Section 37 of The Multi-State Co-operative Societies Act, 2002
- (1)Subject to the provisions of sub-section (2), the liability of a past member or of the estate of a deceased member of a multi-State cooperative society for the debts of the society as they existed,--
- (a)in the case of a past member, on the date on which he ceased to be a member;
- (b)in the case of a deceased member, on the date of his death, shall continue for a period of two years from such date.
- (2)Notwithstanding anything contained in sub-section (1), where a multi-State co-operative society is ordered to be wound up under section 86, the liability of a past member who ceased to be a member or of the estate of a deceased member who died within two years immediately preceding the date of the order of winding up, shall continue until the entire liquidation proceedings are completed, but such liability shall extend only to the debts of the society as they existed on the date of cessation of membership or death, as the case may be.
Summary
- A past member remains liable for the cooperative society's debts that existed on the date they stopped being a member.
- The estate of a deceased member remains liable for the society's debts that existed on the date of their death.
- Under normal conditions, this financial liability continues for a period of exactly two years from the date of leaving or dying.
- If the cooperative society is ordered to be wound up, the liability of those who left or died within two years before the winding-up order continues until liquidation is fully completed.
- In winding-up situations, the liability is strictly limited to the debts of the society as they existed on the date they ceased membership or died.
Practical examples
FAQ
1. How long does a past member's liability for a society's debts continue under Section 37 of The Multi-State Co-operative Societies Act, 2002?
Under Section 37 of The Multi-State Co-operative Societies Act, 2002, the liability of a past member for the debts of the society as they existed on the date of leaving continues for a period of two years.
2. What happens to a deceased member's estate liability if the society is wound up under Section 37 of the Multi-State Co-operative Societies Act?
Under Section 37 of the Multi-State Co-operative Societies Act, 2002, if the member died within two years before the winding-up order, the liability of their estate continues until the entire liquidation proceedings are completed.
3. Does a past member's liability cover new debts of the society under the 2002 Act, Section 37?
No, under Section 37 of the Multi-State Co-operative Societies Act, 2002, the past member is only liable for the debts of the society as they existed on the date they ceased to be a member, not for any debts created afterward.
4. How is the estate of a deceased member treated if the cooperative is liquidated many years after their death under Section 37 of the Multi-State Co-operative Societies Act?
Under Section 37 of the Multi-State Co-operative Societies Act, 2002, if the member died more than two years before the winding-up order, their estate has no liability because the general two year limit has already expired.
Test yourself
Q1.Under Section 37 of The Multi-State Co-operative Societies Act, 2002, for how long does the liability of a past member or the estate of a deceased member for existing debts normally continue?
Q2.Under Section 37 of The Multi-State Co-operative Societies Act, 2002, if the society is ordered to be wound up, whose liability continues until liquidation is completed?
Q3.Under Section 37 of The Multi-State Co-operative Societies Act, 2002, what is the limit of the liability of a deceased member's estate during liquidation proceedings?
Q4.Cross-reference Question: If a member dies and their interest is transferred to their nominee with consent under Section 36 of The Multi-State Co-operative Societies Act, 2002, what happens to the liability of the deceased member's estate for existing debts under Section 37?