Andhra Pradesh Co-operative Societies (Second Amendment) Act, 20031
| [Andhra Pradesh Act No. 16 of 2003] | [29th October, 2003] |
An Act further to amend the Andhra Pradesh Co-operative Societies Act, 1964
Whereas, section 12-A of the Andhra Pradesh Co-operative, Societies Act, 1964, provides special provisions in respect of co-operative spinning mills and sugar factories and empowers the Registrar to give directions to transfer the assets or assets and liabilites of such societies to non-co-operative institutions in the circumstances mentioned therein;
And whereas, the High Court of Andhra Pradesh, by its order dated 25th February, 2003 in writ petition No. 8766 of 2002 and batch concerning certain sugar factories, while upholding the constitutional validity of section 12-A of the said Act, held, inter alia, that the Registrar is required to issue a notice and provide an opportunity of being heard to the management as well as the members of the society concerned even before forming his opinion that majority of the shares in it are held by the Government, that it has become sick and that there is no possibility to rehabilitate the same;
And whereas, the Government considers that it is necessary to amend the provisions of section 12-A of the said Act suitably so as to bring them in conformity with the above said order of the High Court dated 25th February, 2003 and to provide for matters connected therewith or incidental thereto
Be it enacted by the Legislative Assembly of the State of Andhra Pradesh in the Fifty Fourth Year of the Republic of India as follows:
1 The following Act of the Andhra Pradesh Legislative Assembly received the assent of the Governor on the 29th October, 2003 and the said assent is hereby first published on the 30th October, 2003 in the Andhra Pradesh Gazette for general information
STATEMENT OF OBJECTS AND REASONS
Section 12-A of the Andhra Pradesh Co-operative Societies Act, 1964 makes a special provision in respect of Cc-operative Spinning Mills and Sugar Factories and empowers the Registrar to give directions to transfer the assets and liabilities, in whole or in part, of a Co-operative Spinning Mill or a Co-operative Sugar Factory 10 any Co-operative or non-Co-operative institution, if he is of the opinion that the majority of shares in such Co-operative Spinning Mill or Co-operative Sugar Factory are held by the Government, that it has become sick and that there is no possibility to rehabilitate the same.
The High Court of Andhra Pradesh, by its Order dated 25-02-7003, in writ petition No. B766 of 2002 and batch concerning certain Sugar Factories, while upholding the constitutional validity of section 12-A of the Act, held, inter alia, that the Registrar is required to issue a notice and provide an opportunity of being heard to the management as well as the member of the Co-operative society concerned even before forming his opinion that majority of the shares in the society are held by the Government, that it has become sick and that there is no possibility to rehabilitate the same, though this is not specifically provided for in the said section. The Government have therefore decided to amend the provisions of section 12-A of the said Act suitably so as to bring them in conformity with the aforesaid order of the High Court dated 25-02-2003.
The Government have further decided that the scope of section 12-A of the Act should be widened so as to cover not only Co-operative Spinning Mills and Co-operative Sugar Factories but also all other Co-operative societies included in Public Enterprise Reforms. An opportunity has also been taken to amend section 12-A to incorporate suitable provisions in that section to change the definition of "sick co-operative society" and to provide for the order of priority in which the proceeds that may be realised from the sale of assets of the society concerned should be applied in the discharge of various liabilities of the society. Therefore it has been decided to amend the provisions of the Andhra Pradesh Co-operative Societies Act, 1964, suitably.
As the Legislative Assembly of the State was not then in session having been prorogued and as it has been decided to give effect to the above decisions immediately, the Andhra Pradesh Co-operative Societies (Amendment) Ordinance, 2003 (Andhra Pradesh Ordinance 4 of 2003) has been promulgated by the Governor on the 1st August, 2003 and published in Part IV-B Extraordinary of the Andhra Pradesh Gazette dated the 2nd August, 2003.
This Bill seeks to replace the said Ordinance.
1. Short title, extent and commencement.- (1) This Act may be called the Andhra Pradesh Co-operative Societies (Second Amendment) Act, 2003.
(2) It extends to the whole of the State of Andhra Pradesh.
(3) It shall be deemed to have come into force on the 2nd August, 2003.
