Section 38(1) in The Karnataka Souharda Sahakari Act, 1997
(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given an opportunity of being heard in the matter.[Provided further that the board of any such cooperative shall not be superseded or kept under suspension where there is no Government shareholding or loan or financial assistance or any guarantee by the government; Provided also that in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.]
