Section 7 in Multi-State Co-Operative Societies (Privileges, Properties and Funds, Accounts, Audit, Winding Up and Execution of Decrees, Orders and Decisions) Rules, 1985
7. Objects and Investments of Reserve Fund.
(1)Every multi-State co-operative society shall maintain a reserve fund to meet any one or more of the following objects :-(i)unforeseen losses;(ii)claim of the creditors of the society which cannot be otherwise met; and(iii)such other financial needs in times of special scarcity.(2)Every multi-State co-operative society may, with the permission of the Central Registrar invest or deposit its reserve fund in : -(i)acquisition or purchase of land and building and construction of building for-(a)its office, staff and equipment;(b)installation or operation of its machinery or plant;(ii)purchase of machinery or plant which is required for its main business;(iii)acquisition or purchase of land and building and construction of buildings for the purposes mentioned in clause (i) (a) and also for the benefit of its members in accordance with the provisions of its bye-laws; and(iv)its own business.(3)The reserve fund of a multi-State co-operative society shall be indivisible and no member shall have any claim or a share in it.(4)No multi-State co-operative society whose reserve fund has been separately invested or deposited shall draw upon, pledge or otherwise employ such fund except with the sanction of the Central Registrar previously obtained.(5)The utilisation of the reserve fund for the objects mentioned in sub rule (1) shall be subject to the condition that any amount drawn shall be reimbursed from the profits accruing in subsequent co-operative year or years as directed by the Central Registrar. The Central Registrar may, however, having regard to the special circumstances of the society, permit that the reserve fund drawn and utilised for the objects mentioned under clauses (ii) and (iii) of sub-rule ( 1 ) may not be reimbursed wholly or partially as he may direct.(6)(a)In the case of winding up of a multi-State co-operative society, the reserve fund and the other funds of the multi-State co-operative society shall be applied first in discharge of the liabilities of the multi-State co-operative society in accordance with the priority specified in items (i) to (vi) below:-(i)salary and wages or other payments, if any, due to the employees of the multi-State cooperative society;(ii)security deposits of staff, if any;(iii)borrowings held from Government or on the guarantee of Government) if any;(iv)deposits of non-members, if any; (v) loans, if any ; and (vi) deposits of members, if any.(b)The balance, if any, after discharging the liabilities mentioned in clause (a) shall be applied to the re-payment of the paid-up share capital and thereafter to the payment of dividend where it has not been paid.(c)Notwithstanding anything contained in clause (b), no dividend shall be paid if the bye-laws of the multi-State co-operative society do not provide for payment of dividend.(7)Any surplus remaining after payments mentioned in sub-rule (6) shall be applied by the liquidator, after consulting members, for contribution to National Defence Fund or to cooperative education fund referred to in Rule 4-or to any other charitable purpose or local objects of public utility subject to the approval of the Central Registrar.
