet in full the demand of the decree holder, the immovable property mortgaged to 40 the decree holder or other immovable property belonging to the defaulter may be proceeded against.
(5) In the seizure and sale of movable property the following rules shall be observed :––
(a) The sale officer shall after giving previous notice to the decree holder, proceed to the village where defaulter resides or the property to be distrained is situated and serve a demand notice upon the defaulter if he is present. If the amount due together with the expenses be not at once paid the sale officer shall make the distress and shall immediately deliver to the defaulter in a list or inventory of the property distrained and an intimation of place and day and hour at which the distrained property will be brought to sale if the amounts due are not previously discharged. If the defaulter is absent the sale officer shall serve the demand notice on some adult member of his family, or on his authorised agent, or when such service cannot be effected shall affix a copy of the demand notice on some conspicuous part of his residence. He shall then proceed to make the distress and shall affix the list of the property attached on the usual place of residence of the defaulter endorsing thereon the place where the property may be lodged or kept and an intimation of the place, day and hour of sale.
(b) After the distress is made, the sale officer may arrange for the custody of the property attached with the decree holder or otherwise. If the sale officer requires the decree holder to undertake the custody of the property, he shall be bound to do so and also loss incurred owing to his negligence shall be made good by decree holder. If the attached property is livestock, the decree holder shall be responsible for providing the necessary food therefor. The sale officer may at the instance of the defaulter or of any person claiming an interest in such property, leave it in the village or place where it was attached, in the charge of such defaulter or person, if he enters into a bond in the form specified by the Registrar with one or more sufficient sureties for the production of the property when called for.
(c) The distress shall be made after sunrise and before sunset and not at any other time.
(d) The distress levied shall not be excessive, that is to say, the property distrained shall be as nearly as possible proportionate to the sum due by the defaulter together with interest and all expenses incidental to the distraint, detention and sale.
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(e) If crops or un-gathered products of the land belonging to the defaulter are attached the sale officer may cause them to be sold when fit for reaping or gathering, or at his option may cause them to be reaped or gathered in due season and stored in proper place until sold. In the later cases, the expenses of reaping or gathering and storing such crops or products shall be defrayed by the owner upon his redeeming the property or from the proceeds of the sale in event of its being sold.
(f) The sale officer shall not work the bullocks or cattle or make use of the goods or effect distrained, and he shall provide the necessary food for the cattle or livestock, the expenses incurred thereon shall be defrayed by the owner upon his redeeming the property or from proceeds of the sale in the event of its being sold.
(g) It shall be lawful for the sale officer to force open any stable, cowhouse, granary, godown, out-house or other building and he may also enter any dwelling house, the outer door of which may be open and may break the door of any room in such dwelling house for the purpose attaching property belonging to a defaulter and lodged herein, provided always that it shall not be lawful for the officer to break open or enter apartment in such dwelling house appropriated for the Zenana or residence of women except as hereinafter provided.
(h) Where the sale officer may have reason to suppose that property of a defaulter is lodged within a dwelling house, the outer door of which may be shunt or within any apartments appropriated to women which by custom or usage are considered private, the sale officer represent the fact to the officer in charge of the nearest Police station. On representation the officer in charge of the said station shall send a police officer to the post in the presence of whom the sale officer may force open the other door of such dwelling house, in like manner as he may break open the door of any room within the house except Zenana, the sale officer may also in the presence of a police officer after due notice given for the removal of women within Zenana and after furnishing means for their removal in a suitable manner if they be women of rank who, according to the custom of usage cannot appear in public, enter the Zenana apartment for the purpose of distraining the defaulters property, if any deposited therein, but such property, if found, shall be immediately removed from such apartments after which they shall be kept free to the former occupants.
(i) The sale officer shall on the day previous to and on the day of sale cause proclamation of the time and place of the intended sale to be 42 made by beat of drum in the village in which the defaulter resides and in such other place or places as the officer may consider necessary to give due publicity to the sale. No sale shall take place until after expiration of the period of 15 days from the date on which the sale notice has been served or affixed in the manner prescribed in clause (a) :
Provided that where the property seized is subject to speedy and natural decay, or where the expense of keeping it in custody is likely to exceed its value, the sale officer may sell it at any time before the expiry of the said period of 15 days, unless the amount due is sooner paid.
(j) At the appointed time the property shall be put up in one or more lots, as sale officer may consider advisable, and shall be disposed off to the highest bidder :
Provided that it shall be open to the sale officer to decline to accept the highest bid where the price offered appears to be unduly low or for other reasons. Where the property is sold for more than the amount due, the excess amount, after deducting the interest and the expenses of process and the other charges, shall be paid to the defaulter :
Provided further that the recovery officer or the sale officer may, in his discretion, adjourn the sale to a specified day and hour recording his reasons for such adjournment. Where a sale is so adjourned for a longer period than 7 days, a fresh proclamation under clause (h) shall be made unless the judgement debtor consents to waive it.
(k) The property sold shall be paid for in cash at the time of sale, or as soon thereafter as the office holding the sale shall appoint, and the purchaser shall not be permitted to carry away any part of the property until, he has paid for it in full; where the purchaser may fail in the payment of purchase money the property shall be resold.
(l) Where it is proved to the satisfaction of any civil court of competent jurisdiction that any property which has been distrained under these rules has been forcibly or clandestinely removed, by any person the court may order forthwith such property to be restored to the sale officer.
