Laxmikanth Summary: Co-Operative Societies | Indian Polity for UPSC CSE PDF Download

Cooperative Societies

Cooperative Societies are a voluntary group of people sharing common economic, social or welfare goals, coming together for mutual commercial, economic & developmental support.

• The 97th Constitutional Amendment Act of 2011 gave constitutional status and protection to cooperative societies. 
• In this context, it made the following three changes in the constitution:

1. It made the right to form cooperative societies a fundamental right (Article 19).

2. It included a new Directive Principle of State Policy on the promotion of cooperative societies (Article 43-B).

3. It added a new Part IX-B in the Constitution which is entitled “The Cooperative Societies" (Articles 243-ZH to 243-ZT).

Constitutional Provisions

State Leg may make provision for Incorporation, regulation & winding-up of Cooperatives based on principles of voluntary formation, democratic control, member-economic participation, autonomous functioning.

Part IX-B of the constitution contains the following provisions with respect to the co-operative societies: 

Incorporation of Co-operative Societies

The state legislature may make provisions for the incorporation, regulation, and winding-up of cooperative societies based on the principles of voluntary formation, democratic member control, member economic participation, and autonomous functioning. 

Number 

• The board shall consist of such a number of directors as may be provided by the state legislature. 
• A maximum number of directors of a co-operative society shall not exceed twenty-one.

• Terms: 05 years

Election of

Co-operative Societies

• The election of a board shall be conducted before the expiry of the term of the board.
• The superintendence, direction, and control of the preparation of electoral rolls and the conduct of elections to a co-operative society shall vest in such body, as may be provided by the state legislature.

Suppression and Suspension of Board and Interim Management

Board can be superseded or kept under suspension for a period of not more than six months

• Of its persistent default
• Of negligence in the performance of its duties
• Of committing any act prejudicial to the interests of the cooperative society or its members
• Of there being a stalemate in the constitution or functions of the board
• Of the election body having failed to conduct elections in accordance with the provisions of the State Act

Audit of Accounts of Co-operative Societies

• The state legislature may make provisions for the maintenance of accounts by the co-operative societies and the auditing of such accounts at least once in each financial year.
• The audit report of the accounts of an apex co-operative society shall be laid before the state legislature

Convening of General Body Meetings

The State Legislature may provide that the annual general body meeting of every cooperative society shall be convened within a period of six months of the close of the financial year.

Returns

Every co-operative society shall file returns, within six months of the close of every financial year, to the authority designated by the State Government

Offenses and Penalties

The State Legislature may make provisions for the offenses relating to the cooperative societies and penalties for such offenses.

Application of the Part lX-B

• It shall apply to multi-state Co-ops, where provisions regarding the Co-ops will be made by the Centre.
• Shall also apply to UTs but Prez may exclude a part of the UT from the application of this Part lX-B.

Reasons for 97th CAA, 2011

The reasons for adding the above provisions in the Constitution by the 97th Constitutional Amendment Act of 2011 are as follows:

• The cooperative sector, over the years, has made a significant contribution to various sectors of the national economy and has achieved voluminous growth. However, it has shown weaknesses in safeguarding the interests of the members and fulfillment of objects for which these institutions were organized.
• The “co-operative societies” is a subject enumerated in Entry 32 of the state list of the Seventh Schedule of the Constitution and the state legislatures have accordingly enacted legislations on co-operative societies. 
• Within the framework of State Acts, the growth of cooperatives on large scale was envisaged as part of the efforts for securing social and economic justice and equitable distribution of the fruits of development.
• Inadequate professionalism in management in many of the co-operative institutions has led to poor services and low productivity.
• On many instances, elections have been postponed indefinitely and nominated office bearers or administrators have remained in charge of these institutions for a long time. This dilutes accountability.