Section 14 of the Co-operative Societies Act, 1912 - Restrictions on Transfer of Share or Interest
Section 14 regulates the transfer or charge of a member's share or interest in the capital of a registered co-operative society. It makes such dealings subject to the statutory or rule-based conditions concerning maximum holding and imposes additional restrictions where the society is registered with unlimited liability.
Current-law note: The Co-operative Societies Act, 1912 is a historical Central Act that continues to appear in the official India Code database, but its territorial application has been affected by State and Union Territory legislation and repeals. For a transaction involving a particular society, the co-operative societies law currently applicable in that State or Union Territory, along with the society's registered by-laws and applicable rules, should also be checked.
Text of Section 14
14. Restrictions on transfer of share or interest.
(1) The transfer or charge of the share or interest of a member in the capital of a registered society shall be subject to such conditions as to maximum holding as may be prescribed by this Act or by the rules.
(2) In the case of a society registered with unlimited liability, a member shall not transfer any share held by him or his interest in the capital of the society or any part thereof unless:
(a) he has held such share or interest for not less than one year; and
(b) the transfer or charge is made to the society or to a member of the society.
Meaning and Scope of Section 14
The provision deals with a member's economic interest in the capital of a registered society. A transfer changes the person in whom the share or interest is held, while a charge generally creates a security interest over that share or interest. Section 14 does not treat a member's share as freely transferable in the same manner as an ordinary asset; the transfer or charge remains subject to the Act and the rules.
Maximum holding under Section 14(1)
Sub-section (1) provides that a transfer or charge is subject to conditions concerning the maximum holding permitted by the Act or the rules. Accordingly, a proposed transfer should be checked against the applicable statutory and rule-based limits before it is acted upon.
Additional conditions for unlimited liability societies
Sub-section (2) applies specifically to a society registered with unlimited liability. In such a society, the member must have held the share or interest for at least one year. The transfer or charge must also be made to the society itself or to another member of the society.
Relevant Definitions
Section 2 of the Act defines a member to include a person who joins in the application for registration and a person admitted to membership after registration in accordance with the by-laws and rules. A registered society means a society registered or deemed to be registered under the Act. The Act also defines rules as rules made under the Act.
Practical Points to Check Before Transfer
- Confirm which co-operative societies statute currently governs the society in the relevant State or Union Territory.
- Check the society's registered by-laws and the applicable rules for transfer procedure, eligibility and maximum holding.
- Where the society has unlimited liability, verify that the one-year holding condition is satisfied.
- For an unlimited liability society, verify that the proposed transferee is the society itself or a member of the society.
- Check whether approval, registration in the society's records or other procedural compliance is required under the applicable law and by-laws.
Official legal source: The text of the Co-operative Societies Act, 1912 can be verified on the official India Code portal.
Related Provisions
For connected provisions, see Section 13 - Votes of members, Section 15 - Address of societies, and Section 16 - Copy of Act, rules and by-laws open to inspection.