History was created in the Lok Sabha on Thursday when it passed Constitution (111th) Bill, 2009 which made right to form cooperative societies as a fundamental right. The House also accorded right to set up a specialised agency on the lines of the Election Commission which can conduct election of the cooperative societies.
A jubilant Sharad Pawar Union Cooperative and Agriculture Minister said that the bill would usher in an era of professionalization and democratization thereby strengthening the cooperative movement. It was Pawar who had moved the bill on Wednesday , discussion on which remained inconclusive till evening.
Thursday forenoon saw the passage of cooperative bill which put the right to form cooperative into the category of Fundamental Rights. The other features of bill are yet to be known. The basic points filtering through so far could be summed up as
1 Right to form cooperatives is a fundamental right
2 Cooperatives could set up agency which would oversee election
3 Uniformity in the tenure of Cooperative Board of Directors
4 provisions for incorporation, regulation and winding up of co-operative societies based on the principles of democratic member-control, member-economic participation and autonomous functioning;
5 specifying the maximum number of directors of a co-operative society to be not exceeding twenty-one members;
6 providing for a fixed term of five years from the date of election in respect of the elected members of the board and its office bearers;
7 providing for a maximum time limit of six months during which a board of directors of co-operative society could be kept under supersession or suspension;
8 providing for independent professional audit;
9 providing for right of information to the members of the co-operative societies;
10 empowering the State Governments to obtain periodic reports of activities and accounts of co-operative societies;
11 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, which have individuals as members from such categories;
12 providing for offences relating to co-operative societies and penalties in respect of such offences.
December 26th, 2011 at 11:51
It should be of great interest with urgency as to how the State of Maharashtra enacts legislation confirming to the amended Constitution and with what urgency. Since NCP chief has been instrumental in getting this Bill through, and his party is a Coalition Partner in State Government, it can be hoped that he will be the first to strive for percolating the opportunity created by this amendment.
MY sincere appeal to Sharad Raojee to set up a time bound task force to suggest an action plan with in next three months.
January 15th, 2012 at 18:51
This is an important act passed by Parliament. In Tamilnadu Cooperatives are under the grip of government officials…Members are not admitted for the past five years…. Urgently this is to be done in tamilnadu
January 16th, 2012 at 10:20
Will some one explain what difference it will make to people who are given one more Fundamental Right to form Cooperatives. There was no prohibition so far any way. This will help people of India to reap benefit of this new right sooner than otherwise.
January 26th, 2012 at 21:11
I could not see anything like fundamental right in the Bill.
Then how this news appeared in this site. Please help me know the correct position
January 27th, 2012 at 11:04
I guess there was an amendment after the Bill was introduced. Unfortunately the Bill as passed by both the Houses is yet not available any where.
The question remains, whether a legal right was not enough that a Fundamental right had to be conferred on the Citizens?
January 29th, 2012 at 22:50
The bill passed in the loksabha is available from the site:
http://loksabha.nic.in/
January 30th, 2012 at 15:49
THERE IS NO MENTION OF SECURITY OF COOPERATIVE STAFF IN THE AMENDMENT BILL
January 30th, 2012 at 16:02
THE AMENDMENT BILL WILL NOT BE HELPFUL FOR COOPERATIVE STAFF OF VARIOUS COOPERATIVE SOCIETIES .
January 30th, 2012 at 20:36
The Security of employment is a matter of Labour Laws. Current Labour Laws do not grant such protection. Constitution does not directly protect employment. It has to be under a Statute of the State concerning employment.
January 30th, 2012 at 20:57
whether the act has been received the assent of President of India?
January 31st, 2012 at 11:16
SECURITIES ARE FOR GOVERNMENT EMPLOYEE IT MAY BE STATE GOVERNMENT OR CENTRAL GOVERNMENT. COOPERATIVE STAFF OF VARIOUS COOPERATIVE SOCIETIES ARE MEN OF ANOTHER PLANET. THE GOVERNMENT OF INDIA WILL DO NOTHING FOR US. WE ARE EMPLOYEE OF PRIVATE ENTERPRISE. ONLY GOVERNMENT WILL CONTROL US . WE DO NOT FIND FUND ALLOCATION FOR COOPERATIVE SECTOR IN THE BUDGET. WE MAY LOSS OUR SERVICE IF SOCIETY CANNOT AFFORD TO GIVE US SALARY. ALL COOPERATIVE STAFF OF INDIA SHOULD BE UNITED .WE SHOULD DEMAND SEPARATE CENTRAL COOPERATIVE MINISTER.EVERY SOCIETY SHOULD BE ATTACHED WITH GOVERNMENT BODY . WE MUST PRESS THE CENTRAL GOVERNMENT TO DO SOMETHING FOR OUR SECURITY IN SERVICE.OTHERWISE OUR FUTURE WILL BE AT STAKE.
February 2nd, 2012 at 11:25
Nothing has been heard about President assent to 111th Constitutional Amendment Bill 2009 as passed by both the Houses of Parliament.Also the bill as passed is not available on web site. This is too bad,
February 3rd, 2012 at 13:13
The government department is already corrup[t.The govt. should prepare a panel of well qualified persons for audit under a independent autonomaus body/.
February 3rd, 2012 at 14:42
The concept of “Protection” does not go hand in hand with market driven economy.In that the issue of protecting Co-Op Staff is being discussed in a totally wrong direction.The Government protecting the staff and that too even Corrupt People is a publicly known “eyesore” leading to Anna hazare Tirade and simialr serious attempts. The Co-P Staff have become competitive under the circumstances.They have to expose bad practices by managements such that the Co-operative they work for maitain its health and make progress.
February 3rd, 2012 at 15:24
We have been selected through Service Commission. So we can want our protection as cooperative staff.Our selection is free and fair. On the permission of Registrar of Cooperative Societies of Government of West Bengal Cooperative Service Commission has recommended our name in CWS.
