WINDING UP OF MULTI-STATE CO-OPERATIVE SOCIETYCentral

Section 92 of The Multi-State Co-operative Societies Act, 2002

Notwithstanding anything contained in any law relating to insolvency, the contribution assessed by a liquidator shall rank next to debts due to the Central Government or a State Government or a local authority in accordance with the order of priority in insolvency proceedings.

Summary

The section governs the priority order for recovering financial contributions demanded by a liquidator from members or officers.
In insolvency proceedings, which is the legal process of dealing with bankrupted entities, these contribution demands have high priority.
The assessed contributions rank immediately behind debts owed to the Central Government, State Governments, or any local authorities.
This priority status applies even if other general laws regarding bankruptcy or insolvency have conflicting rules.

Practical examples

1Rahul Kumar, a member of a bankrupted co-operative, goes personally bankrupted on January 15, 2026. The liquidator has assessed that Rahul owes 10,000 rupees as his contribution. Under Section 92 of the Act, after Rahul's property is sold, the court first pays Rahul's unpaid municipal property taxes, and then immediately pays the 10,000 rupees to the liquidator before any other ordinary commercial creditors get paid.

2In another case, the estate of a deceased member, Late Mr. Gupta, owes 5,000 rupees in unpaid taxes to the State Government, 2,000 rupees in assessed liquidation contributions to the co-operative, and 20,000 rupees to a private moneylender. Under Section 92 of the Act, the State Government's 5,000 rupees is paid first, the liquidator's 2,000 rupees is paid second, and only then can the private moneylender claim whatever is left.

FAQ

1. What is the priority of the liquidator's assessed contributions under Section 92 of The Multi-State Co-operative Societies Act, 2002?

Under Section 92 of The Multi-State Co-operative Societies Act, 2002, contributions assessed by a liquidator rank next in priority, meaning right after, any debts that are due to the Central Government, a State Government, or a local authority.

2. Does Section 92 of The Multi-State Co-operative Societies Act, 2002 override other insolvency laws?

Yes, under Section 92 of The Multi-State Co-operative Societies Act, 2002, this specific priority order applies notwithstanding anything contained in any other law relating to insolvency.

3. Are local authority debts given higher priority than liquidator contributions under Section 92 of The Multi-State Co-operative Societies Act, 2002?

Yes, under Section 92 of The Multi-State Co-operative Societies Act, 2002, debts due to a local authority are paid before the contributions assessed by the liquidator, as the liquidator's contributions rank next to government and local authority debts.

Test yourself

Q1.Under Section 92 of The Multi-State Co-operative Societies Act, 2002, contributions assessed by a liquidator rank immediately after debts due to which of the following?

Q2.Under Section 92 of The Multi-State Co-operative Societies Act, 2002, how does the priority of assessed contributions behave in relation to other insolvency laws?

Q3.Under Section 92 of The Multi-State Co-operative Societies Act, 2002, what does the term "local authority" refer to in the context of priority debts?

Q4.Under Section 92 of The Multi-State Co-operative Societies Act, 2002, whose assessment determines the amount of contribution that enjoys this legal priority?

91PreviousSection 91 Disposal of surplus assets.93NextSection 93 Power of Central Registrar to cancel registration of a multi-State co-operative society.

←Section 91 Section 93→