Section 38 in The Karnataka Souharda Sahakari Act, 1997
38. Supersession.
(1)If, in the opinion of the Federal Co-operative, the Board of a Co-operative,-(i)persistently makes default or is negligent in performance of the duties imposed on it under this Act or rules or the bye-laws; or(ii)has committed any act which is prejudicial to the interests of the Co-operative or its members; or(iii)is not functioning properly on account of the number of members of the board falling short of the required number to form quorum due to disqualification, resignation, death or removal of directors; or(iv)is not functioning in accordance with the provisions of this Act or rules or [the bye-laws] [Substituted by Act 4 of 2013 w.e.f. 11.02.2013.] or(v)[ fails to conduct the annual general meeting within the six months of the close of year but within the twenty fifth day of September every year; or] [Substituted by Act 4 of 2013 w.e.f. 11.02.2013.][(v-a) has committed grave financial irregularities or fraud which have been detected; or [Inserted by Act 4 of 2013 w.e.f. 11.02.2013.](v-b) has a stalemate in its constitution or its functions; or(v-c) fails to provide necessary assistance to the cooperative election commission and as a result or otherwise the cooperative Election Commission has not conducted election immediately before the term of expiry of the outgoing board; or(v-d) fails to get the audit of accounts done within first day of September every year and present the said audit report before the general meeting; or](vi)is otherwise not functioning properly.may supercede the Board and appoint an administrator to manage the affairs of the Co-operative for such period not exceeding six months, as may be specified by the Federal Co-operative:Provided that the Federal Co-operative shall not [supersede or suspend the board] [Substituted by Act 4 of 2013 w.e.f. 11.02.2013.] unless the board has been given an opportunity of being heard in the matter.[Provided further that the board of any such cooperative shall not be superseded or kept under suspension where there is no Government shareholding or loan or financial assistance or any guarantee by the government; Provided also that in case of a cooperative carrying on the business of banking, the provisions of the Banking Regulation Act, 1949 shall also apply and the provisions of this clause shall apply as if for the words "six months", the words "one year" had been substituted.] [Inserted by Act 4 of 2013 w.e.f. 11.02.2013.](2)On the issue of the order under sub-section (1),-(a)the Directors of the board shall be deemed to have vacated their office; and(b)the Administrator shall be deemed to have assumed charge of the affairs of the Co-operative.(3)The Administrator shall, subject to the control of the Federal Co-operative, exercise and perform all the powers and functions of the Board or any office bearers of the Co-operative and take all such actions as may be required under this Act, rules and the bye-laws in the interest of the Co-operative.(4)The Federal Co-operative shall, before taking action under sub-section (1), consult the financing agency of the Co-operative to which it is indebted. It shall, in respect of a Co-operative Bank, also consult the [Reserve Bank or National Bank] [Substituted by Act 21 of 2004 w.e.f. 31.3.2004.] as the case may be.(5)The Administrator shall, before the expiry of his term, arrange for constitution of the new Board for the Co-operative in accordance with its bye-laws.(6)Notwithstanding anything contained in this Act, rules and bye-laws, the Federal Co-operative shall, in case of a Co-operative Bank, if so required in writing by the [The Reserve Bank or National Bank] [Substituted by Act 21 of 2004 w.e.f. 31.3.2004.] in public interest or for preventing the affairs of the Co-operative Bank being conducted in the manner detrimental to the interest of the depositors or for securing proper management of the Co-operative Bank, by order in writing, supersede the board of that Co-operative Bank and appoint an Administrator to manage the affairs of the Co-operative Bank for such period as may specified by the Federal Co-operative in concurrence with [The Reserve Bank or National Bank] [Substituted by Act 21 of 2004 w.e.f. 31.3.2004.].(7)[ The Federal cooperative shall determine the remuneration payable to the Administrator. The amount of such remuneration and the expenses made by the Administrator in connection with the management of the cooperative shall be borne from out of the funds of the cooperative. The service rules applicable to the officer or employee appointed as Administrator of the cooperative shall continue to govern his service as Administrator of the cooperative] [Inserted by Act 4 of 2013 w.e.f. 11.02.2013.]