The State Government has constituted the West Bengal Co-operative Service Commission which has been entrusted with the task of selecting persons for appointment to certain posts other than Group-D posts in all the Apex Co-operative Institutions including the State Co-operative Bank and the State Co-operative Agriculture and Rural Development Bank, Central Co-operative Banks and other Central Societies, Primary Co-operative Agriculture and Rural Development Banks and Primary Urban Co-operative Banks.
The Commission is headed by a person who has been or is a Judge of Calcutta High Court or a person who holds or has held a post not below the rank of a Secretary to the Government of West Bengal. The commission also has two other members who are persons from the apex societies appointed by state government. An Officer of the rank of Additional Registrar of Co-operative Societies appointed as Secretary of the Commission for conducting its business and affairs.
The undermentioned matter is copied from website of cooperation dept of WB
The Commission has also been provided with the services of officers of the rank of Deputy Registrar of Co-operative Societies and Assistant Registrar of Co-operative Societies who function as its Deputy Secretary and Assistant Secretary respectively. A number of officers of the rank of Co-operative Development Officer and Inspector of Co-operative Societies have also been deputed by State Government to the service of the Commission who, along with clerical and Group D staff, carry out its regular business. The State provides with financial as well as the logistical support and the Commission is treated on par with the State Public Service Commission in status and position. The State Government has the power to increase or decrease the staff strength in consultation with the Chairman of the Commission.
The Selection Committee of the Commission consists of the Chairman and other two members of the Commission, a representative of the State-level or District-level Co-operative Society as the case may be and a representative of the Co-operative Society for which the selection is to be made. In case of selection of employees for a State Level Co-operative Society, the Selection Committee consists of the Chairman and two other members of the Commission, a representative of the State Level Co-operative Society for which the selection of employees is to be made and one officer of the Co-operation Directorate to be nominated by Registrar of Co-operative Societies, West Bengal.
Every Co-operative Society has to consult the Commission on all disciplinary matters affecting any of its employees appointed on the recommendation of the Commission and on such matters as may be specified by the State Government by Notification.
February 4th, 2012 at 11:30
In West Bengal Cooperative sectors like PACS , wholesale consumer’s Cooperative society Ltd are in horrible situation. Many of them will wind up due to lack of source of income. Immediately they should be merged with agriculture marketing division of government of west bengal .All cooperative staff in West Bengal are to be united to survive.Otherwise there will be few for cooperative movement .
February 4th, 2012 at 12:20
Cooperative Sectors should be empowered to run state hospital, transport, agriculture,irrigation,School, University in the state of West Bengal.It will increase exchequer of Government of West Bengal. Government of West Bengal should take immediate step in this regard. Cooperative and government should work jointly.
February 4th, 2012 at 12:32
In all cooperative sectors in West Bengal appointment should be made through Cooperative Service Commission.The selection of this commission is free and fair. And commission recommended staff should be given state government employee status.
February 5th, 2012 at 18:21
What is the situation of PACS and central cooperative Banks after the implimentation of Vaidyanathan committee package?
In Kerala discussions are going on to decide whether central package is beneficial for the cooperatives.
February 6th, 2012 at 12:15
Cooperative sectors are to be merged with Panchayet and Municipality immediately. Appointment should be made through Service Commission. PACS and wholesale in west bengal not in a good possition. It is not possible for Wholesale Con.cooperative society Ltd to give salary to the cooperative staff by retail selling rice, mustard oil etc. They need government project and financial support. In the village staff of many wholesale , PACS are getting 2500/ P.m. It is not good sign of cooperative .
February 6th, 2012 at 13:01
BANAMALI SOREN Says “Co-operative Sectors and Panchatai Raj and Munipalities are to be merged -Immediately” If this was to be true, Co-operative Principles followed by Co-OPeratives in West Bengal will have to be re-codified as this proposal is totally opposite of the golbal principles of Co-operatives, accepted in India.
Terms like “Self Help”,”Demacratic” “Autonomous” “Professionally Managed Co-operatives” have no place in West Bengal Co-operative Policy.The Indian Constitution’s directive principle as per new Article 43B seems to be in for operating upside down in WB. This appears to be the aftermath of a change of the regime in the State that so far people were habituated to looking towards Government for solving all their problems as if their liabilities were also State owned. Mamta Banerjee seems to have an upheavel task to re-align the people’s thinking to Constitutional provisions.Does BANAMALI SOREN want to give up the Fundamental right of forming Co-Operatives as defined under Article 43B being conferred under 111th Constitutional amendment ? Is thsi the thinking of the majority of people of WB and the State also ?
February 6th, 2012 at 15:57
Selection of cooperative staff in various cooperative sectors in west bengal is made through cooperative service commission, government of west bengal.
February 6th, 2012 at 16:19
West Bengal Government has made it mandatory to recruit cooperative staff in various cooperative sectors through cooperative service commission , government of west bengal.
February 6th, 2012 at 16:30
What 111th Constitutional Amendment Act 2009 inteds by inserting Article 43B is to be taken seriously by the Government of West Bengal the Co-operative Service Commission should be wound up. This is because Article 43B directs the Governments of all the States of India that”The State shall endeavour to promote voluntary formation, autonomous functioning, democratic control and professional management of co-operative
societies.” State has no direct role. Nor the state to be blamed.
It is another matter that the Indian Federalism permits a State Government of the Poltical Party supporting the Centre in passing the Constitiutional Amendmemt,not to accept the directions of the same Constititional Amendment.
It is another kind of “Fundamental Right” of the State.
February 7th, 2012 at 11:45
So far as I know that cooperative staff recruitment in west bengal would be through cooperative service commission. It would not be changed.
February 7th, 2012 at 11:53
West Bengal is known to have its own ways – opposite to mainstream any way. Whatever Government is there, it is the people there who govern it that way.Same thing is happening to day also
February 7th, 2012 at 12:00
Cooperative subject is in state list. So state will think what it will do.Central government has no role in this respect .
