Section 56 of The Multi-State Co-operative Societies Act, 2002
- (1)Subject to the provisions of section 55, the share or contribution or interest of a member or past or deceased member in the capital of a multi-State co-operative society shall not be liable to attachment or sale under any decree or order of any court in respect of any debt or liability incurred by such member, and an official assignee or a receiver under any law relating to insolvency shall not be entitled to, or have any claim on, such share or contribution or interest.
- (2)The reserve fund, or the bad debt reserves, or the provident fund of the employees, of a multiState co-operative society invested by such society in accordance with the provision of this Act and the bye-laws shall not be liable to attachment under any decree or order of a court in respect of any debt or liability incurred by the society.
Summary
- A member's share, contribution, or interest in the cooperative's capital is exempt from attachment or sale by a court.
- This protection is subject to the cooperative's own prior rights to charge and set-off under Section 55.
- Creditors of an individual member cannot attach their cooperative capital, even through an official receiver or assignee in insolvency.
- The cooperative's own reserve funds, bad debt reserves, and employee provident funds are also exempt from attachment for the cooperative's own debts.
Practical examples
FAQ
1. Can a court attach a member's cooperative shares for personal debts under Section 56 of the Multi-State Co-operative Societies Act, 2002?
No, under Section 56 of the Multi-State Co-operative Societies Act, 2002, a member's share or interest in the capital of the society is not liable to attachment or sale under any court order.
2. What happens to a member's cooperative shares if they go bankrupt under Section 56 of the Multi-State Co-operative Societies Act, 2002?
Under Section 56 of the Multi-State Co-operative Societies Act, 2002, an official assignee or receiver in insolvency cannot claim or have any right over the member's share, contribution, or interest in the capital.
3. Are the cooperative's reserve funds safe from court attachment under Section 56 of the Multi-State Co-operative Societies Act, 2002?
Yes, under Section 56 of the Multi-State Co-operative Societies Act, 2002, reserve funds, bad debt reserves, and employees' provident funds invested by the society cannot be attached for the society's debts.
Test yourself
Q1.Under the Multi-State Co-operative Societies Act, 2002, how do Section 55 and Section 56 interact regarding a court's ability to attach a member's share capital?
Q2.Under Section 56 of the Multi-State Co-operative Societies Act, 2002, which of the following funds of the society is protected from court attachment for the society's own liabilities?
Q3.Under Section 56 of the Multi-State Co-operative Societies Act, 2002, who is barred from claiming a member's share or interest in the capital of a society during bankruptcy proceedings?
Q4.Under Section 56 of the Multi-State Co-operative Societies Act, 2002, what can a court order to be sold to satisfy a member's personal debt?