2. Substitution of section 12-A.- In the Andhra Pradesh Co-operative Societies Act, 1964 (Act 7 or 1964), for section 12-A, the following shall be substituted, namely:-
12-A "Special provisions in respect of certain Societies.- (1) Notwithstanding anything contained in this Act or the rules made thereunder or the bye-laws of the societies concerned or in any other law for the time being in force, where, in the opinion of the Registrar, a society,-
(a) in which majority of the shares are held, or
(b) to which loan exceeding fifty percent of the total loan borrowed is advanced, or
(c) in which liabilities by way of guarantee for borrowing including working capital borrowing exceeding fifty percent of the total borrowings are undertaken, by the Government or one or more Government Companies or one or more corporations owned or controlled by the Government, or a society in which majority of shares are held by one or more of the aforesaid persons or any combination thereof,-
(i) has become a sick co-operative society and there is no possibility to rehabilitate it; or
(ii) being in processing, manufacturing or other industrial sector, has its unit or units lying incomplete or idle or under-utlisied for want of funds or for any other reason, or ceased to undertake its operations, or cannot undertake its operations in a viable manner, or
(iii) being in marketing, trading, commercial or any other sector has ceased to undertake its operations, or cannot undertake its operations in a viable manner.
and it is necessary in public interest to transfer its assets or assets and liabilities, in whole or in part, to any other person, he may make an order to that effect.
(2)(i) The Registrar shall, before forming the opinion and making the order under sub-section (1), give an opportunity to the society by calling upon it by notice in writing in such manner as may be prescribed to state its objections or make its representations, if any, and consider the objections or representations, if any, so stated or made.
(ii) It shall be the responsibility of the society to place the notice received from the Registrar before the genera] body convened for the purpose and communicate its objections or representations, if any, to the Registrar within a period of four weeks from the date of receipt of the notice from him:
Provided that the Registrar may receive the objections or representations, if any, form the society after the said period of four weeks but not later than five weeks from the date aforesaid, if he is satisfied that the society was prevented by sufficient cause from, stating its objections or making its representations, if any, in time.
(3) Where the Registrar has made an order under sub-section (1), he may appoint the Implementation Secretariat or any other committee, consultant or adviser having the requisite expertise or experience to assist and advise him for the purpose of,-
(i) assessing the value of the assests or the assets and liabilities, in whole or in part, of the society;
(ii) formulating terms and conditions for transfer of assests or assests and liabilities, in whole or in part, of the society;
(iii) calling for tenders or, offers for the assets or assets and liabilities, in whole or in part, to obtain the best possible offer;
(iv) evaluating the offers received and identifying the best offer,
(v) finalising sale agreement and other documents relating to the transfer,
(vi) receiving the proceeds from the sale;
(vii) applying the proceeds towards discharge of the liabilities of the society as per the priorities set out in sub-section (9);
(viii) providing such other service or assistance as the Registrar may think it necessary; and
(ix) advising and assisting generally on matters relating to employees, creditors and other matters connected with the sale.
(4) Where the best offer for the assets or assets and liabilities, in whole or in part, of the society concerned is identified in the manner prescribed, the Registrar shall, before approving the best offer and the terms and conditions of transfer thereof, consult the Government and the financing bank, if any, to which such society is indebted.
(5) Where the best offer is approved, the Registrar may make an order directing that the Committee of the society concerned shall stand dissolved from the date specified in the order and that the assets or assets and liabilities, in whole or in part, of the society shall be transferred to the person submitting the best offer on fulfilment of such terms and conditions including payment of the purchase price as may be specified in the order in the manner prescribed.
(6)(i) The Registrar shall, before making the order under sub-section (5), give an opportunity to the society by calling upon they notice in writing insuch manner as may be prescribed to state its objections or make its representations, if any, and consider the objections or representations, if any, so stated or made.
(ii) It shall be the responsibility of the society to place the notice received from the Registrar before the general body convened for the purpose and communicate its objections or representations, if any, to the Registrar within a period of four weeks from the date of receipt of the notice from him:
Provided that the Registrar may receive the objections or representations, if any, from the society after the said period of four weeks but not later than five weeks from the date aforesaid, if he is satisfied that the society was prevented by sufficient cause from stating its objections or making its representations, if any, in time.
