Formation & Registration of NGO’S – Setting Up of Business Entities and Closure Important Questions

Formation & Registration of NGO’S – Setting Up of Business Entities and Closure Important Questions

Question 1.
Slate any eight exemptions available to ‘Section 8 Companies’ from the provisions of the Companies Act, 2013.
Answer:
The Central Government has granted various exemptions, either in full or in part from the provisions of the Companies Act, 2013.

The key exemptions are summarized below:
1. Company Secretaries no longer mandatory: Section 8 Company can appoint Company Secretary who does not fall in the definition of Company Secretary u/ s. 2(24). A Company Secretary has been defined to mean a member of the Institute of Company Secretaries of India (ICSI). However, with this exemption, a Section 8 company can appoint any person as Company Secretary even if that person is not a member of ICSI.

2. No need for minimum share capital: A Section 8 Company need not have a minimum paid-up share capital as prescribed u/s 2(68) and 2(71) for a private and a public company respectively. Thus, section 8 companies are free to have any share capital.

3. Relaxation with regard to AGM: The time, date, and place of each AGM can be decided beforehand by the Board of directors, subject to directions, if any, given in the general meeting.

4. Shorter notice period for AGM: A Section 8 company can call a general meeting by giving a clear 1,4 days notice. In the case of other companies, AGM can be called only by giving a notice calling such an AGM after 21 clear days.

5. No necessity to record minutes of meetings, unless required etc.: A Section 8 Company need not comply with the requirements stipulated u/s 118 dealing with Minutes of Proceedings of general meetings, meeting of Board of Directors, and other meetings and resolutions passed by postal ballot. However, the minutes of meetings may be recorded within 30 days of the conclusion of the meeting in cases where the company’s articles provide for confirmation by way of circulation of minutes.

6. Shorter period for sending financial statements: A Section 8 Company can send a copy of the financial statements, including consolidated financial statements if any, auditor’s report, and every other document required by law to be annexed or attached to the financial statements, which are to be laid before a company in its general meeting to its members not less than 14 days before the date of the meeting.

7. a Maximum number of directors: A Section 8 Company need not comply with the requirement of a maximum number of directors as stipulated u/s 149(1). Thus, such companies can appoint more than 15 directors on its board without complying with provisions of Section 149.

8. Independent Directors not required: A Section 8 Company need not appoint independent directors.

9. Consent to act as a director not required: A section 8 company need not obtain a consent letter from directors and file the same with ROC within 30 days of appointment as required u/s 152(5).

10. Provisions relating to contesting as director shall not apply: A Section % 8 Company need not comply with requirements of Section 160 with respect to notice of candidature for appointment of a director other % than a retiring director if the Articles of association of such company provide for the election of directors by ballot.

Question 2.
A company may be formed without using the words ‘Limited’ or ‘Private Limited’ at the end of its name. Comment. [June 1995 (5 Marks)]
Answer:
A person or association of persons registered under the Act as a limited company can obtain a license to omit the “Limited” or “Private Limited” from its name if:
(a) it has in its objects the promotion of commerce, art, science, sports, education, research, social welfare, religion, charity, protection of the environment, or any such other object
(b) it shall apply its profits, if any, or other income in promoting its objects; and
(c) it prohibits the payment of any dividend to its members.

Companies can obtain a license from the Central Government to register the company u/s 8(1) of the Companies Act, 2013. Such non-profit-making companies are popularly called “Section 8 Companies”.

Name of the section 8 company must contain specified words: The name of section 8 Company shall include the words foundation, Forum, Association, Federation, Chambers, Confederation, council, Electoral trust and the like, etc. [Rule 8(7) of the Companies (Incorporation) Rules, 2014]

Question 3.
Ehsan along with his nine friends desires to incorporate a Company, not for profit, for the protection of the environment, as permissible under the Companies Act, 2013. Advise them on the procedural aspects for the incorporation and formation of such a company. [Dec. 2018 (5 Marks)]
Answer:
Following are the steps involved in the incorporation of Section 8 company:
Step 1: Reservation of Name: Applicants have to login into their account on MCA Website. (Pro-existing users can use the earlier accounts or new users have to create a new account.) After Login use has to click on the icon SPICe+ in MCA Service. An online form shall be open. Applicants have to fill the information online

Step 2: Application for License from CG: After obtaining the name, an application seeking a license for the formation of proposed Company 8 is to be made in e-form INC 12 to the ROC.

