446 PROVISION or BORROWING FACILITIES. 



societies, liability might be either limited or unlimited, as might be 

 provided by bye-laws or rules made under the Act. Profits, in the 

 case of a rural society, were, in the first instance, to be carried to a 

 reserve fund, or applied to the reduction of the rate of interest, and 

 a bonus might be distributed only when requirements in these 

 directions had been fully met ; urban societies were also to carry at 

 least a quarter of the annual profits to a reserve fund. Loans were 

 to be made only to members, or, subject to the consent of the 

 Registrar, to a rural society. Limitations were placed on the interest 

 in a society that might be held by a single member, and on the 

 transfer of shares. Privileges included the exemption of a member's 

 shares or other interests in the capital of a society from attachment 

 for private debts, the grant to societies of a measure of priority over 

 ordinary creditors in enforcing claims on crops, cattle, &c., and 

 provisions for exemption, at the discretion of the Government of India, 

 from income tax, stamp duties, and registration fees. Provision was 

 made for compulsory inspection and audit by the Registrar, for 

 compulsory dissolution, subject to appeal to the local Government, 

 and for liquidation under a simple procedure. Finally, wide rule- 

 making powers were conferred upon local Governments. 



The development of co-operative societies during the period under 

 review took place under the Act of 1904, but in the last month of the 

 decade the Act was repealed and replaced by the Co-operative Societies 

 Act (Act 2) of 1912, which introduced important changes in the law. 

 Experience had shown that, in spite of the simplicity and elasticity of 

 the earlier Act, there were certain respects in which it was desirable 

 to extend its scope, and some points in regard to which amendment 

 of the detailed provisions was required. The first change made is 

 indicated by the difference between the titles of the two Acts, With 

 the spread of co-operative credit societies, there had arisen in many 

 parts of India a desire to initiate other societies of a co-operative type, 

 having for their aim the production or distribution of commodities 

 and not merely the provision of credit. The new Act accordingly 

 provides for the registration under the Act of any society "which has 

 as its object the promotion of the economic interests of its members 

 in accordance with co-operative principles/' or any society "established 

 with the object of facilitating the operations of such a society/' The 

 statutory distinction between "rural" and "urban" societies is dropped, 

 the radical differentiation between societies -with limited and 