(7) On the Registrar making an order under sub-section (5) and on such order being notified in the Andhra Pradesh Gazette, the Committee of the society shall stand dissolved and all members of the Committee including the President and the Vice President, if any, shall vacate their respective office from the date specified in the order. The Registrar shall simultaneously appoint a person or persons, wherever necessary, to manage the affairs of such society till it is dissolved.
(8) The person or persons appointed by the Registrar under sub-section (7) shall transfer the assets or assets and liabilites, in whole or in part, of the society concerned to the person submitting the best offer in the manner specified in the order.
(9) The proceeds realised from the transfer of assets or assets and liabilities, in whole or in part, of the society concerned, shall be applied in discharge of the liabilities of such society in the following order of priority, namely:-
(i) all expenses incurred for preservation and protection of the assets;
(ii) (a) dues payable to workmen and employees;
(b) debts payable to secured creditors according to their rights and priorities in terse;
(c) dues payable to provident fund or other authorities which are protected under a statue by a charge on the assets;
(iii) debts payable to ordinary creditors;
(iv) share capital contributed by the members of the society:
Provided that the cases covered under Category (i) shall have precedence overall other Categories, Category (ii) shall have precedence over Category (iii) and (iv) and Category (iii) shall have precedence over Category (iv);
Provided further that the debts specified in each of the Categories shall rank equally and be paid in full, but in the event of the amount being in sufficient to meet such debts, they shall abate in equal proportions and be paid accordingly;
Provided also that the question of discharging any liability with regard to a debt specified in a lower Category shall arise only if a surplus fund is left after meeting all the liabilities specified in the immediately higher Category.
(10) When the assets and liabilites of the society concerned are transferred, or when the assets of the society are transferred and the realisations therefrom applied towards discharge of its liabilities, on the making of an order by the Registrar, the registration of such society shall stand cancelled and the society shall stand dissolved from the date specified in the order.
(11) Notwithstanding anything contained in other provisions of this Act or any other law, or any contract or any other instrument for the time being in force, the provisions of the order or orders of the Registrar under this section shall be binding on the society concerned and its members.
(12) No suit or other legal proceeding shall be instituted or maintained or continued in any civil court, tribunal or other authority in respect of any order made under this section.
(13) It shall be competent for the Government to make rules and to give such directions as they deem fit to the Registrar to carry out the provisions of this section.
Explanation:- For the purpose of this section,-
(a) "sick co-operative society" means a co-operative society which has,-
(i) the accumulated losses in any financial year equal to fifty per cent or more of its average net worth during four years immediately preceding such financial year, or
(ii) fail to repay its debts within any three consecutive quarters on demand made in writing for its repayment by a creditor or creditors of such society;
(b) "net worth" means the sum total of the paid up capital and free reserves after deducting the provisions or expenses as may be prescribed.
(c) "free reserves" means all reserves created out of the profits and share premium account but does not include reserves created out of revaluation of assets, write back of depreciation provisions and amalgamation;
(d) "debt" means any liability (inclusive of interest), which is due and payable by a society, in cash or otherwise, whether secured or unsecured, or whether payable under a decree or order of any Civil Court or otherwise and legally recoverable from such society.
(e) the expression "cannot undertake its operations in a viable manner" shall mean the level of operations of the society in any financial year during four financial years immediately preceding the financial year in which the issue is being considered, is such that the income generated therefrom is not adequate to meet even the operating and establishment costs, current liabilities and to service the loans and working capital borrowings availed by it.
(f) "person" includes an individual, partnership, trust, company, corporation, co-operative society, an association of persons or a body of individuals, whether incorporated or not, and every artificial juridical persons, not falling within any of the preceding categories;
(g) "Implementation Secretariat" means the implementation Secretariat established in the Department of Public Enterprises by the State Government in G.O.Ms. No. 150, General Administration (PE-II) Department, dated 30th April, 1998.
(h) "best offer" means the offer received that best satisfies the criteria specified in the call for tenders or offers".
3. Repeal of Ordinance 4 of 2003.- The Andhra Pradesh Co-operative Societies (Amendment) Ordinance, 2003 is hereby repealed.