Step 3: License granted by CG: CG if satisfied will issue a license to the company in Form INC-16

Step 4: Incorporation of Company: After obtaining the license number, an applicant can proceed further to incorporate a company by filing e form SPICe along with required attachments

Step 5: Certificate of Incorporation: If the concerned Registrar of Companies (“RoC”) is satisfied that all the requirements of the Companies Act, 2013 have been complied with, RoC will register the association of person as a company u/s 8(1) and will issue a certificate of incorporation carrying a unique Company Identification Number (“CIN”).

Guidelines: The MOA and/or Articles of Association shall inter alia provide the following:

  1. The object of the proposed company must be the promotion of commerce, art-science, sports, education, social welfare, religion, charity, and protection of the environment or any such other object.
  2. The proposed company shall intend to apply its profits if any or other income in promoting its objects and
  3. Intend to prohibit the payment of dividends to its members.

In this case, Ehsan and his Friends can incorporate a Company registered u/s 8(1) as above and will able to enjoy all the privileges and be subject to all the obligations of a limited company under the Companies Act, 2013

Question 4.
What do you understand by ‘Trust’ under the Indian Trust Act, 1882?
Answer:
Trust [Section 3]: Trust is an obligation annexed to the ownership of property, and arising out of a confidence reposed in and accepted by the owner, or declared and accepted by him, for the benefit of another, or of I another and the owner.

Author The person who creates trust.
Trustee The person in whose favor confidence is declared.
Beneficiary The person for whose benefit the confidence is accepted.
Trust property The subject matter of the trust. It also called a beneficial interest.
Instrument of Trust The instrument declaring the trust.

Example: Ram transfers certain property in favor of Shyam for the benefit of his wife and children. This is trust. In this case, Ram is the author of trust; Shyam is Trustee; Wife and children of Ram are beneficiaries.

Question 5.
State the purposes for which trust may be created.
Answer:
Creation of Trust – Lawful purpose [Section 4]: Trust may be created for any lawful purpose. The purpose of a trust is lawful unless it is

  • Which is forbidden by law
  • Which is of such a nature that if permitted it would defeat the provisions of any law
  • Which is tainted with fraud
  • Which involves or implies injury to any person
  • Which is injurious to the property of any person
  • Which is immoral in the opinion of the Court or
  • Which the Court regards as opposed to public policy.

Every trust for which the purpose is unlawful is void and where a trust is created for two purposes, of which one is lawful and the other unlawful, and the two purposes cannot be separated, the whole trust is void.

Question 6.
Write short note on Constructive Trust [June 1995 (5 Marks)]
Answer:
Constructive Trust: A constructive trust is one that is not created by the express or implied act of the settler, but which is deemed by operation of law or arises by the construction of law.

Principle: Constructive Trust is based on the principle of Unjust Enrichment where any person cannot enrich himself at expense of another person. The trustee cannot enrich by breach of his fiduciary position

Example: Mr. A is a trustee to settle all the creditors of ABC Limited. Mr. A is left with surplus money after the settlement of all creditors. Now Mr. A cannot enrich himself by keeping surplus cash and he needs to return it to ABC Limited. So for surplus cash, there is constructive trust between Mr. A and ABC Limited

Question 7.
Discuss the ‘Certainties of a Trust’. [Dec. 1996 (5 Marks)]
Answer:
Creation of trust [Section 6]: A trust is created when the author of the trust indicates with reasonable certainty by any words or acts:
(a) An intention on his part to create thereby a trust,
(b) The purpose of the trust,
(c) The beneficiary, and
(d) The trust-property, and transfers the trust-property to the trustee.

If the trust is uncertain then the trust is invalid and void.
Example: (a) A bequeaths certain property to B, “having the fullest confidence that he will dispose of it for the benefit of C”. This creates a trust so far as regards A and C.

(b) A bequeaths certain property to B, “hoping he will continue it in the family”. This does not create a trust as the beneficiary is not indicated with reasonable certainty

(c) A bequeaths certain property to B, requesting him to distribute it amongst such members of C’s family as B should think most deserving. This does not create trust, for the beneficiaries are not indicated with reasonable certainty.