February 7th, 2012 at 12:03
Before enacting 111th Constitutional Amendment Act 2009 we the staff recommended through cooperative service commission shall be transferred to government body by the government of west bengal.
February 7th, 2012 at 13:57
Federalism and Directive Principles are features of our Constitution.Unlike Fundamental Rights, Directive Principles can not be enforced through judicial system.So enjoying Federalism is anotjer side of “State Coin” Directive Principles being the other – New DP under Article 43B. There is no punishment for flougthing DPs, except fear of getting voted out.
February 7th, 2012 at 14:05
IN KERALA AND WEST BENGAL THERE IS A COOPERATIVE SERVICE COMMISSION IN DIFFERENT NAME TO APPOINT COOPERATIVE STAFF IN COOPERATIVE SECTOR. APPOINTMENT IS FREE AND FAIR.
February 7th, 2012 at 14:08
PEOPLE OF WEST BENGAL WANT TO HAVE GOVERNMENT CONTROLLED COOPERATIVE .COOPERATIVE SECTORS ARE ACCOUNTABLE TO THE REGISTRAR OF COOPERATIVE SOCIETIES OF WEST BENGAL .
February 7th, 2012 at 15:31
The Indian Constitution directs State to have Co-operatives to be autonomus,democratic and professionally managed enterprises free from State interference…The D P 43B is an unanimus choice of Rajya Sabha also which represents state’s Voice. So Co-operative Sector is poised to reform itself dramatically, isn’t it?
February 7th, 2012 at 16:09
If state government is to reform itself, we the cooperative staff recommended through cooperative service commission will be handed over to west bengal government various department.
February 7th, 2012 at 16:50
People (Salaried Class)of West Bengal wanting the State Government take Control of Cooperatves is understandable. But the Legislature of West Bengal thinks differently as can be seen in the following Provisions of Cooperative Societies Law : Exactly on the lines of 111th Constitutional Amendment already.
Section 2 of the West Bengal Co-operative Societies Act 2006 (came in to Effect in may 2010) reads as under: (1).It shall be the policy of the State to promote Co-operative societies…..in fulfillment of the Directive Principles of the State Policy as enshrined in the Constitution of India. (2). Save as otherwise expressly provided in this Act, the State shall not interfere in the management and operation of Co-operative Societies and shall recognize Co-operative societies as democratic institutions owned, managed and controlled by members for their economic and social betterment……
Section 3 lists out Co-operative Principles which are drawn from those laid down by Internal Co-operative alliance and accepted as Global Principles of Co-operatives.
February 7th, 2012 at 16:53
IF STATE GOVERNMENT IS TO REFORM ITSELF WHAT COOPERATIVE INSPECTOR, ARCS WILL DO THEN ?
February 7th, 2012 at 16:58
Section 2 of the West Bengal Co-operative Societies Act 2006 (came in to Effect in may 2010) reads as under: (1).It shall be the policy of the State to promote ………THE PRESENT GOVERNMENT HAS AMENDED THE ABOVE ACT ALSO ON 26 DECEMBER IN 2011.
February 7th, 2012 at 18:32
That was to make the Act more effective…
February 8th, 2012 at 12:44
I have gone through the comments. Thanks to the respected comments-makers. Though I am closely associated with the co-operative,I am not clear
about the effect of the amendment in question. It is the Bill of 2009.The
Bill has got the assent of the Hon’b;e President is not also clear.If not, when the Bill will have the same,what would be the fate of the Board of such co-opeartives where the Directors had been elected in 2009 for three (3) years ? Will it be continued on the basis of the power of the amendmened Bill in question or it wwould be dissolved as per recent amendemnt done by the State Govt. (W.B)? Valued viws are solicited please. Moreover, I am interested to exchange the view over Urban Coop.Banks.
February 8th, 2012 at 13:10
Presidential assent is a formality. The other formality is Union Government announcing the date on which the Amendment Act comes in to effect.
The Constitutional Amendment emphazise on
‘Freedom to Cooperative Managements from the State interference.’ The flip side is Members of Societies have to exercise vigil over management of their society. The Board can be superseeded in case of State aided Societies when mismanagement is reported. Where a Society is not “State Aided” Board can not be superseded, so members are given freedom with higher responsility. The recruitment of Co-operative Staff and taking disciplinary actions will become history after one year of the date announced by the Union Government, the Recruitment Commission’s activities would be viewed as State Interference. Althugh Directive Principle as per new Article 43B is not mandatory, new provisions about Board are mandatory for the states to follow. It will be very necessary for at least 205 of the Members to sort up “gang up” againmst delinquent Board and be prepared to join the Board. They have to shed their shyness / indifference as reagrds management of their Socities.
February 9th, 2012 at 10:45
I have got one of my wanted points. Thanks to Mr.Ishwer Naik . Now can you clear me regarding the point of ‘Reservation of Seat’ ? If the number of the Directors is restricted to 15, then will the reservation of seats be
counted within 15 or in addition to 15 ? Please explain considering both of the provisions,(i) as already done by the State Govt. (W.B) and (ii) the Bill waiting for having the assent of Hon’ble President ?
Regards.
February 9th, 2012 at 11:14
Number of Directors are as specified in bye laws subject to maximum of 15.Bye laws specify whether 15 includes Reservation or have to be additional.If the Bye Laws are silent about Reservation then that will be additional Seats as these are reserved under the Act.
As per 111th Constititioanl Amendment maximum Number will be 21 including the Reserved Seats. This number has to be specified in the State Act.For WCSA it will continue to be 15 Plus Reservations.
February 9th, 2012 at 12:13
Thank you Sir, for your instant reply. For filling up the reserved seats
should we conduct any further election ? If yes, should it be block
wise like directors’ election ? Should it be notified to the eligible delegates alongwith Notice published for holding AGM and election for directors, mentioning separately? Is anybody amongst 15 already belongs to the reserved category – what should we do? – Valued opinion is solicited, pl.
