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Multi-State Cooperative Societies (Amendment) Bill, 2022 Introduced In Lok Sabha

The Central Government today introduced the Multi-State Cooperative Societies (Amendment) Bill, 2022 with an objective to enhance transparency and accountability, and improve the ease of doing business by reducing the period of registration.

The Bill proposes to amend the Multi-State Co-operative Societies Act, 2002 in light of the 97th Constitutional Amendment Act of 2011 which inserted Part IXB in the Constitution.

RSP MP NK Premchandran opposed the introduction of the Bill, stating that it is against the federal principles.

He pointed out that Articles 243ZH and 243ZI in Part IXB of the Constitution distinguish between Cooperative Societies of State and Multi-State Cooperative Societies which are governed by the Union of India. No provision of the Constitution makes way for merging a cooperative society which is incorporated under State law with a Multi-State Cooperative Society. However, through Clause 6 of the Bill the Center is indirectly encroaching into rights of State Co-operative Societies, he said.

Clause 6 seeks to amend Section 17 of the principal Act and provide that any co-operative society may, by a resolution passed by a majority of not less than two-thirds of the members present and voting at a general meeting of such society, decide to merge into an existing multi-State co-operative society. “This is against the basic spirit of the Constitution…they are taking the rights of the State government…it is against the basic features of the Constitution,“he got

Congress MP Manish Tewari also opposed the Bill, stating that 5 clauses therein are beyond the legislative competence of the Parliament. They got:

-Clause 6 creates an ambiguity by allowing any cooperative society to merge into an existing multi-State cooperative society. This is beyond legislative competence of Union as State cooperative societies are within exclusive jurisdiction of States.

-Clause 13 prohibits redemption of shares of multi-State co-operative societies without Centre’s approval. This strikes at the heart of principles of autonomous functioning of cooperative societies which the 97th Constitutional Amendment sought to introduce.

-Clause 17 usurps object of parent Act by appointing Central Election Authority to be appointed by the Central govt.

-Clause 24 seeks to create a Fund, putting an additional burden on cooperative societies and it affects their autonomous functioning.

-Clause 45 makes provision for overriding the Board of Directors and appointing an Administrator, who may not be a member of the society, and thus contravenes the 97th Constitutional Amendment Act.

The Bill proposes the following amendments:

Registration

The principal Act provides that an application for registration of multi-State co-operative society and its bye-laws shall be disposed of by the Central Registrar within a period of 4 months. The Amendment Act proposes to reduce this period to 3 months.

Board of Directors

Section 41 of the principal Act stipulates that every multi-State co-operative society shall have a board of directors comprising a maximum of 21 directors, 2 co-opt directors and functional directors in the national co-operative societies.

The Amendment provides that out of 21 directors, one Member shall be Scheduled Caste or Scheduled Tribe and two shall be women.

The 2 co-opt members shall have experience in the field of banking, management, co-operative management and finance or specialization in any other field relating to the objects and activities undertaken by such multi-State co-operative society. They shall not have the right to vote in any election of the office bearers or be eligible to be elected as office bearers of the board. (5)

It also excludes such directors of the multi-State co-operative society from being present in the discussion or voting qua any contract in which they may have direct or indirect interest.

Co-operative Election Authority

Section 45 of the principal Act provides elections to the board of a multi-State cooperative society shall be the responsibility of the existing board.

The Amendment Act now seeks to substitute this provision and establish the “Co-operative Election Authority” comprising a Chairperson, a Vice-Chairperson and maximum 3 members appointed by the Central Government, to bring electoral reforms in the co-operative sector.

Sections 45A to 45L deal with appointment, powers, functions, removal, resignation, vacancy, etc. in the Authority.

Co-operative Rehabilitation, Reconstruction and Development Fund

The Amendment Act seeks to insert a new section 63A relating to “establishment of the Co-operative Rehabilitation, Reconstruction and Development Fund” for revival of “sick multi-State co-operative societies”.

It provides that multi-State co-operative societies which are in profit for the preceding three financial years shall annually credit 1 crore rupees or 1% of their net profits, whichever is less, to such Fund. The Center will constitute a Committee to administer this Fund and maintain separate accounts and records.

Other Amendments

It proposes a new section 70A relating to “concurrent audit” for multi-State co-operative societies having an annual turnover or deposit of more than the amount as determined by the Central Government.

The Amendment also seeks to insert a new Chapter IXA relating to “redressal of complaints”. It makes provision for the appointment of one or more “Co-operative Ombudsman” by the Centre, for inquiring into the complaints made by the members.

It also proposes to enhance monetary penalties on multi-State co-operative societies for contravention of the provisions of the Act and the rules made thereunder.

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