Question 8.
Aditya transfers his property in trust in favor of Raman with the direction that the trust property is used for the business of contraband opium and out of the profits of this business, maintenance may be given to Aditya’s children. Is this a valid trust? [Dec. 2000 (4 Marks))
Answer:
Facts of Case: Aditya transfers his property in trust in favor of Raman with the direction that the trust property is used for the business of contraband opium and out of the profits of this business, maintenance may be given to Aditya’s children.

Provision: As per Section 4 of the Indian Trust Act, 1882, a trust may be created for any lawful purpose. It is further provided that every trust of which the purpose is unlawful is void and where a trust is created for two purposes, of which one is lawful and the other unlawful, and the two purposes cannot be separated, the whole trust is void.

In the given case the trust is made for two purposes, i.e. for carrying on the business of contraband opium and to provide maintenance to children of the creator of the trust. Although, only the former object is unlawful and ] the other is legal, yet the whole of the trust is void, as the two objects are 1 inseparable from each other.

Conclusion: Trust will be void as the object is inseparable and one of the I object is unlawful.

Question 9.
Distinguish between: Revocable & Irrevocable Trusts [June 2007 (4 Marks)]
Answer:
A revocable trust is one that is revocable when it is created by a non-testamentary instrument or orally and a power of revocation has been expressly reserved by the settler.

Methods of Revocation are:
(a) A trust may be revoked by the consent of all the beneficiaries who are competent to contract.
(b) Power of revocation expressly reserved by the author of trust, which is expressly reserved by words or by instrument.
(c) At the pleasure of the author of trust, if the trust is for payment of debts and S the author of trust has not communicated to the creditors

Irrevocable Trust: All other trusts are irrevocable. Besides if a trust is created for charitable or religious purposes, such a trust cannot be revoked.

Question 10.
Distinguish Between: Trust & Agency [Dec. 2010 (4 Marks)]
Answer:
Following are the main points of difference between trust & agency:

Points Trust Agency
Meaning Trust is an obligation annexed to the ownership of property, and arising out of a confidence reposed in and accepted by the owner, or declared and accepted by him, for the benefit of another, or of another and the owner. Agency is a contract in which one person authorizes another to act on behalf of the former.
Ownership A trustee is the full owner of the trust property. An agent has no title to the property.
Control A trustee acts in his own right. An agent acts on behalf of his principal and is subject to his control.
Personal Liability A trustee may be personally liable. An agent is generally not personally liable.
Parties Trust involves three parties i.e., Author, trustee, beneficiary Agency involves two parties i.e., Principal and Agent
Law Trust Act, 1882 Contract Act, 1972

Question 11.
Amitabh has executed a trust deed for the creation of a cancer hospital in his village for the treatment of cancer patients in the nearby area. But there has already been a hospital for the treatment of such patients in that area for the last 50 years. Ironically, with all other facilities to the public, there is no medical college in the vicinity of that area. Thus, in the midst of such circumstances, whether the creation of another cancer hospital would be fruitful for the public at large or whether it would be desirable to open a medical college. Advise a suitable device through which the purpose of the trust deed may be saved and materialized. [Dec. 2002 (5 Marks)]
Answer:
Facts of Case: Amitabh wants to create charitable trust by creating the cancer hospital in his village for the nearby area. But, a cancer hospital being already in existence, another cancer hospital in the same area would be infructuous. The purpose of the trust is valid and expedient but indirectly carries no meaning. Hence, the trust would be expedited for its near purpose where the public at large may be benefited and that is the urgent need of the medical college for the student.

Provision: By.application of the doctrine of Cy Pres, the trust will be saved and its purpose will be materialized for the needy students. The doctrine of Cy Pres means near to it, which is applied only to charitable trusts.

The Supreme Court observed that the Cy Pres doctrine applies where a charitable trust is initially impossible or impracticable and the Court applies the property Cy Pres viz. to some other charitable purpose as nearly as possible, resembling the original trust. [Rajabather Mudaliar v. M.S. Vadivelu Mudaliar]

Conclusion: Hence, the trust may be created in the form of a medical college and not for a cancer hospital.

Question 12.
Write a note on Doctrine of Cypres [Dec. 2007 (4 Marks)], [Dec. 2012 (4 Marks)]
Answer:
Meaning: Cypress is the Latin word cypres’ which means as nearly as possible.

Application: The doctrine of cy pres applies to a charitable trust. It does not apply to a private trust.