February 9th, 2012 at 12:33
Bye law concerning Board and Election of Members etc need to be consulted Please.You can mail me naikic@gmail.com
February 9th, 2012 at 21:47
The three year tenure of the Board of Diretors of NADIA DIST. CENTRAL COOPERATIVE BANK LTD expired in 2011 and management extended its tenure for further 2 years in 2011.
What will be fate of this board in this changing situation ?
February 10th, 2012 at 11:28
“Management” of a Bank is the Board itself and it can not extend its own terms after expiry of the tenure of the elected Board.However without looking at the Bye Laws no definite answer is possible.
February 10th, 2012 at 15:37
Whether the proposed DTC and Banking laws amendment act have adversely affect PACS? There is a talk in Kerala that all PACS will come under RBI and that as per DTC these societies will have to pay tax on the income from banking/Credit business.
February 11th, 2012 at 10:57
Good morning ; Regarding bye-law concring the Board abd its election mainly
related with the Directors and the no. of Directors I will mail you. But Sir,can you highlight on the issue of the status of the employees of the
Urban co-op. Banks ; A Chief Executive of an urban copop. bank in the state
(not having any Govt’s gtant)appointed through Co-op. Service Comm. is not
having D.A at the enhacned rate like other employees employees of the same bank.Even the pay revision though made for all other staff of the Bank, has not been done in case of C.E. showing the ground that he is a part of management.I know it is bad in law . But what is the appropriate forum where the C.E. should lodge the complaint for having the proper justice ;
Prayer already made before the Board, ARCS, Addl.RCS of the state but no
result has been found . Can u advise suitably, please ?
would get the
February 11th, 2012 at 10:59
Good morning ; Regarding bye-law concring the Board abd its election mainly
related with the Directors and the no. of Directors I will mail you. But Sir,can you highlight on the issue of the status of the employees of the
Urban co-op. Banks ; A Chief Executive of an urban copop. bank in the state
(not having any Govt’s gtant)appointed through Co-op. Service Comm. is not
having D.A at the enhacned rate like other employees employees of the same bank.Even the pay revision though made for all other staff of the Bank, has not been done in case of C.E. showing the ground that he is a part of management.I know it is bad in law . But what is the appropriate forum where the C.E. should lodge the complaint for having the proper justice ;
Prayer already made before the Board, ARCS, Addl.RCS of the state but no
result has been found . Can u advise suitably, please ?
February 11th, 2012 at 14:44
Frankly the appointment of “Recruitment Commission” itself was either an illadvised act of interference of the State or could be the state’s policy of Over protection to cooperative staff, in those days. With the environment swiftly changing in favour of autonomous,self sufficient, professionally managed democrtaic Co-operatives, it is extremely difficukt to visualise which of the State machineries comes forward with confidence of tackling it favourably.It is unfortunate but we can not have the best of both the worlds.
February 11th, 2012 at 17:29
Thank you for your comments though it is unfortunate to note. I have learnt that the instant case has been referred to Hon’ble High court for
having the justice. Let’s see what would be the outcome of it. But I am sure that the Hon’ble court will realise the gravity of the issue and will
kindly pass a favourable order.I will inform you the result. It may create
a new history.
February 12th, 2012 at 13:25
I will be too anxious to know the outcome of this legal process, which is bit expensive. But all avenues should in any case be explored.The Courts have startled people on many issues giving pleasnt surprises,not limiting the justice with in tight framework of laws which are also not free from flaws. It’s a very redeeming trend for “Aãm Aãdmi” that judgements are full of humane side of law.For humanity is firt and laws are invention of humanity in any case.Thanks for noting my interest in this case.
February 13th, 2012 at 13:00
If this information is correct that” in Wholesale Consumer’s Cooperative Society Ltd Sate government’s share holding is above 80%” then for several purposes, the status of the Co-operative Society may be held as “State”. The staff has a good chance of getting reprieve from the High Court. There are PSUs making losses but their employees do not suffer because of that. It’s a different matter that such situations do not auger well for Indian economy. Moreover Co-operative Society having 80% stake of the State is hardly a Co-operative Society which can be grouped with Societies following ICA Principles of Co-operatives. It may well be dissolved taking care of the staff or may be taken out of artificial status of Co-operativ Society.
February 13th, 2012 at 15:39
Mr Ishwer Naik
You are right. We have also sent a letter to the state government mentioning state government’s share participation but in vain. We are yet to receive a letter in this respect from the Previous and Present state government.
February 13th, 2012 at 15:54
Staff Union can meet the Governer of the State with grievances It is a States’s undertaking and he has a moral duty to listen to State empoyees.I do not know if WB has a Loayukta. If there is one he can also be approached. The State Public Service Commission may also have jurisdiction to examine any claim of a person who thinks himself to be an employee of the State.
February 14th, 2012 at 14:10
we sent a letter to the government of west bengal stating our distress condition and government share participation .We have received a letter from the governor of west bengal who already sent a letter to Asst secretary of cooperation in Writers’ Building at Kolkata . After that no response from the above stated officer. Six months is already over.
February 14th, 2012 at 14:28
I think You should approach Asstt Secretary under RTI asking for information as to how the Governer’s letter has been disposed off i.e. what action has been taken in the matter? It is possible that after 30 days you may have to go in appeal also. Can you not give Governer’s letter to Media?
February 15th, 2012 at 23:35
It is understood that President has assented to the bill on 12-01-2012.
Whether government notification is available? Moreover the number of the bill is shown as 97 instead of 111 in the final bill approved by Parliament.Any reason?
February 16th, 2012 at 14:02
It is irony of Indian Communication System that the maxim “Ignorance of Law is no excuse” operates to the detriment of the Citizens but there is no system to ensure that the ignorance is to a minimum if not eliminated. If a Citizen wants to know the law, because he does not want to fall prey to its ignorance, information on any law should be made available free and fast. Let this maxim be on hold for just a day and see what happens?
The Gazzette is a state Communication to its Citizens. Where is it available?
India has overflaowing laws – active and redundant- how thsi maxim can be tolerated I do not understand.
