Section 14: Upon Dissolution, No Member to Receive Profit
Section 14 of the Societies Registration Act, 1860 regulates what happens to the remaining property of a registered society after it has been dissolved and all its debts and liabilities have been discharged. Its general rule prevents distribution of that surplus among members and provides for transfer to another society, subject to a specific statutory exception and applicable State amendments.
Text of Section 14
If upon the dissolution of any society registered under this Act there shall remain, after the satisfaction of all its debts and liabilities, any property whatsoever, the same shall not be paid to or distributed among the members of the said society or any of them, but shall be given to some other society, to be determined by the votes of not less than three-fifths of the members present personally or by proxy at the time of the dissolution, or, in default thereof, by such Court as aforesaid:
Clause not to apply to Joint-stock Companies. Provided, however, that this clause shall not apply to any society which shall have been founded or established by the contributions of shareholders in the nature of a Joint-stock Company.
Meaning and application of Section 14
The provision applies at the stage of winding up a society's affairs following dissolution. Before any surplus is considered, the society must settle its outstanding debts and liabilities. The remaining assets, whether money or other property, ordinarily cannot be distributed to members merely because they were members, office-bearers or contributors.
Transfer to another society
Under the central text, the recipient society is selected by a vote of not less than three-fifths of members present in person or by proxy at the time of dissolution. This threshold is distinct from the approval needed to dissolve a society under Section 13. The meeting, voting and transfer should also comply with applicable rules and State legislation.
Role of the court
If the members do not determine the recipient society in the prescribed manner, the matter is to be decided by the court referred to in Section 13, namely the principal court of original civil jurisdiction of the district in which the society's chief building is situated, subject to applicable local modifications.
Exception for certain shareholder-founded societies
The proviso excludes a society founded or established through contributions of shareholders in the nature of a joint-stock company from this particular restriction. It is a specific exception; it does not mean that every registered society may divide its surplus among members or that other applicable legal obligations cease to apply.
Practical steps on dissolution
- Confirm a valid dissolution decision under Section 13 and the applicable State law.
- Prepare an inventory of assets and settle all lawful debts and liabilities.
- Identify the remaining property and check any restrictions attaching to grants, donations or specific assets.
- Record the vote choosing the recipient society, including the required three-fifths threshold.
- Complete the necessary transfer, filings and record preservation under the society's rules and relevant State provisions.
Relationship with Sections 13 and 15
Section 13 addresses the decision to dissolve and the settlement of affairs. Section 14 separately governs the disposition of surplus property. Section 15 defines a member for purposes of the Act, subject to its terms and applicable amendments.
State amendments and official legal sources
The Societies Registration Act, 1860 has been amended, adapted or supplemented differently across States and Union Territories. The relevant State enactment, registration authority's requirements and any special law governing the society must therefore be checked before dissolution or transfer of assets.
Official resources: India Code (Central and State legislation) and e-Gazette of India. Search for the Societies Registration Act, 1860 and the applicable State amendments.
This article explains the central statutory provision. The legal position for a particular society depends on its place of registration, governing documents and applicable amendments.