THE KARNATAKA SOUHARDA SAHAKARI (AMENDMENT) ACT, 2021
(Received the assent of the Governor on the Fifth day of October 2021)
KARNATAKA ACT NO.35 OF 2021
(First Published in the Karnataka Gazette Extra-ordinary on the Seventh day of October 2021)
An Act further to amend the Karnataka Souharda Sahakari Act, 1997.
Whereas, it is expedient further to amend the Karnataka Souharda Sahakari Act, 1997 (Karnataka Act 17 of 2000);
Be it enacted by the Karnataka State legislature in the seventy second year of the republic of India, as follows:-
1. Short title and Commencement.- (1) This Act may be called the Karnataka Souharda Sahakari (Amendment) Act, 2021.
(2) It shall come into force at once.
2. Amendment of section 2.- In the Karnataka Souharda Sahakari Act, 1997 (Karnataka Act 17 of 2000) (hereinafter referred to as the Principal Act) in section 2,-
(i) for sub-clause (a1), the following shall be substituted, namely:-
“(a1) “Area of operation” means jurisdictional area as specified in the registered bye-laws of the co-operatives.”
(ii) for sub-clause (e), the following shall be and shall always be deemed to have been substituted, namely:-
“(e) “Co-operative” means a Souharda Cooperative Society including a Cooperative bank doing the business of banking registered or deemed to be registered under section 5 and which has the words ‘Souharda Co-operative Society’ in its name and for the purposes of the Banking Regulation Act, 1949 (Central Act 10 of 1949), the Reserve Bank of India Act, 1934 (Central Act 2 of 1934), the Deposit Insurance and Credit Guarantee Corporation Act, 1961 (Central Act 47 of 1961), the National Bank for Agriculture and Rural Development Act, 1981 (Central Act 67 of 1981), the Income Tax Act, 1961 (Central Act 43 of 1961), the Karnataka Tax on Professions, Trades, Callings and Employments Act, 1976 (Karnataka Act 35 of 1976), the Central Goods and Services Tax Act, 2017 (Central Act 12 of 2017), the Banning of Unregulated Deposits Schemes Act, 2019 (Central Act 21 of 2019), and for all purposes mentioned in all Central and State legislation it shall be deemed to be a Co-operative Society.”
3. Amendment of section 5.-In section 5 of the principal Act in sub-section
(3) for the words “along with the copy of the bye-laws shall also be sent to the Federal
Co-operative” the words “along with the copy of the bye-laws and details of promoters shall also be sent to the Federal Co-operative within a period of sixty days from the date of registration” shall be substituted.
4. Amendment of section 17.-In section 17 of the principal Act, the words “and other than deposits from any other financial institutions and organisations.” shall be inserted, at the end.
5. Insertion of new section 17-A.-After section 17 of the principal Act, the following new section shall be inserted, namely:-
“17A. Restrictions on holding shares.– In any Co-operative, no member shall hold more than such portion of the total share capital of the Co- operative exceeding five percent thereof as may be prescribed.”
6. Amendment of section 20.- In section 20 of the principal Act,-
(i) in sub-section (1), after the words “shall be admitted” the words “or continued” shall be inserted.
(ii) after clause (c) the following shall be inserted, namely:-
“(d) is in default regarding any payment to be made to the co- operative exceeding an amount and for a period specified in the bye- laws;
(e) has applied to be adjudicated an insolvent or is an un- discharged insolvent; or
(f) has been sentenced for any offence, involving moral turpitude, such sentence not having been reversed or the offence pardoned and a period of five years has not elapsed from the date of the sentence; or
(g) is a paid employee of the co-operative or of its financing bank or of its union or of its federal co-operative.”
(iii) sub section (2) shall be omitted.
