The Prayas ePathshala

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Present circumstances:

The Lok Sabha recently forwarded the Multi-State Co-operative Societies (Amendment) Bill 2022 to a joint committee of Parliament. On December 7, the Bill was introduced. Opposition members argued that it should be referred to the standing committee because they believed it intended to “take away” authority from state governments.

Why did the bill aim to alter the existing law?

The Atal Bihari Vajpayee administration passed the Multi-State Co-operative Societies Act, 2002, which is currently in effect. The cooperative industry has seen significant development since that period.
Back then, the Ministry of Agriculture had a component called Cooperation. Shah was appointed as the country’s first Minister of Cooperation on July 6, 2021, when the government did establish a separate Ministry of Cooperation.
Part IXB of the Constitution became a part of the document after the Constitution (Ninety-seventh Amendment) Act of 2011 was passed. The Act must be changed in light of the aforementioned Part’s insertion.
In order to improve the cooperative movement in multi-State cooperative societies, changes to the Act were also required as a result of developments throughout time.

Fresh merger rules:

Any cooperative society may decide to merge with an existing multi-State cooperative society by resolution adopted by a majority of not less than two-thirds of the members present and voting at a general meeting of such society, according to the bill, which permits “any cooperative society” to join an existing multi-State cooperative society through a merger.
The only entities that can combine to form new multi-state cooperative societies at this time are other multi-state cooperative societies.

Cooperative Authority:

The Bill also seeks to establish a “Co-operative Election Authority” to carry out “electoral adjustments” in the cooperative sector.
The authority will be comprised of a Chairperson, a Vice-Chairperson, and up to three members nominated by the Center, according the proposed amendment.

Who might be selected to hold the position of authority chairperson?

The proposed amendments state that a person shall not be qualified for appointment if they are:

The Chairperson of the Authority, unless he has held the position of Additional Secretary to the Government of India or a similar rank.
Vice-Chairperson of the Authority member shall not be eligible for appointment unless he is a Joint Secretary to the Government of India or holds a position of equivalent rank and has the necessary training and work experience.
The Chairperson, Vice-Chairperson, or Member of the Authority shall be eligible for reappointment and shall hold office for a term of three years or until they reach the age of 65, whichever comes first.

What was the Ninety Seventh Amendment Act, 2011?

The 97th constitutional amendment added Part IXB (The Co-Operative Societies) to the Constitution.
The right to form cooperative organisations is listed as a Right to Freedom in Article 19 (1), Part 3 of the Constitution.
Additionally, as one of the Directive Principles of State Policy, Article 43-B (Promotion of Cooperation Societies) was added to Part 4 of the Indian Constitution.

Increased penalties

A proposed measure would change Section 104 of the Act to make some penalties more severe.
“Where the multi-State cooperative society’s board of directors or executives receive any illegal benefits while conducting the affairs of such society or use any of the society’s assets for personal illegal gains.
The proceeds of such illegal gains must be recovered from the directors or officers in question and deposited in the manner specified. They may be sentenced to imprisonment for a term of not less than one month but not more than one year, to fines of not less than 5,000 rupees but not less than one lakh rupees, or to both.

Ombudsman to have similar authority to a civil court:

To investigate member complaints, the government has proposed appointing one or more “Co-operative Ombudsman” positions with geographic jurisdiction.
Any member of a multi-state cooperative society has the right to lodge a grievance regarding their deposits, the fairly distributed society benefits, or any other issue that may impact their individual rights.
The Co-operative Ombudsman must complete the inquiry and reach a conclusion within three months of receiving a complaint, according to the proposed changes.
The society is compelled to abide by any orders given by the Ombudsman during the course of the investigation, which it must do within a month.
According to the proposed regulations, a multi-state cooperative organisation may contest an Ombudsman ruling, and the Central Registrar will rule within 45 days. Within one month of the Ombudsman’s decision, the appeal must be filed.
After a month, the Central Registrar may take the appeal under consideration if he is persuaded that the society was prevented from filing the appeal in time by sufficient cause.
The Cooperative Ombudsman would have the power to summon and conduct investigations in civil court.

Fund for the revival of failing cooperative societies:

The bill also proposes to add a new section 63A to the main Act for the “establishment of the Co-operative Rehabilitation, Reconstruction and Development Fund” for the recovery of “sick multi-State cooperative organisations.”
A new section 70A pertaining to “concurrent audit” for multi-state cooperative societies with an annual turnover or deposit higher than the threshold established by the Central Government is also suggested.

Cooperatives’ information officer:

In order to inform society members on the management and operations of multi-state cooperatives, the Center has also recommended include language that would permit the “employment of a Co-operative Information Officer.”

Cooperative societies should not be considered state subjects, according to certain arguments:

Some of the criticisms of the center’s measure from the opposition stemmed from the fact that cooperative societies are a state issue.
Entry 32 of the State List under the Seventh Schedule of the Constitution discusses “cooperative societies” as a subject. Incorporation, regulation, and winding up of companies other than those listed in List I, and universities; unincorporated commercial, literary, scientific, religious, and other organisations and associations; cooperative societies are all covered under entry 32 of the State List.
Entry 43 of the Central List under the Seventh Schedule of the Constitution further clarifies that cooperative societies are not within the purview of the Centre.
“Incorporation, regulation, and winding up of trade corporations, including banking, insurance, and financial businesses, but excluding cooperative societies,” reads entry 43 of the Central List.

Moving ahead:

Cooperatives are essential for sustaining the social capital that is the foundation of the nation and fostering collectivism. The best way to maintain the values of democracy and collectivism is through cooperatives.
Massive social networks, like those produced by cooperatives, would facilitate the creation and utilisation of social capital, and the greater the amount of social capital, the greater the potential for development.
However, state government interests and authority should not be compromised in order to maintain a favourable center-state relationship.