Condition: When the original objective of the settlor or the testator became impossible, impracticable, or illegal to perform, the cypres doctrine allows the Court to amend the terms of the charitable trust as closely as possible to the original intention of the testator or settlor to prevent the trust from failing.

Where a clear charitable intention is expressed, it will not be permitted to fail because the mode, if specified, cannot be executed, but the law will substitute another mode Cy Pres, that is, as near as possible to the mode specified by the donor.

However, the above doctrine is subject to the doctrine of severability, ie., the doctrine of Cypres, applies if the nature of the charitable object is general and not specific.

Question 13.
A, a society registered under the Societies Registration Act, 1860 with a view to amalgamate with another registered Society, convened a general meeting of the members. At the meeting, the secretary of the Society placed before the members, the intention of the governing body and the special resolution regarding amalgamating. Out of 100 members of the Society, 99 members were present in the meeting. The resolution was put to vote and 51 members voted in favor of the resolution. Discuss whether Society can effect amalgamation with the said Society on the strength of the resolution. Give reasons for your answer. [Dec. 1994 (5 Marks)]
Answer:
Facts of Case: A, a society registered under the Societies Registration Act, 1860 with a view to amalgamate with another registered Society, convened a general meeting of the members. At the meeting, the secretary of the Society placed before the members, the intention of the governing body and the special resolution regarding amalgamating. Out of 100 members of the Society, 99 members were present in the meeting.

The resolution was put to vote and 51 members voted in favor of the resolution Provision: Section 12 of the Societies Registration Act, 1860
(a) Special Meeting: To alter, extend, or abridge purposes of the society or to amalgamate such society with any other society, such governing body may submit the proposition to the members of the society in a written report and may convene a special meeting for the consideration according to the regulations of the society.

(b) Notice and Report: Such proposition shall be carried into effect by sending by post a report to every member of the society 10 days prior to the special meeting.

(c) Voting Majority Requirement: Such proposal shall have been agreed by the votes of 3/5th of the members of society in person or by proxy and confirmed by the votes of 3/5th of the members present at a second special meeting convened by the governing body at an interval of one month after the former meeting.

Conclusion: As per the facts given in the case, only 51 members voted in favor of the resolution out of 99 members. As the resolution is not passed by the 3/5th majority and hence amalgamation cannot be affected.

Question 14.
A is not permitted to cast vote in the general meeting of a Society on the ground that he failed to pay his membership subscription for a period of seven months. Challenges the validity of this action. His plea is that being a member of Society he has the right to cast his vote. Will he succeed? [Dec. 1997 (4 Marks)]
Answer:
Facts of Case: A is not permitted to cast vote in the general meeting of a Society on the ground that he failed to pay his membership subscription for a period of seven months. Challenges the validity of this action. Provision: As per Section 15, a person shall not be counted as a member and shall not be entitled to vote whose subscription at the time shall have been in arrears for a period exceeding 3 months.

As per facts given in case the subscription of A has failed to pay his membership subscription for a period of seven months.

Conclusion: Thus, he is disqualified for membership and therefore cannot be allowed to exercise his voting right at the meeting. Hence, Societies action is justified.

Question 15.
A Society registered under the Societies Registration Act, 1860 has State Government also as its member. The 3/5th of other members of the Society passed a resolution to dissolve the society forthwith can State Government challenge this resolution and if, so on what ground? [June 1999 (4 Marks)]
Answer:
Facts of Case: A Society registered under the Societies Registration Act, 1860 has a State Government also as its member. The 3/5th of other members of the Society passed a resolution to dissolve the society forthwith can State Government challenge this resolution

Provision: According to Section 13, whenever any Government is a member of, or a contributor to, or otherwise interested in any registered society, such society shall not be dissolved without the consent of the Government.

Conclusion: Therefore, State Government can challenge the resolution passed by the society.

Question 16.
Five persons subscribed their signatures to the memorandum of association for the purpose of forming a society for paying expenses on the education of poor students studying in a Government school. They fulfilled all requirements for registration. Will the Registrar register the Society? [Dec. 1999 (4 Marks)]
Answer:
Facts of Case: Five persons subscribed their signatures to the memorandum of association for the purpose of forming a society for paying expenses on the education of poor students studying in a Government school. They fulfilled all requirements for registration

Provision: As per Section 1 of the Societies Registration Act, 1860, any seven or more persons associated for any literary, scientific, or charitable purpose, or for any other purpose described in Section 20, may, by subscribing their names to an MOA, and filing the same with ROC form themselves into a society.

