Section 40 of the Co-operative Societies Act, 1912 - Cancellation of Registration of Society
Section 40 - Statutory provision
Where it is a condition of the registration of a society that it should consist of at least ten members, the Registrar may, by order in writing, cancel the registration of the society if at any time it is proved to his satisfaction that the number of the members has been reduced to less than ten.
The provision is part of the dissolution framework in the Co-operative Societies Act, 1912. It addresses a specific situation: a society whose registration depends upon having at least ten members later falls below that minimum. The statutory power is vested in the Registrar, and cancellation under Section 40 must be made by an order in writing.
Meaning and requirements of Section 40
| Minimum membership condition | The section applies where registration of the society is conditional upon the society consisting of at least ten members. |
|---|---|
| Reduction below ten | The number of members must have been reduced to fewer than ten. |
| Registrar's satisfaction | The reduction in membership must be proved to the satisfaction of the Registrar. |
| Written order | The Registrar may exercise the cancellation power through an order in writing. |
| Nature of power | The word "may" indicates a statutory power exercisable by the Registrar when the conditions stated in Section 40 are met. |
Who is the Registrar?
For the purposes of the 1912 Act, the Registrar is the statutory authority appointed under the Act to perform the functions assigned to that office. Section 3 provides for appointment of a person to be Registrar of Co-operative Societies for the State, and permits appointment of persons to assist the Registrar with conferred powers.
How Section 40 differs from Section 39
Section 39 - Dissolution deals with cancellation following the circumstances specified there, including an inquiry under Section 35, an inspection under Section 36, or an application by three-fourths of the members. Section 40 is narrower: it concerns the fall in membership below ten where ten members are a condition of registration.
Effect of cancellation under Section 40
Section 41 states the legal effect of cancellation. In a cancellation under Section 40, the society ceases to exist as a corporate body from the date of the cancellation order. This timing differs from cancellation under Section 39, for which Section 41 links cessation to the date on which the Section 39 cancellation order takes effect.
Winding up after cancellation
Section 42 provides that where registration is cancelled under Section 39 or Section 40, the Registrar may appoint a competent person as liquidator. The Act then confers powers on the liquidator for matters including legal proceedings, claims, contributions, costs, and collection and distribution of the society's assets.
Practical legal points
- A mere fluctuation in membership is not enough unless the statutory condition described in Section 40 is applicable and the membership has actually fallen below ten.
- The Registrar's statutory satisfaction must relate to proof that the number of members has fallen below the prescribed minimum.
- The cancellation must be embodied in a written order.
- Because Section 41 makes a Section 40 cancellation effective for corporate existence from the date of the order, the date of the written order is legally significant.
- Consequences relating to winding up should be read with Section 42 and the applicable rules.
Official text and further reading
For the authoritative central Act text, see the Co-operative Societies Act, 1912 on India Code. Readers may also refer to the related internal pages on Section 35 - Inquiry by Registrar, Section 36 - Inspection of books of indebted society, Section 37 - Costs of inquiry, Section 38 - Recovery of costs, and Section 39 - Dissolution.