February 16th, 2012 at 14:15
If any one wants to remain abreasty of Government News there is a web site wich provides a free service:
http://www.igovernment.in/newsletter-registration-thanks?email=naikic@gmail.com
Subscribe to this site.
February 17th, 2012 at 16:23
We have 4900 members in our primary co-operative society. Our last election date was 16.06.2009. Now we are going to conduct election of delegate in this year, our question is that
a) Whether we will provide 100 members in one constituency ?
b) Is it required to conduct election in three years or five years ?
February 17th, 2012 at 16:52
The West Bengal Cooperatives Society Act 2006 was made effective in 2010.As per this Act [Section 29 (5)(a)] Election of the Board is to be held once in 5 years.Bye Law concerning tenure of the Board gets superseded. So the Board member to be elected after end of the tenure of present board on 16.6.2012 new bord will have a tenure of 5 years. The other question can be answered only seeing the bye laws as the Act is open on that number.
February 17th, 2012 at 16:57
We the undersigned strongly condemn the Amendment of the West Bengal Cooperative Societies (Amendment) Act, 2011 and your undemocratic Circular No: 1297 / IV – 3427/11 Dated 09/02/2012 for engagement of Special Officer in a duly elected democratic institution. The very object of the amendment of Section 36 is to impose a nominated body perpetually by omitting the proviso of clause (d) of Section 36. Keeping in view of the recommendation of Baidhayanathan Committee the West Bengal Cooperative Societies Act-2006 was framed to limit the Government intervention in Cooperatives specially in Short Term Credit Structure. But it is the shameful affairs of the Government by introduction of undemocratic West Bengal Cooperative Societies (Amendment) Act, 2011 to frustrate the democracy in the constitution of management of co-operative societies in the International Year of Cooperatives-2012 as declared by United Nation. The West Bengal was the example for their democratic set-up in co-operatives but after introduction of five years tenure of the board (Act 2006) it was reduced to three years for bodies who were elected under 1983 Act without giving any opportunity for allowing the time to call the election specially when the Parliament passed the 111 bill for Amendment of Constitution for allowing more freedom to co-operatives in the line of Baidhayanathan Committee recommendation. This is a severe violation in natural justice and hence bad in law. We give our strong protest against the unconstitutional and discriminatory amendment by keeping duel standard in the Act with a political motivation and we demand immediate scratching of amendment of Section-36 of West Bengal Cooperative Societies (Amendment) Act, 2011 for restoration of democracy in Co-operative sector.
March 9th, 2012 at 12:17
The constitution (Ninety seventh amendment) Act, 2011 was assented on 12-01-2012 and subsequently Central Government has notified the effective date as 15-02-2012. The fact was ascertained from Sh. Sampath, director, department of cooperation available on 011-23383053.
March 9th, 2012 at 13:16
Congrats Mr. Meghavath for finding out the effective date 15-02-2012. I wish the mechanism to find out such vital info is simplified. This date is important because it has an impact on the “Federalism Hype”
The Parliament has through this Constitutional Amendment, so to say warned its Federal Constituent viz the States that you better make appropriate legislative amends in your Co-operative laws, where there is anything contrary to any provision made under this amendment.
One year is given from 15-02-2012 for this purpose and after that whatever contrary provision is there in State law will get superseded by what is provided in ‘PART IXB of the Constitution. Look at the following Article in this Part.
243ZT. Notwithstanding anything in this Part, any provision of any law relating to co-operative societies in force in a State immediately before the commencement of the Constitution (Ninety-seventh Amendment) Act, 2011, which is inconsistent with the provisions of this Part, shall continue to be in force until amended or repealed by a competent Legislature or other competent authority or until the expiration of one year from such commencement, whichever is less.’.
For example about suspension of the management of societies, one important provision is made in Article 243ZL(1) as under.
“ Notwithstanding anything contained in any law for the time being in force, no board shall be superseded or kept under suspension for a period exceeding six months:
“Provided further that the board of any such co-operative society shall not be superseded or kept under suspension where there is no Government shareholding or loan or financial assistance or any guarantee by the Government:”
If any State Law has a provision of suspending Boards where no financial support . stake of the State exists, this power of suspension will cease to be operative after one year.
March 9th, 2012 at 17:47
Naik Sab,
The ploitical and bureaucratic interfearance all along have ruined the cooperative sector. Only now it has been exposed through the constitutional amendment. As far as my knowledge goes, even before 15-02-2013, the contravening provisions of state legislatures can not be made use as against to the notified constitutional provisions. One year time is given only to bring the inconsistency into consistency as it can not be done overnight. As such, the inconsistent provisions are allowed to continue for correcting the things and not to make things worst further.
Therefore, no Government will make use of inconsistent provisions even now.
March 9th, 2012 at 18:22
Dear Mr Meghavath
I fully agree about “Interference”. This evil was recognised as early as 1990 by Chaudhari Brahm Prakash Committee. It took 3 Decades to get it in to Constitution…Not so bad…If there was much less indifference on individual citizen’s part as regards getting the best out of the “Co-operatives” as a concept [which is best suited for democracies like ours]perhaps the C A would have come up long before. The pshycologoical advantage of Co-op formation being fundamental right can also help reduce this indifference. So one year is not a very long period.During this period it is shedding INDIFFERENCE to fight the State “Interference” and more number of people demonstrate “outrage’ sooner the benefits of Co-operatives start visible.Thereafter its an evolution… Its no different from a case of maturing democracy even after more than 6 decades of home rule…
March 9th, 2012 at 23:08
Thaks you Mr.Megavath. Please suggest where can we download the notification of the ministry of Agri. & co-op.
March 10th, 2012 at 16:33
Thanks for the valued comments made by Mr.Meghavath & Mr. Naik. I have been
really enriched with those comments. But the question is, in the state of W.B.where all the Boards whose tenure have been completed 36 months, already been dissolved with effect from 09.02.2012 in accordance with the new ammendment as made very recently in the middle of Jan.2012, by the State Legislature, what will be the fate of those societies, will they have any benefit with this notification dt.15.02.2012 issued by the Central Govt.?