Conclusion: In the given case only 5 members have subscribed their signatures to the memorandum. Hence, the Registrar will refuse registration.

Question 17.
Mohan is a member of a registered Society and has regularly paid his subscription up to March 2019. Thereafter, he fails to pay any subscription. In a meeting of the Society convened on 30th June 2019. Mohan is not permitted to participate in the meeting and to cast his vote. Is the action justified? [Dec. 2000 (4 Marks)]
Answer:
Facts of Case: Mohan is a member of a registered Society and has regularly paid his subscription up to March 2019. Thereafter, he fails to pay any subscription. In a meeting of the Society convened on 30th June 2019. Mohan’s not permitted to participate in the meeting and to cast his vote

Provision: As per Section 15, a person shall not be counted as a member and shall not be entitled to vote whose subscription at the time shall have been in arrears for a period exceeding 3 months.

As per the facts given in the case, Mohan has not failed to pay his membership subscription for a period exceeding 3 months. He is not disqualified for membership and therefore he can be allowed to exercise the voting right at the meeting.

Conclusion: Hence, Societies action is not justified.

Question 18.
Discuss the powers of Societies to alter, extend or abridge their purposes. [Dec. 2001 (4 Marks)]
Answer:
Societies enabled to alter, extend or abridge their purposes [Section 12]: Whenever it appears to the governing body of any society to alter, extend, or abridge purposes of the society or to amalgamate such society with any other society, such governing body may submit the proposition to the members of the society in a written report and may convene a special meeting for the consideration according to the regulations of the society. Such proposition shall be carried into effect by sending by post a report to every member of the society 10 days prior to the special meeting.

Such proposal shall have been agreed by the votes of 3/ 5th of the members of society in person or by proxy and confirmed by the votes of 3/5th of the members present at a second special meeting convened by the governing body at an interval of one month after the former meeting.

Procedure: To achieve the above purpose, the following procedure should be adopted.

  • The governing body should fix a day & convened a special meeting.
  • They should submit the proposition to the members in a written form, which should be delivered 10 days prior to the special meeting.
  • At the appointed date meeting will be held.
  • In meeting the proposal must be agreed by the votes of 3/5th of the members present in person or by proxy.
  • Then a second special meeting will be convened, at an interval of 1 month after the first meeting.
  • In the second meeting, the agreement & proposition must be confirmed by 3/5th of the members present.
  • Only thereafter, the proposition shall be carried into effect.

The procedure laid down in Section 12 cannot be regarded as a directory but is also mandatory for a registered Society. [Shridhar Misra v. Jai Chandra VidyalankarJ

Question 19.
For the purpose of dissolution of a society under the Societies Registration Act, 1860. A general meeting of the member of the Society was convened. In that meeting, a proposal for the dissolution of the Society was placed by the majority of the members. The said proposal was passed by three-fifths of the member of the Society present and voting. Is the dissolution valid? [Dec. 2001 (4 Marks)]
Answer:
Facts of Case: For the purpose of dissolution of a society under the Societies Registration Act, 1860. A general meeting of the member of the Society was convened. In that meeting, a proposal for the dissolution of the Society was placed by the majority of the members. The said proposal was passed by three-fifths of the member of the Society present and voting

Provision: No, dissolution is not valid. Section 13 requires voting of 3/5th of total members for passing a resolution of dissolution of the Society. In the instant problem, the proposal was passed by 3/5th of the members present & voting.

Conclusion: By referring to the above facts and provision, society can be dissolved

Question 20.
Explain the provision and procedures relating to the registration of Societies under the Societies Registration Act, 1860. [June 2002 (3 Marks)]
Answer:
Societies formed by memorandum of association and registration [Section 1]: Any seven or more persons associated for any literary, scientific, or charitable purpose, or for any other purpose described in Section 20, may, by subscribing their names to a memorandum of association, and filing the same with ROC form themselves into a society.

Memorandum of Association [Section 2]: The memorandum of association shall contain the following:

  • Name of the society
  • The object of the society
  • Names, addresses, and occupations of the governors, council, directors, committee, or other governing body to whom, by the rules of the society, the management of its affairs is entrusted.

