1. relates to a society having a charge over members produce. This is in relation to agricultural societies. Here a society which has as one of its objects the disposal of any agricultural produce may enter into a contract with its members either in its by laws or by a separate document binding the members to dispose of all their agricultural produce or such amounts or descriptions of the same as may be stated to or through the society and the contract may bind the members to produce the quantities of agricultural produce mentioned therein and the contract may further provide for payments of a specific sum per unit of weight or other measure as liquidated damages for any breach of the contract and any such sum on becoming payable shall be a debt due to the society and shall be a charge upon the immoveable property of the member. Such contract has the effect of creating in favour of the society a charge upon the proceeds of sale mentioned therein whether existing or future.
A society may on the authority of a resolution passed in general meeting pledge the produce deliverable by members under any such contract as security for loans made to it as if it were the owner.
No contracts entered therein shall be contested in any court on the ground that it constitutes a contract in restraint of trade. (in relation with a society to have a charge over members produce)
2 Fines for violation of bylaws
Society by laws may subject to the Act and rules provide for the imposition of fines on its members for any infringement of its bylaws but such a fine shall not be imposed until written notice to impose it and the reason for it has been served on a member and he has had an opportunity to show cause why it should not be imposed and to be heard with or without witnesses.
Such a fine shall be a civil debt due to the society and shall without prejudice to any other means of recovery be recoverable summarily. The whole or any part of such a fine may be set-off against any money due to such a member in respect of produce delivered by him to the society. Note however that a member shall not be taken to have infringed society by laws by reason of his having failed to deliver produce to it if the failure was due to the fact that before becoming a member he had contracted to deliver such a produce to some other person and the contract had been disclosed to the society. In fact every person applying for society membership is duty bound to disclose to it particulars of all such contracts.
3. Society to have first Charge over debts and assets in certain cases:
Here, subject to any other written law as to priority of debt where a society has
(a) Supplied to any member or past member any seeds or manure or any animals feeding stuff, agricultural or industrial implements or n machinery or materials from manufacture of buildings or;
(b) Render any services to any member or past member or;
(c) Lend money to any member or past member to enable him to buy any of the things aforesaid or obtain any such services, the society shall have a first charge upon such things or upon any agricultural produce, animals or articles produced therewith with the aid of such money and that charge shall exist for such period as the loan or value of services rendered shall remain unpaid.
(d) Society to have first charge over members share: It is provided that a society shall have a first 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 accumulated funds payable to him in respect of any debts due from him to the society and may set off any sum credited or payable to him in or towards the payment of any such debt.
(e) Remittance of Deductions from employees emoluments to the society and interest payable on default: where the employer of a person who is a member of a society having with the agreement of such member and the society concerned made a deduction from his emoluments for remittance by the employer to the society concerned fails to remit it within 15 days after the date upon which the same was made, the society concerned shall be entitled after having given such employer not less than 7 days notice in writing requiring immediate payment to file proceedings for recovery of such deductions. The notice shall be in writing and require that the employer concerned shall within 7 days after service thereof pay the sum deducted to the society and further provide that failure to pay before the period specified in the notice will lead to proceedings being taken for summary recovery of the amount concerned together with compound interest at the rate of not less than 3% per month through the courts and the action shall be taken without further notice to the employer. (one of the least observed rules) In proceedings instituted the society may be represented by the registrar.
(f) Members shares not to be subject to attachment: The share or interest of a member in the capital of a society shall not be liable to attachment or sale under any decree or order of a court in respect of any debt or liability incurred by him and trustee in bankruptcy shall not have any claim on such share or interest provided that where a society is dissolved the share or interest of any member who is adjudged bankrupt shall vest in the trustee in bankruptcy.
(g) Liability of past members: The liability of a past member of a society shall be in respect of the debts of the society as they existed at the date when he ceased to be a member and proceedings in respect thereof may be commenced within a period of two years from such date. Provided that in the case of a society with limited liability if the first audit of its accounts after his ceasing to be a member discloses that it is solvent, the financial liability of such member shall cease forthwith.
(h) Liability of Estate of Deceased Members: It is provided that the Estate of a deceased member shall be liable for the debts of the society as they existed at the time of his death and proceedings in that respect may be commenced within one year of the death. Provided that
(i) (i) In the case of a society with limited liability, if the first audit of its accounts after the death discloses a credit balance in favour of the society then the financial liability of the Estate shall cease forthwith;
(ii) A personal representative shall not be liable except in respect of assets in his possession or under his control;
(j) Transfer of Shares or Interest of a Deceased Member: On the death of a member a society may transfer his share or interest to the following:
(i) The person nominated in accordance with the Act and Rules;
(iii) If there is no person so nominated such person as may appear to the committee of the society to be the personal representative of the deceased; or
(iv) If either of such persons is not qualified under the Act or bylaws or the society bylaws, such person specified by the nominee or personal representative as the case may be who is so qualified or may pay to such nominee or personal representative a sum representing the value of such member share or interest ascertained in accordance with any rules made under the Act or the society by laws. Provided that
(a) IN the case of a society with unlimited liability such nominee or personal representative may require the society to pay him the value of the share or the interest of the deceased member ascertained in a manner provided by the bylaws or
(b) In the case of a society with limited liability it shall transfer the share or interest of the deceased to such nominee or personal representative being qualified in accordance with the Act or any Rules or Society bylaws for membership on his application within one month of the death. All other monies due do the deceased from the society shall be paid to such a nominee or personal representative. All transfers and payments by a society made herewith shall be valid and effectual against any demand made upon the society by any other person.
(k) Evidence of Members Interest: any register or list of members or of shares which is kept by a society is prima facie evidence of any of the following particulars therein entered:
(i) The dates on which the name of any person was entered in such a register or list as a member;
(ii) The date on which such persons ceased to be a member;
(iii) The number of shares held by him;
A copy of any entry in a book of a society regularly kept in the course of its business shall if certified in accordance with the rules be prima facie evidence in any proceedings of the existence of such entry and of the matters transactions and accounts therein recorded.
(l) Restriction on Production of Society Books: No officer of a society shall in any legal proceedings to which the society or liquidator is not a party may be compelled to produce any of the society’s books where the contents can be proved as herein above mentioned or to appear as a witness to prove the matters transactions and accounts therein recorded unless the court for special course otherwise orders.