March 10th, 2012 at 20:35
Mr Apuba Sen
For the Boards dissolved as reported, please note the following.
Following sub section was inserted in Section 35 of the West Bengal Co-operative Societies Act 2006 by Section 11 of the WBCS Amendment Act 2011.
“(1A) if an elected Board cannot be reconstituted within the period of one year from the date of dissolution of the board, the administrator shall be removed from his office by the State Government ane thereupon the provision contained in subsection (7) of sf;ction 29 shall be followed.”.
Every Co-op Society is entitled to constitute its Board in General Body Meeting and in this case it should be done with 12 months. In case State Government is majority holder, the decision to move any such resolution rests with the Government in any case.
March 13th, 2012 at 13:53
Mr. Apurba Sen
Naik sab has a complete knowledge over all State cooperative societies legislations and his suggestion is ultimate. From the layman’s point of view, my openion is the notification dated 15-02-2012 may not help for an action already carried out before the said date.
March 13th, 2012 at 14:56
Mr. Radhakrishnan
It is reported that it has been published in central gazette dated 13-02-2012 under part II section 3 sub section ii no.235. Try to get it.
March 13th, 2012 at 16:09
Thanks Meghavath. But it is not true. State Co-operative Societies Laws are very divergent and to be able to understand any issue fully one needs to go thrugh three documents viz The State Act. The Rules made there under and the registered Bye Laws of the Society as these three make up for a complete law subject to State Notifications. Whever an issu is confonted these three have to be consulted. There can be difference amongs individuals as regards comprehension, interpretaion application of practicle issue etc and above all passion for Co-operatives as an area. So it is not correct that I have complete knoweledge nor what I believe is final. It is just one view.
March 13th, 2012 at 16:50
Dear Naik Sab
It is true cooperative laws in our country are highly inconsistent and user friendly for politicians and bureaucrats to exploit. Very few are able to understand “Cooperative” is a form of governance like any other form of governance (proprietorship, partnership etc.) and the activities of cooperative societies are governed by activity related legislations, example; banking activity is governed by B R Act etc. Unfortunately, cooperative laws are made in such a way to supercede all activity related laws and thereby create inconsistency. My humble request is all the learned should utilise the constitutional amendment and to confine the making of cooperative law only to the extent of governence. This way we can bring a clarity and mitigate exploitation on cooperatives.
March 13th, 2012 at 17:43
Mr. Radhakrishnan
Further, it is clarified that department of cooperation has notified on 13-02-2012 and sent to gazette publication. I think it is yet to be published. However, it is confirmed that the notification date is 13-02-2012 and the efective date is 15-02-2012.
March 13th, 2012 at 18:49
Meghavath is very right.
The Country seems to be far too much fragmented in to many States as far as Co-operative movement is concerned. With one Central law perhaps the Movement could have progressed much more than where it is to day. Internet is creating a common platform to carry this movement further globally. innovative use with “mass scale interest” can build pressures that may make up for the loss on account of fragmented law all over the State. Look at the delay in publication of the Gazzette itself!!! What an INDIFFERENCE ? Its about Constitutional Amendment!!!
March 13th, 2012 at 20:00
I also subscribe to the thoughts of Mr. Meghavath and Mr.Ishwer C Naik. Moreover web site of Ministry of Law & Justice states that “The Constitution (Ninety-seventh Amendment) Act, 2011- Date on which the Act came into force:12-01-2012 (Date of Assent)”.
http://indiacode.nic.in/coiweb/welcome.html
But clause 2 of the act states that ” it shall come into force on such date as the central government may by notification in the official gazette appoint.”
So I afraid that there is some ambiguity on the date on which the 97th Constitutional amendment act came into force. Is it 12.01-2012 or 15-02-2012?
March 14th, 2012 at 18:07
Dear Radhakrishnan
You are right RK. Normally & constitutionally, Constitutional amendment laws will come into force from the date of assent. Because it is cooperative!!! the ministry was empowered to give effect (clause 2). Therefore the amendment is effective from 15-02-2012 and supercede all the inconsistencies so continue in state laws with effect from 15-02-2013. The display in indiacode website will get a change soon. You can verify with the text of the constitution available in indiacode website for changes.
March 15th, 2012 at 19:55
Thank you for the response Dear Meghavat. As a writer and trainer of cooperators in Kerala I would like to confirm the date of commencement of the act.Can you help me by providing the authentic source, like Govt. notification or publication?
March 15th, 2012 at 21:11
Glad to know Dear Radhakrishnan is a trainer/writer on Coops. Will try to get benefit of his experience and wisdom as much as he would be pleased to offer.
March 15th, 2012 at 21:43
Dear Radhakrishnan,
As said earlier the display in indiacode website will get a change soon. You can verify with the text of the constitution available in indiacode website for changes.
March 18th, 2012 at 14:17
I feel that cooperatives are still under the seize of the politicians. Well there is nothin harm in it but as they climb the ladder of cooperative, they fell it as a useless thing. It would be nice if this bill hepls to curb this menace. RTI should not be permitted to enter COOPERATIVE as this instrument, till now has found to be more destrucitve rather than constructive. It has skewed the mental and physical energy of coopertives. If cooperative has to succeed, bring your kids and younger generation to the lap of cooperative..there is no other better way.
March 19th, 2012 at 11:06
Mr. Jaswal,
Cooperatives are the breeding ground for politicians. Democratic governance are basically cooperative governance. Obviously, politicians of any democratic country are the children of cooperatives. The cildren who respect their mother will survive and those who open their trouser ruin on thier own. This is the phylosophical truth.
March 19th, 2012 at 11:27
Dear Meghavath
Well Said.
