Sections 36-37 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 36 explains what a multi-State co-operative society does when a member dies: it may transfer the share or interest to the nominee, or to the heir or legal representative the board considers to be such, or pay out the value, and it must pay other moneys due to the deceased within six months unless a competent court prevents it. Section 37 explains how long a past member, or the estate of a deceased member, stays liable for the society's debts: two years, extended in a winding-up.
Both sections are read as per the Ministry of Cooperation copy of the Act read with the Multi-State Co-operative Societies (Amendment) Act, 2023; neither was amended in 2023. Families dealing with a deceased member's share, or members who have left a society, can use a legal consultation to understand where they stand.
On a member's death the society may transfer the share or interest to the nominee (or, if none, to the person the board considers the heir or legal representative), or pay a sum representing its value as ascertained under the rules; this needs the consent of the person concerned (s.36(1)). Other moneys due must be paid within six months unless a competent court prevents it (s.36(2)). A past member's or deceased member's estate stays liable for debts for two years (s.37(1)), and until liquidation ends if the society is wound up (s.37(2)).
Section 36: on the death of a member
Sub-section (1): transfer or payment
"On the death of a member, a multi-state cooperative society may transfer the share or interest of the deceased member to the person nominated in accordance with the bye-law made in this behalf or, if there is no person nominated, to such person as may appear to the board to be the heir or legal representative of the deceased member, or pay to such nominee, heir or legal representative, as the case may be, a sum representing the value of such member's share or interest as ascertained in accordance with the rules."
The order is:
- A nominee under the bye-law, if there is one.
- If none: the person who "may appear to the board to be the heir or legal representative".
- Alternatively, payment of a sum equal to the value of the share or interest, "as ascertained in accordance with the rules".
The proviso: "no such transfer or payment shall be made except with the consent of the nominee, heir or legal representative, as the case may be." The method of valuation is left to rules; this article states no formula. The Multi-State Co-operative Societies (Amendment) Rules, 2023 were notified on 4 August 2023 (G.S.R. 591(E)), and the consolidated Rules should be checked. The bye-laws provide for "the procedure and manner for transfer of shares and interest in the name of a nominee in case of death of a member" under section 10(2)(zg); see Section 10.
A transferee of the share must still satisfy the one-fifth holding cap in section 34, which applies to any "transfer of share or interest of a member"; see Sections 33-35.
Sub-section (2): other moneys within six months
"A multi-state cooperative society shall, unless within six months of the death of the member prevented by an order of a competent court, pay to such nominee, heir or legal representative, as the case may be, all other moneys due to the deceased member from the society." The duty is "shall", the period is six months from the death, and the only stated excuse is a competent court's order.
Sub-section (3): validity against others
"All transfers and payments made by a multi-state cooperative society in accordance with the provisions of this section shall be valid and effectual against any demand made upon the society by any other person." A society that transfers or pays as the section directs is protected from another claimant. The protection depends on following the section, including the consent in the proviso.
Section 37: liability of past members and estates
Sub-section (1): two years
"Subject to the provisions of sub-section (2), the liability of a past member or of the estate of a deceased member of a multi-state cooperative society for the debts of the society as they existed (a) in the case of a past member, on the date on which he ceased to be a member; (b) in the case of a deceased member, on the date of his death, shall continue for a period of two years from such date."
Sub-section (2): where the society is wound up
"Notwithstanding anything contained in sub-section (1), where a multi-state cooperative society is ordered to be wound up under section 86, the liability of a past member who ceased to be a member or of the estate of a deceased member who died within two years immediately preceding the date of the order of winding up, shall continue until the entire liquidation proceedings are completed, but such liability shall extend only to the debts of the society as they existed on the date of cessation of membership or death, as the case may be."
| Situation | How long the liability lasts | Which debts |
|---|---|---|
| Past member, no winding up | Two years from the date he ceased to be a member | Debts as on that date |
| Deceased member's estate, no winding up | Two years from death | Debts as on the date of death |
| Winding-up ordered under section 86; member left or died within the two years immediately before the order | Until the entire liquidation proceedings are completed | Debts as on the date of cessation or death |
The Act does not state the amount of the liability; it depends on the society's liability set by its bye-laws (see section 3(q) on limited liability) and the debts of the society. Winding up is explained in Section 86.
What the 2023 Amendment Act changed
| Provision | Before | After |
|---|---|---|
| Section 36(1) to (3) | As printed above | No change |
| Section 37(1) and (2) | As printed above | No change |
A practical example
Teesta Tea Growers Co-operative, an invented multi-State society, loses a member, Anand, who has nominated his daughter Leela in the manner the bye-law permits. Leela consents to the transfer of Anand's share to her. The society transfers it and, within six months of his death, pays her the sale proceeds of his crop that the society owes. If Anand had made no nomination, the board would look to the person who appears to it to be his heir. Later, the society is wound up and an order is made under section 86 one year after Anand's death. His estate's liability for the society's debts, as they stood on the date of his death, continues until liquidation is completed.
For a wider view of rights and liabilities of members, see the complete guide.
Need help with a deceased member's share?
Nomination, consent and the six-month payment all have to be handled in order. Our legal consultation service can help a family or a society follow sections 36 and 37.
Key takeaways
- On death the society may transfer the share or interest to the nominee, or to the heir or legal representative, or pay its value as ascertained in accordance with the rules; consent of the recipient is required.
- Other moneys due must be paid within six months of death unless a competent court prevents it.
- Transfers and payments made in accordance with section 36 are valid against other claimants.
- Past-member and deceased-member liability lasts two years, and until liquidation ends if the society is wound up.
- Neither section was amended in 2023.
Read next
- Sections 33-35: holding, transfer and redemption of shares
- Section 38: constitution, powers and functions of the general body
- Section 25: persons who may become members
- Multi-State Co-operative Societies Act, 2002: complete guide
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.