A copy of the rules and regulations of the society, certified to be a correct copy by not less than 3 members of the governing body, shall be filed with the MOA.

Registration & Fees [Section 3]: On the filing of MOA & certified copy of the rules and regulations of the society, the Registrar shall certify under his hand that the society is registered. There shall be paid to the Registrar for every such registration a fee of ₹ 50 or such smaller fees as the State Government may from time to time, direct.

Selection of a Name: When selecting a name for society registration, it is vital to understand that an identical or similar name of a currently registered society will not be allowed. Moreover, the proposed name shall not suggest any patronage of State Government or Government of India or contravene the provisions of the Emblems & Names (Prevention of Improper Use) Act, 1950.

Procedure for Registration:
The following documents are required to be filed with the Registrar of Societies for registration of a society under the main Act or corresponding Acts of various State Governments:
1. Covering letter requesting for registration addressed to the registering authority and signed by all the subscribers to the MOA or by a person authorized by all of them. Following documents are required to be attached to the application for registration:

  • A certified copy of the MOA, signed by the founding members.
  • A certified copy of the rules and regulations, signed by the founding members, along with a duplicate copy.
  • A table with the names and addresses and occupations of all members of the society with their signatures.
  • Address proof of registered office and no-objection certificate g from the landlord.
  • PAN Card of all the members of the proposed society.
  • Other documents may be required by the registering authority.

2. MOA in copies which shall contain the following details:

  • Name of the society
  • Objects of the society
  • Names, addresses, and occupation of the members of the governing body
  • Place of the registered office of the Society, and
  • Names, addresses, and full signatures of the seven or more persons subscribing their names to the memorandum of Association. Their signatures should be witnessed.

3. Rules & Regulations/Bye-laws in duplicate duly signed by founding members or at least three members of the governing body.

4. Affidavit on non-judicial stamp paper of requisite value by the President or secretary of the society duly attested by Oath Commissioner or Notary Public or Magistrate of first class.

5. Documentary proof such as rent receipt or property tax receipt in respect of the Registered Office of the Society or no-objection of the owner of the premises,

6. Registration fee in cash or by demand draft.

Question 21.
An application for registration of a Society named Kautilya Institute of Legal Education & Training is submitted under the Societies Registration Act, 1860. A copy of the memorandum of association and bye-laws is j enclosed along with the prescribed fee. The registrar refused to register the society on the ground that the memorandum of association is not signed by seven members. Is the refusal justified? [June 2003 (4 Marks)]
Answer:
Facts of Case: An application for registration of Society named | Kautilya Institute of Legal Education & Training is submitted under the Societies Registration Act, 1860. A copy of the memorandum of association and bye-laws is enclosed along with the prescribed fee. The registrar refused to register the society on the ground that the memorandum of association is not signed by seven members

Provision: As per Section 1 of the Societies Registration Act, 1860, any seven or more persons associated for any literary, scientific, or charitable purpose, or for any other purpose described in Section 20, may, by subscribing their names to an MOA, and filing the same with ROC form themselves into a society,

Conclusion: In the given case, below 7 members have subscribed their signatures to the memorandum. Hence, the Registrar will refuse registration.

Question 22.
Alka Society was registered by seven individuals comprising relatives and close friends in 2018 for diffusing of political knowledge among the youth. It has now assets amounting to over ₹ 5 Crore. In whom does the property vest? Refer to relevant provisions and case law, if any, under the Societies Registration Act, 1860. [June 2014 (5 Marks)]
Answer:
Facts of the case: Alka Society was registered by seven individuals com-prising relatives and close friends in 2018 for diffusing of political knowledge among the youth. It has now assets amounting to over ₹ 5 Crore

Provision: Property of society how vested [Section 5]: The property, movable and immovable belonging to a registered society shall be vested in trustees or governing body of such society. In all civil and criminal proceedings may be described as the property of the governing body of such society for their proper title.

In the case of the Board of Trustees, Ayurvedic, and Unani Tibbia College v. the State of Delhi, the Board of Trustees of Tibbia College was dissolved by the Tibbia College in 1952, and the property which had vested in the Board of Trustees passed to the newly constituted Board.

Conclusion: Thus, the assets worth ? 5 Crore of Alka Society will vest in its Board of Trustees.