(m) Where prior to the day fixed for sale, the defaulter or any person acting on this behalf or any person claiming an interest in the property attached, pays the full amount due including interest, batta and other costs incurred in attaching the property, sale officer shall cancel the order of attachment and release the property forthwith.
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(n) The movable properties mentioned as exempt from attachment in the provision to section 60 of the *[Code of Civil Procedure, 1977 (X of 1977)] shall not be liable to attachment of sale under these rules.
(6) Where the movable property to be attached is the salary or allowance or wages of a public offcer or a servant of a railway company or local authority or a firm or a company the Recovery Officer may, on receiving a report from the sale officer, order that the amount shall subject to the provisions of section 60 of the *[Code of Civil Procedure, 1977 (X of 1977)] be withheld from such salary or allowance or wages either in one payment or by monthly installments as the said Recovery Officer may direct and upon notice of the order, the officer or other person whose duty it is to disburse such salary or allowance or wages, shall withhold and remit to the sale officer, the amount due under the order or the monthly instalment, as the case may be.
(7) (i) Where the property to be attached consists of the share or interest of the defaulter in movable property belonging to him and another as co-owners, the attachment shall be made by a notice to the defaulter, prohibiting him from transferring the share or interest or charging it in any way.
(ii) Where the property to be attached is a negotiable instrument not deposited in a court, nor in the custody of a public officer, the attachment shall be made by actual seizure and the instrument shall be brought to the office of the Recovery Officer ordering the attachment and be held subject to his further orders.
(iii) Where the property to be attached is in the custody of any court or public officer, the attachment shall be made by a notice to such court or officer, requesting therein that such property and any interest or dividend becoming payable thereon may be held subject to the further orders of the Recovery Officer issuing the notice :
Provided that where such property is in the custody of a court or Recovery Officer of another district, any question of title or property arising between the decree holder and any other person not being the defaulter, claiming to be interested in such property by virtue of any assignment, attachment or otherwise shall be determined by such court or Recovery Officer.
(8) (i) Where the property to be attached is a decree either for the payment of money or for sale in enforcement of a mortgage or charge, the attachment shall be made if the decree sought to be attached was passed by the Registrar, authority or by a person to whom a dispute was transferred by the Registrar under rule 39(1) of these rules or by an arbitrator, by the order of the Registrar.
* Now Code of Civil Procedure, 1908.
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(ii) Where the Registrar/authority/arbitrator makes an order under clause (i), he shall on the application of the decree holder who has attached the decree, proceeded to be executed.
(iii) The holder of a decree sought to be executed by the attachment of another decree of the nature specified in clause (i) shall be deemed to be the representative of the holder of the attached decree and to be entitled to execute such attached decree in any manner for the holder thereof.
(iv) Where the property to be attached in execution of a decree is a decree other than a decree of the nature referred to in clause (i), the attachment shall be made by the issue of a notice by the Recovery Officer to the holder or such decree prohibiting him from transferring or charging the same in any way.
(v) The holder of a decree attached under this sub-rule shall give the Recovery Officer executing the decree such information and aid as may reasonably be required. On the application of the holder of a decree sought to be executed by the attachment of another decree the Recovery Officer making an order of an attachment under this sub-rule shall give notice of such order to the judgement debtor bound by the decree attached and no repayment of adjustment of the attached decree made by the judgement debtor in contravention of such order after receipt of notice thereof either through the said Recovery Officer or otherwise shall be recognized so long as the attachment remains in force.
(9) Where the movable property to be attached is,––
(a) A debt due to the defaulter in question ;
(b) A share in the capital of a corporation or a deposit invested therein ; or
(c) Other movable property not in the possession of the defaulter except property deposited in or in the custody of, any civil court, the attachment shall be made by a written order signed by the Recovery Officer prohibiting :––
(i) In the case of a debt, the creditor from recovering the debt and the debtor from making payment thereof ;
(ii) In the case of a share or deposit, the person in whose name the share of the deposit may be standing from transferring the share or deposit or receiving any dividend of interest thereon; and 45
(iii) In the case of any other movable property except aforesaid the person in possession of it from giving it over to the defaulter.
A copy of such order shall be sent in the case of the debt to the debtor, in the case of the share of deposit to the proper officer of the corporation and in the case of the other movable property except as aforesaid to the person in possession of such property. As soon as the debt referred to in clause (a) or the deposit referred to in clause (b) mature, the Recovery Officer may direct the person concerned to pay the amount to him. Where the share is not withdrawable the said Recovery Officer shall arrange for its value shall be paid to the said Recovery Officer or to the party referred to in clause (c) the person concerned shall place it in the hands of the said Recovery Officer as it becomes deliverable to the defaulter.
(10) Immovable property shall not be sold in execution of decree unless such property has been previously attached, provided that the decree has been obtained on the basis of a mortgage of such property it shall not be necessary to attach it.
(11) The attachment and sale or sale without attachment of immovable property the following procedure shall be observed :––
(a) The application presented under sub-rule (3) shall contain a description of the immovable property to be proceeded against, sufficient for its identification and in case such property can be identified by boundaries or numbers in record of settlement of survey, the specification of such boundaries or number in a record of settlement or survey, the specification of such boundaries or numbers and the specification of the defaulters share or interest in such property to the best of th