7. Amendment of section 20B.-For section 20B of the principal Act the following shall be substituted, namely:-
“20B. Right of members to vote.- (1) A Member shall be disqualified to vote for one year in the general meeting or in an election of the members of the board of a co-operative,-
(a) who is admitted as member not less than one year before the date of General meeting or election as the case may be;
(b) who is defaulter for any dues to co-operative;
(c) Who has not participated in the management,-
(i) by attending any two out of the last five annual general meetings;
(ii) by utilizing such minimum services or facilities offered by the co-operative as may be specified in the Bye-Laws for any two co-operative years out of the last five co-operative years:
Provided that, the restriction in clause (a) shall not apply to member of a co- operative participating in the first general meeting or first election of newly register co-operative held immediately after its registration.”
8. Amendment of section 24.-In section 24 of the principal Act, in sub- section (2), for the proviso, the following shall be substituted, namely:-
“Provided that the term of the director of the Federal Co-operative shall end if he ceases to be the director of the representative Co-operative.”
9. Amendment of section 25.- In section 25 of the principal Act,-
(i) in sub-section(1), for clause (e) the following shall be substituted, namely:-
“(e) is in default to that cooperative or any other cooperative or cooperative society in respect of any dues from him as borrower or has been a surety for a borrower who has defaulted in repaying his loan continuously for three installments.”
(ii) in sub section (2), for the words “All the directors shall incur disqualification for being elected as directors in a cooperative for a maximum period of five years from the date of incurring such disqualification and shall also be disqualified to continue as directors of that cooperative or any other cooperative if during the term of office as directors of a cooperative they,” the words “Such directors who are responsible shall incur disqualification for being elected as director in a cooperative or cooperative society for a maximum period of five years from the date of incurring such disqualification and shall also be disqualified to continue as director of that cooperative or any other cooperative or cooperative society, if during the term of office as director of a cooperative or cooperative society they,” shall be substituted.
10. Amendment of section 28.-In section 28 of the principal Act in sub- section(3), for the proviso, the following shall be substituted, namely:-
“Provided that the term of the office bearer of the Federal Cooperative shall end if he ceases to be the director of the representative Co-operative.”
11. Amendment of section 31.-In section 31 of the Principal Act, after sub- section (1) the following shall be inserted, namely:-
“(1A) No employee of the co-operative shall be promoted to the next higher post unless he successfully completes such courses prescribed for promotion from his cadre out of the courses conducted under sub-section (7) of section 53.”
12. Amendment of section 35.-In section 35 of the principal Act in sub- section (2),-
(i) the words “in the following circumstances also shall be held” shall be omitted.
(ii) for clause (c) the following shall be substituted, namely:-
“(c) not less than one-tenth of the total number of members of the Co- operative or a minimum of ten members of the Co-operative.”
13. Amendment of section 49.-In section 49 of the principal Act, in sub- section (3), after clause (g) and entries relating thereto the following shall be inserted, namely:-
“(h) The liquidation process of winding up of a Souhardha cooperative and Souhardha Cooperative banks under sub-section (4) of section 47 and sub- section (5) and (7) of section 48 shall be completed within two years, which may, however be extended by the Registrar for the reasons to be recorded in writing for a further period of one year:
Provided that the State Government shall, on a report made by the Registrar shall have power to extend the period, for the reasons to be recorded if it is satisfied that, there are genuine grounds for the extension.
(i) The procedure to be adapted by the Liquidator shall be such as may be prescribed.”
14. Amendment of section 53.-In section 53 of the principal Act,- for sub- section (9) the following shall be substituted, namely:-
“(9) The Board of the member co-operative may nominate elected director by resolution to represent the co-operative in the Federal Co-operative. Such nominated Director shall represent the co-operative in Federal co-operative along with such resolution.”
15. Amendment of section 61.- In section 61 of the principal Act, in sub- section (2), after clause (l-4) the following shall be inserted, namely:-
“(l-5) may conduct Suo motu Inquiry or cause an Inquiry to be conducted expeditiously into any specific matter touching the constitution, management, working or financial condition of a member cooperative.”
16. Substitution of expression Co-operative Election Authority.- In the principal Act, for the expression "Co-operative Election Commission" wherever they occur, the expression "Co-operative Election Authority" shall be substituted.
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