Section 86 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Section 86 lets the Central Registrar direct that a multi-State co-operative society be wound up, on stated grounds and after giving the society a reasonable opportunity to make its representations. It also provides for winding up by the society's own resolution, and for banks and lenders.
This article follows the Ministry of Cooperation copy of the Act read with the Multi-State Co-operative Societies (Amendment) Act, 2023, which amended s.86 by its section 32. The 2023 Act came into force on 3 August 2023 (notification S.O. 3493(E)).
The Central Registrar may direct winding up after an audit, special audit, inquiry or inspection (now including an inspection of books under section 108), or of his own motion on three grounds: the number of members has fallen below the number required (with six months to restore it), the society has not commenced working in six months or has ceased to function in accordance with co-operative principles, or registration was obtained by misrepresentation or fraud. A resolution of two-thirds of members present and voting compels the order.
Section 86(1): after audit, inquiry or inspection
As amended, the Central Registrar, "after audit has been conducted under section 70 or special audit has been conducted under section 77 or an inquiry has been held under section 78 or an inspection has been made under section 79 or section 108", if of opinion that the society ought to be wound up, "may, after giving the society a reasonable opportunity of making its representations by order, direct it to be wound up". The 2023 Act inserted the words "or section 108". Our article on inspection of books of account by the Central Registrar covers s.108.
Section 86(2): on the Central Registrar's own motion
The Central Registrar may "of his own motion and after giving the multi-state cooperative society a reasonable opportunity of making its representation" direct winding up in these cases:
| Clause | Ground as amended |
|---|---|
| (a) | "where the number of members or the number of societies or the number of persons, as the case may be, has at any time reduced below the number of members or societies or persons as specified in sub-section (2) of section 6", with a proviso: the society "shall be given six months' time to restore the number" |
| (b) | The society has not commenced working within six months of registration "or such extended period as the Central Registrar may allow", or "has ceased to function in accordance with co-operative principles" |
| (c) | New: "where the Central Registrar has reasons to believe that the registration was obtained by misrepresentation of facts, submission of false or misleading information, suppression of material facts or fraud thereby compromising the spirit of co-operation" |
The proviso gives the society a period of six months to restore numbers before the order can rest on clause (a). The text does not say from when the six months run; this article does not supply a start date.
Example. The invented Godavari Multi-State Farmers' Society finds that two of its member societies have withdrawn, bringing the number below the minimum in s.6(2). The Central Registrar may not simply wind it up; the society has six months' time to restore the number, and the order needs a reasonable opportunity to make representations. A society in that position can take advice on dispute resolution before the Central Registrar early.
Section 86(3) and (4): cancelling the order; communication
The Central Registrar may cancel a winding-up order "at any time, in any case where, in his opinion, the society should continue to exist". A copy of the order "shall be communicated by registered post to the multi-state cooperative society and to the financial institutions, if any, of which the society is a member".
Section 86(5): multi-State co-operative banks
As substituted in 2023: "Notwithstanding anything contained in this section, in case of winding up of multi-State co-operative banks, the provisions of the Banking Regulation Act, 1949 shall also apply." Readers should check the current law for the corresponding provision of the Banking Regulation Act, 1949. Sections 87 and 88 deal with banks separately; see our article on winding up of a co-operative bank and deposit insurance.
Section 86(6): winding up by resolution
"The Central Registrar shall make an order for the winding up of a multi-state cooperative society, if the society, by a resolution passed by two-third majority of members present and voting in a general meeting decides for winding up of that society." The 2023 Act added a proviso: "prior to winding up, 'no objection' from the institutional lenders, who have outstanding loans from the society, shall be required in writing."
The Explanation says "institutional lenders" includes "banks, savings and loan association, trust company, insurance company, real estate investment trust, pension fund and the like". These words are printed as quoted; the Act does not define the terms further, and this article does not interpret them.
What the 2023 Amendment Act changed
| Provision | Before | After |
|---|---|---|
| s.86(1) | Audit under s.70, s.77, s.78 or s.79 | "or section 108" added after s.79 |
| s.86(2)(a) | Society required to have at least fifty members; reduced to less than fifty | Number below that specified in s.6(2), with six months to restore |
| s.86(2)(c) | Not present | New ground: registration obtained by misrepresentation, false information, suppression or fraud |
| s.86(5) | No co-operative bank wound up except with previous written sanction of the Reserve Bank | Banking Regulation Act, 1949 "shall also apply" |
| s.86(6) | Winding up on two-thirds resolution | Proviso and Explanation: written "no objection" from institutional lenders |
The amending clause and the principal text reconcile: the text of old s.86(5) is wholly replaced, so the Reserve Bank sanction sentence no longer appears in the section as amended.
Need help with a winding-up notice or resolution?
A winding-up order follows a process that turns on timing and records: the show-cause stage, the six-month restoration window, and the lenders' written "no objection". Our team can review the position and the next steps through legal dispute resolution before any representation is filed.
Key takeaways
- The Central Registrar must give a reasonable opportunity to make representations before ordering winding up under s.86(1) or (2).
- Section 108 inspections now sit beside ss.70, 77, 78 and 79 in s.86(1).
- A fall in numbers below the s.6(2) requirement gives the society six months to restore them.
- Registration obtained by misrepresentation or fraud is a new ground in s.86(2)(c).
- A two-thirds resolution of members present and voting compels the order, but written "no objection" from institutional lenders is a pre-condition.
Read next
- Multi-State Co-operative Societies Act, 2002: complete guide
- Sections 87 and 88: winding up of a co-operative bank and deposit insurance
- Section 89: appointment of liquidator
- Section 108: inspection of books of account by the Central Registrar
Disclaimer: Based on the Ministry of Cooperation copy of the Multi-State Co-operative Societies Act, 2002 read with the Multi-State Co-operative Societies (Amendment) Act, 2023 (in force from 3 August 2023), as consulted on 2 October 2026. The Multi-State Co-operative Societies Rules, 2002 as amended, later notifications and later amendments are not covered and should be checked. This article is general information, not legal advice; check the official text before acting.