“Cooperative” “Democracy” are really the same. One piece of imagination. If democracy is a “Huge Body” Co-operative is ” a collective represntation of Souls of all individual Co-operators” Purity of Soul i.e. acting as the soul dictates (Atma No Awaz)and listening to one’s soul determines the actions…..Soul is momentarily overpowered by “Senses” Senses are Politicins it seems…How do we control our Senses for Soul to play its role
March 19th, 2012 at 11:39
Jaswal has identified two factors coming in the way of success of Co-operatives. How fast the 97th Constitutional Amendment can curb the menace of politicians is very difficult to say, but the idea is to empower every Indian by granting him a Fundamental right of forming (I suppose running also thereafter) Co-operative without the State (Politicians) abrogating (adversely affecting/controlling/interfering etc) this right.
Protecting ones own right is ones duty and to ensure this protection by definition Indian citizens will have to unite against politicians moves. This effort has got a boost now with the amendment.
It will call for a public outrage against attack on our fundamental right going forward.
RTI is another important right conferred by the State. Its an excellent tool for giving momentum to the “outrage “ I referred to above. Every tool is potent with dangers of misuse so the RTI. As a trade off I think it is still a favourable tool in our hands.
March 19th, 2012 at 12:36
Naik Sab, you inspired me to share a piece from my memory with due respect to physically challenged.
I remember a play which I saw during my childhood. There were 3 friends and all were physically challenged. One is “blind”, other is “cripple” and last is “dumb”. They found very difficult to carry on their day to day work and hence they decided to get one of them married. The blind being the eldest and quite handsome, they found a suitable “bride” who was also equally beautiful. When the trio expressed their intention and purpose of marriage (house maid), the clever bride came for certain terms & conditions. She has to be paid well during her service for trio and when she becomes physically weak (senior citizen) she has to be paid pension without work. It was well agreed between the parties and living happily.
After a few days, the cripple and the bride fell into illegality. The blind counld not see the sin as well the dumb could not make the blind understand though he could see.
In fact, it is the characterisation of any democracy. The blind is “Judiciary”, the cripple is “Legislature”, the bride is “Executive” (Bureaucrat) and the dumb is “Aam Jantha” Unless we identify and medicate the physical weaknesses as early as possible, we remain dumb forever.
March 19th, 2012 at 13:41
Dear Meghavath
Extremely appropriate story.
I guess the “Public Outrage” (Like the one Annaj is engaed in at all India level) coupled with genuine Will to shed “indifference” could change the Scenario. Optimism is better than be passive or do nothing.
March 19th, 2012 at 16:01
Naik Sab,
I fully agree on optimism and I heartily support people like Anna. Let me share one more play. There was some yagna arranged in a village for wellbeing and 12 brahmans were sent to forest to bring sandalwood. It was summer day and all were thirst. While they were in search of water they found a deep well with a little water at the bottom. All removed their dhotras to make a rope and tied one shoe at dipping point of the rope as vessel to collect water. With great effort they could lift the water and all drank except one. The one was not willing to impure the yagna by drinking water lifted through the shoe and determined to sustain thirst. On reaching the village, in fear of complaint from the person who sustained the thirst, all the 11 have complained against the poor fellow as otherwise. The village headman expelled the person based on the majority voice.
In our country, the sense of good or bad is determined by majority and that will perform till the truth prevails. At all times, the truth prevails only after cremation. Look at the fate of Mr. Trivedi former rail minister, he has become a victim of an immatured leadership with majority.
Hope, I am not boring !!!
March 19th, 2012 at 16:19
The 12th Brahmin got Liberated from the people unworthy of his Company, which he should have done long back but some compulsions did not let him do.This brahmin must have taken the re-birth as Dinesh Trivedi, it looks like.
March 19th, 2012 at 16:32
What an instant analysis. It can happen only with Naik Sab.
April 6th, 2012 at 10:13
I have been a participant in the activities of The Bengal Secretariat Co-operative Land Mortgage Bank and Housing Society Ltd, Kolkata – 700 068, which incidentally is the oldest surviving cooperatives in West Bengal and it is a multipurpose Society without ant involvement of the State Government. The Board of Directors got elected in 2008 and it is my earnest request if you could enlighten us with the status of the present board in light of the latest amendment of the West Bengal Cooperative Societies Act,2006 by Govt. of West Bengal. Further, does this amendment needs an assent from the President of India before it is finally implemented – Regards…
April 7th, 2012 at 12:42
ImmediateElection of Board members.
There is no need for Presdential assent.
April 7th, 2012 at 13:08
Thank you very much for your kind response.
April 10th, 2012 at 15:53
In Tamilnadu, BOD’s have been superseded in 2002 and no elections since then. All societies including those where no Govt stake is involved have been managed ( mismanaged?) by Govt appointed Special Officer.
How will this constitutional amendment help revive the cooperative societies in Tamilnadu?
April 10th, 2012 at 16:48
Dear Ramanathan,
As the 97th constitutional amendment Act has came into force from 12-01-2012
the special officer cannot continue in the office after 11-01-2013 i.e. after the expiration of 1 year from the commencement of the act.vide article 243 ZT. If they fail to constitute an elected BOD by this time it will be deemed as a violation of constitution and the judiciary can interfere at this juncture.Thanks to the constitutional amendment act.
April 10th, 2012 at 18:09
The effective date is 15-02-2012 for all practical purpose.
April 10th, 2012 at 18:18
Dear Ramanathan
Tamilnadu offers a quick and huge success in fixing Co-Operatives. This is because there are cycles in every sphere. The Mismanagement can not grow any more…so law of Cycle has to set in. There is bound to emerge a “Tamil-Anna” sooner than later. The Indian Cooperative is a “Platforum” which can give birth to “NET-ANNA” Lets work all of us to make that happen sooner…
April 11th, 2012 at 19:45
The great personality Late Mr. ANNA DURAI has alraedy popular as “ANNA” in Tamilnadu. The present Govt party ANNA DRAVIDA MUNNETRA KALAGAM (ADMK) is named after him. Hope Jayalalitha will respect the name ANNA in all sphears of her administration.
