CO-OPERATIVES

Cooperative Societies

 a voluntary association of individuals having common needs who join

hands for the achievement of common economic interest.
 They are organisations formed at the grassroots level by people to harness
the power of collective bargaining towards a common goal.
 In agriculture, cooperative dairies, sugar mills, spinning mills etc are formed
with the pooled resources of farmers who wish to process their produce.
In banking and finance space

 Cooperative institutions are spread across rural and urban areas.

 EG: Village-level primary agricultural credit societies (PACSs). They have

much more bargaining powers than an individual farmer.
 They place the credit demand of a village and make the demand to the
district central cooperative banks (DCCBs).
 State cooperative banks sit at the apex of the rural cooperative lending
structure.
Laws governing Cooperative Societies

STATE LEVEL – COOPERATIVE SOCIETIES

 Agriculture and cooperation are in the state list, therefore state governments can
govern them.
 A majority of the cooperative societies are governed by laws in their respective
states, with a Cooperation Commissioner and the Registrar of Societies as their
governing office.
CENTRAL LEVEL – MULTI STATE COOPERATIVE SOCIETIES
 In 2002, the Centre passed a MultiState Cooperative Societies Act
 It allowed for registration of societies with operations in more than one state.
 The Central Registrar of Societies is their controlling authority, but on the
ground the State Registrar takes actions on his behalf.
97th CAA

 The Constitution (97th Amendment) Act, 2011 relates to the cooperative societies
working in India.
 It aims to overcome all the problems faced by these societies and bring about an
efficient way to manage them.
• The 97th Constitution Amendment Act, 2011 provided for amendment of
following things:
• It amended Article 19(I) c by inserting, after the words ‘or unions’ the words ‘or Co-
operative Societies’.
• It also inserted Article 43B in Part IV of the Constitution as “The State Shall endeavor
to promote Voluntary formation, autonomous functioning, democratic Control and
professional management of the Co-operative societies”
• After Part IX-A of the Constitution, Part IX-B was inserted. Part IX-B extended from
Article 243ZH to Article 243ZT.
 Part IX B of the Constitution, seeks to empower the Parliament in respect of multi-State
co-operative societies and the State Legislatures in case of other co-operative societies to
make appropriate law.
 Law to deal with :
 provisions for incorporation, regulation arid winding up of co-operative societies
 specifying the maximum number of directors of a cooperative society to be not
exceeding twenty-one members; providing for a fixed term of five years
 providing for independent professional audit;
 empowering the State Governments to obtain periodic reports of activities and
accounts of cooperative societies
 providing for the reservation of one seat for the Scheduled Castes or the Scheduled
Tribes and two seats for women on the board of every co-operative society,
Latest Developments

 The government announced the formation of a separate Union Ministry of

Cooperation
 It will provide a separate administrative legal and policy framework
for strengthening the cooperative movement in the country.
 Promote a Co-operative based economic development model.
 The Ministry will work to streamline processes for ‘Ease of doing business’ for
co-operatives and enable development of Multi-State Co-operatives (MSCS).
 Earlier – looked after under Mo Agriculture
Need for New Ministry

 Cooperatives confined to few states only

 Ministry spearheaded cooperative movement would get the required
financial and legal power needed to penetrate into other states also.
 Cooperative institutions get capital from the Centre, either as equity or as
working capital, for which the state governments stand guarantee. This
formula had seen most of the funds coming to a few states such as
Maharashtra, Gujarat, Karnataka while other states failed to keep up.
 Over the years, the cooperative sector has witnessed drying out of funding.
SC on 97th CAA - Union of India v Rajendra Shah
and Others (2021)

 The Supreme Court quashed part of the Constitution inserted by the 97th
amendment on cooperatives.
 Decision:
 Struck down a part inserted by it which relates to the Constitution and
working of cooperative societies.
 only in matters of multistate cooperatives does Parliament have sanction to
legislate.
Reasons for the decision

 AMENDMENT WAS ABOUT –Clauses dealing with the working of cooperative

societies working within a state.
 VIOLATION OF BASIC PRINCIPLES OF FEDERALISM –
 AMENDMENT REQUIRED RATIFICATION OF STATES
 RECOURSE To ARTICLE 252 IS THE ONLY WAY AHEAD FOR CENTRE – TO ENSURE
UNIFORMITY IN FUNCTIONING OF COOPERATIVES
 COPERATIVES – STATE LIST MATTER – HENCE FEDERAL STRUCTURE CANNOT BE
OVERRIDDEN –
 MATTER - belongs wholly and exclusively to the State legislatures to legislate
upon. “Co-operative societies” is a subject enumerated in Entry 32 of the State
List of the Seventh Schedule.