Section 32 of the Co-operative Societies Act, 1912 - Investment of Funds

Section 32 regulates the modes in which a registered society may invest or deposit its funds. It forms part of the provisions dealing with the property and funds of registered societies under the Co-operative Societies Act, 1912.

Legal position: The official India Code text continues to list the Co-operative Societies Act, 1912 and reproduces Section 32. Because co-operative societies are also governed by State and Union Territory legislation, rules and amendments, the law applicable to a particular society should be checked for the relevant jurisdiction.

Text of Section 32 - Investment of funds

(1) A registered society may invest or deposit its funds-

  1. in the Government Savings Bank; or
  2. in any of the securities specified in section 20 of the Indian Trusts Act, 1882 (2 of 1882); or
  3. in the shares or on the security of any other registered society; or
  4. with any bank or person carrying on the business of banking approved for this purpose by the Registrar; or
  5. in any other mode permitted by the rules.

(2) Any investments or deposits made before the commencement of the Act which would have been valid if the Act had been in force are ratified and confirmed.

Meaning and scope of Section 32

The provision does not give a registered society an unrestricted power to place its funds in any investment. Sub-section (1) identifies the permitted statutory channels. In particular, clause (d) requires approval of the Registrar where funds are placed with a bank or a person carrying on the business of banking, while clause (e) recognizes additional modes that may be permitted by the applicable rules.

What is a registered society?

For purposes of the 1912 Act, a registered society is a society registered, or deemed to be registered, under the Act. Section 32 therefore operates in the statutory framework governing the management of funds belonging to such societies.

Reference to Section 20 of the Indian Trusts Act, 1882

Clause (b) expressly incorporates the investment category specified in Section 20 of the Indian Trusts Act, 1882. Section 20 concerns investment of trust-money and sets out authorized investment modes subject to the terms of the relevant trust instrument and applicable law. The current official text of that provision should be checked when relying on clause (b).

Effect of sub-section (2)

Sub-section (2) is a validating provision. It confirms pre-commencement investments or deposits that would have been valid had the 1912 Act already been in force. Its purpose is therefore historical and transitional rather than the creation of a new present-day investment category.

Practical compliance

A society considering an investment should read Section 32 together with the rules, registered by-laws, orders or approvals of the Registrar, and the co-operative societies legislation applicable in the State or Union Territory concerned. Where clause (d) is relied upon, the required Registrar approval should be verified. Where clause (e) is relied upon, the relevant rules should specifically permit the proposed mode.

Official legal resources

For the authoritative central text, see the India Code portal. The official text of the Co-operative Societies Act, 1912 contains Section 32, and the Indian Trusts Act, 1882 contains the cross-referenced Section 20.