Question 23.
State the provisions of the Societies Registration Act, 1860 relating to ‘suits by and against society’. [June 2015 (5 Marks)]
Answer:
Suits by and against societies [Section 6]: Every registered society may sue or be sued in the name of President, Chairman, or Principal Secretary, or trustees, as shall be determined by the rules and regulations of the society and, in default of such determination, in the name of such person as shall be appointed by the governing body for the occasion.

It shall be competent for any person having a claim, or demand against the society, to sue the President or Chairman, or Principal Secretary or the trustees thereof if on the application the governing of the body some other officer or person be not nominated to be the defendant.

Suits not to abate [Section 7]: No suit or proceeding in any Civil Court shall abate or discontinue by reason of the person, by or against whom such suit or proceedings shall have been brought or continued, dying or ceasing to fill the character in the name whereof he shall have sued or been sued, but the same suit proceedings shall be continued in the name of or against the successor of such person.

Question 24.
Discuss the legal provisions for the dissolution of society under the Societies Registration Act, 1860. [Dec. 2014 (4 Marks)]
Answer:
Provision for dissolution of societies and adjustment of their affairs [Section 13]: Any number not less than 3/ 5th of the members of any society may determine that it shall be dissolved and thereupon it shall be dissolved. All necessary steps shall be taken for the disposal and settlement of the property of the society, its claims, and liabilities according to the rules of the society applicable.

In the event of any dispute arising among the governing body or the members, the adjustment of its affairs shall be referred to the principal court of the original civil jurisdiction of the district in which the chief building of the society is situated; and the court shall make such order in the matter as it shall deem requisite.

No societies shall be dissolved unless 3/5th of the members shall have expressed a wish for dissolution by their votes delivered in person, or by proxy, at a general meeting convened for the purpose.

Government Consent: Whenever any Government is a member of, or a contributor to, or otherwise interested in any registered society, such society shall not be dissolved without the consent of the Government.

Upon a dissolution, no member to receive profit [Section 14]: If upon the dissolution of any registered society there remains any surplus after the satisfaction of all its debts and liabilities, the same shall not be paid to or distributed among the members of the society but shall be given to some other society, to be determined by the votes of not less than 3 / 5th of the members present personally or by proxy at the time of the dissolution, or in default thereof as per the order of the court.

Question 25.
What are the rights and liabilities of ‘members’ of a society registered under the Societies Registration Act, 1860? [Dec. 2015 (3 Marks)]
Answer:
Who is the Member?
As per Section 15 of the Societies Registration Act, 1860 member means a person who has:
(a) been admitted to the society according to its rules and regulations
(b) paid subscription provided in the rules;
(c) signed the roll or list of members of the society, and
(d) not resigned or ceased from the membership of the society.

Rights of members of society:

  • To receive notice of all special and annual general meetings.
  • To vote at all meetings.
  • To resolve all disputes among members and society or inter .se.
  • To receive copies of the rules and regulations and bye-laws. Liabilities of members of society:
  • A member may be sued as a stranger by society.
  • Member, guilty of an offense to the society, is punishable as a stranger.
  • Member causing a breach of any rule or regulation or bye-law of the society is liable to pay penalty under the Bye-Laws.
  • A member who is guilty of misfeasance or breach of trust or misapplication of funds in relation to the society shall be accountable to make good the loss so caused to the society.

Question 26.
Moorthy wants society to promote the ‘Beti Bachao, Beti Padao Movement’ of the Government of India. He seeks your advice on the following:
(i) The purpose for which a society can be formed under the Societies Registration Act, 1860;
(ii) Whether the foreigners and other registered societies can be members of society? [June 2019 (4 Marks)]
Answer:
Object- As per Section 20 of the Societies Registration Act, 1860, the following societies can be registered under the Act:

  • Charitable Societies.
  • Military Orphan Funds.
  • Societies established at the several Presidencies of India.
  • Societies established for the promotion of science, literature, or the fine arts.
  • The foundation or maintenance of libraries or reading rooms for use of its members or the public.
  • Galleries of Painting & other works of art.
  • Collection of natural history, mechanical and philosophical inventions, instrument designs.

Besides these purposes, the respective State Governments may provide for any other objects by which societies can be registered in their legislations.

Member of Society: A Society can be created by a minimum of 7 or more persons. Apart from persons from India, companies, foreigners, as well as other registered societies can. also, be members of the society

Setting Up of Business Entities and Closure Questions and Answers

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