Section 36 of the Co-operative Societies Act, 1912 - Inspection of Books of Indebted Society

Section 36 of the Co-operative Societies Act, 1912 provides a statutory mechanism by which a creditor of a registered society may seek inspection of the society's books through the Registrar. The provision forms part of the Act's chapter dealing with inspection of the affairs of registered societies.

The provision is designed to give a creditor access, through the Registrar, to an official inspection where a debt is presently due and payment has been demanded but has not been received within a reasonable time. The creditor must also provide security for the proposed inspection costs if the Registrar requires it.

Text of Section 36

Meaning and Scope of Section 36

Section 36 applies when the applicant is a creditor of a registered society. It does not create a general right for any person to inspect the society's books. The statutory route is tied to an existing debt and to the conditions stated in the proviso to sub-section (1).

1. Application by a creditor

The process begins with an application by a creditor of the registered society to the Registrar. On satisfaction of the statutory conditions, the Registrar is required to inspect the books or may direct a person authorised by a written order to carry out the inspection.

2. Debt must be due

The creditor must satisfy the Registrar that the debt is a sum then due. In other words, Section 36 is directed to a presently payable debt rather than a merely prospective or contingent claim.

3. Prior demand and non-payment

The creditor must also show that payment was demanded and that satisfaction was not received within a reasonable time. The Act does not prescribe a fixed number of days for this purpose; the question of what is reasonable will depend on the circumstances and the applicable legal framework.

4. Security for inspection costs

The applicant must deposit such sum as the Registrar may require as security for the costs of the proposed inspection. This requirement should be read with Section 37, dealing with costs of inquiry or inspection.

5. Communication of inspection result

Under sub-section (2), the Registrar must communicate the results of the inspection to the creditor. The statutory text therefore contemplates not merely an inspection but communication of its result to the applicant creditor.

Section 36 and Related Provisions

Section 36 should be read with the surrounding provisions on inspection of affairs. Section 35 concerns an inquiry by the Registrar, while Section 37 deals with apportionment of costs and Section 38 deals with recovery of costs. An inspection under Section 36 is also one of the circumstances referred to in Section 39 concerning dissolution.

Practical Requirements for a Creditor

• The applicant should establish that he or she is a creditor of the registered society.
• The amount relied upon should be due and payable.
• A demand for payment should have been made before seeking inspection.
• The applicant should be able to show that payment was not received within a reasonable time.
• The security for inspection costs required by the Registrar must be deposited.

Official Text and Current Applicability

The central Act is the Co-operative Societies Act, 1912 (Act No. 2 of 1912). The official India Code text may be consulted for the statutory wording: Co-operative Societies Act, 1912 - India Code PDF.

Frequently Asked Questions

Who can apply under Section 36?

A creditor of a registered society may apply to the Registrar for inspection under Section 36, subject to the conditions stated in the provision.

Can the Registrar authorise another person to inspect the books?

Yes. The Registrar may inspect the books personally or direct a person authorised by an order in writing to conduct the inspection.

Is a prior demand for payment necessary?

Yes. The applicant must satisfy the Registrar that payment of the debt was demanded and that satisfaction was not received within a reasonable time.

Does the creditor have to bear inspection costs?

The applicant must deposit such security for the costs of the proposed inspection as the Registrar may require. Section 37 separately deals with apportionment of the costs of an inquiry or inspection.

Does the creditor receive the result of the inspection?

Yes. Section 36(2) requires the Registrar to communicate the results of the inspection to the creditor.

This page provides general legal information and the text and explanation of Section 36. For a specific dispute, the applicable State or Union Territory co-operative societies legislation, rules, amendments and facts should also be checked.