(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 liabilities of the society as may remain un-discharged out of assests of the society in the following order, namely: -
(a) the debts of the society;
(b) the paid-up share capital; and
(c) the dividend upon paid up share capital at rates not exceeding six percent for any period or periods for which dividend has not been paid; or such dividend upon paid up share capital as will bring the dividend to the maximum rate for any period for which the dividend at a rate lower than the maximum specified has been paid. No dividend shall, however, be paid on share capital, if the bye-laws of the society do not provide for payment of dividend.
88
(2) Any surplus funds remaining after the payments mentioned in sub-rule (1) shall be utilised 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, (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 in liquidation fund created under section 66.
(b) In the case of a financing bank, the surplus funds shall be assigned by the Registrar to the reserve fund or funds of any other financing bank or 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 bank is formed in such area in which case the funds shall be credited to the reserve fund of such financing bank.
89