April 12th, 2012 at 10:01
Meghavath
On a second thought, it is the level of People’s “tolerance” vs “outrage” a “passive” vs “active” trait. Democracy is a boom to thrive for a few because they are active as against the Passive Millions. Co-operative by definition operates through “active” & “Outrage” traits of population in their own interests, ?? ??? ???? ?? ?? ???? ??? ???? ?? ????.?? ????????, ?? ????.
April 12th, 2012 at 10:39
Dear Megavath,
When the official website of GOI states that the act came into force with effect from 12-01-2012 how can we assume that it is 15-02-2012.
Any documentary evidence other than hearsay, please? Have you confirmed the date from the official gazette?
April 12th, 2012 at 12:06
Dear Mr. Naik: You had stated through your comments on February 08, 2012 in response to the queries of Mr. Apurba Sen..QUOTE: “The Constitutional Amendment emphazise on ‘Freedom to Cooperative Managements from the State interference.’ The flip side is Members of Societies have to exercise vigil over management of their society. The Board can be superseeded in case of State aided Societies when mismanagement is reported. Where a Society is not “State Aided” Board can not be superseded, so members are given freedom with higher responsility”.- UNQUOTE. Can you kindly clarify this in light of my query dated April 07, 2012.
April 12th, 2012 at 13:44
After 15 2 2013 Boards of unaided societies will have no fear of supersession. The Board mismanaging a Society will have to be controlled by members themselves. The members will have to manage disputes to set right the managements..Where the Board stick to power beyond the tenure, members will have to take this up by majority decisions and State will not come to the rescue as it happens now. It’s a different matter that good managements may also be getting Superseded to day, but that’s the evil Constitution Amendment seeks to control.
April 12th, 2012 at 13:54
Thanks a lot once again…Regards.
April 28th, 2012 at 12:47
This is for whomever needs clarification on effective date of 97th amendment. The details of notification is as follows;
Minstry of Agriculture (Department of Agriculture and Cooperation, Notification No. 265(E), dated February 8, 2012, published in the Gazatte of India, Extra., Part II, Section 3(ii), dated 13th February, 2012, p.1, No. 235.
” In exercise of the powers conferred by sub-section (2) of Section 1 of the Constitution (Ninety Seventh Amendment) Act, 2011 (2012-CCL-II-14), the Central Government hereby appoints the 15th day of Frbruary, 2012 as the date on which said Act shall come into force.”
May 1st, 2012 at 20:09
Dear Meghavath
Is the notification available in internet? Or if you don’t mind please sent me a copy if you have one in my mail ID kvr2009@gmail.com
May 2nd, 2012 at 11:50
Dear Radhakrishnan,
It is not available in Internet. You can collect it from any of the Central Govt. offices. An extract of the notification is being uploaded to http://www.banjara.org.in, kindly wait for a day and download.
May 9th, 2012 at 14:11
Ninty seventh amendment is yet to be inforced. As stated by come one I cheked all Gazzattee notifications but only not to find any notification for the enforcement of the act ascented on date 12.02.2012.
July 26th, 2012 at 18:40
http://indiacode.nic.in/coiweb/amend/amend97.pdf
September 7th, 2012 at 17:02
In the present situation the amendment is a good step. No doubt Nine states have enacted a parallel act basing on the Model Act. The adhering to the Cooperative principles it is no way necessary. Which could have been done by amending the State cooperative law . Non of the political parties have the intention to strengthen the sector in any way. Because it helps them to fetch vote in the election. It is rightly said that reformation is required set right the sector. The basic structure can be uphold when the members of a society will be aware that the society belongs to them and it is the duty of each member to strengthen the HOME.
September 10th, 2012 at 22:56
A PIL has been filed challenging the validity of 97th CAA and notice been issued to attorny General.
September 11th, 2012 at 06:34
Strange!!! Can anybody provide grounds of ghallenge? And what is the public nterest that is likely to suffer?
September 11th, 2012 at 21:56
The Gujarat high court has issued a notice to the attorney general of India after a public interest litigation challenged the legality of the 97th amendment of the Constitution. The PIL said that the amendement deals with co-operative societies, which is purely a state subject.
This PIL was filed by Rajendra Shah of Consumer Protection Analytic Committee, who claimed that the Centre has no legislative competence to enact a law for co-operative societies, which is a state subject according to the Constitution of India.
For details:
http://articles.timesofindia.indiatimes.com/2012-08-03/ahmedabad/33019160_1_seventh-schedule-public-interest-litigation-constitution
September 19th, 2012 at 22:04
Fixing the term of Office at 5 years for all types of Coops is too rigid. No other institution at grassroot level have 5 year term. Let this be amended again….
September 20th, 2012 at 10:07
5 year term for managements of cooperatives across the nation and across all sectors is like standadrdisation of tenure of the elected posts for example Parliament (Lok Sabha). On these lines Rajyasabha MPs’ tenure should also be extened to 5 years from the present three years. Another standardisation is Right to recall.This is not there for any elected post in the country in any sector. However a standardisation of No Confidence motion is the dire need with 5 year term. Presently General Body of Cooperative does not have the right to pass a non-confidence motion and go for mid term poll. With 5 year tenure on the lines of State and Central Government this right should be vested in the General body of all cooperatives.In fact this deserves to be there in the Constitution itself.
September 20th, 2012 at 20:37
Article 243ZL states that “provided that in the case of co-operative societies carrying on the business of banking the provisions of banking Regulation act shall also apply”. Does not this mean that RBI is empowered to suspend or supersede Boards of Multi state co-operative banks even though the bank did not availed government financial assistance? Or can this Article be interpreted as the BR Act will be applicable to all the co-operative societies carrying on banking business. Going through the parliament proceedings it is seen that some MPs have opposed the Bill on the basis of this interpretation. Opinions of Co-operators are solicited.
September 21st, 2012 at 12:45
The Cooperatives are artificial juristic persons. It will be wrong to say that they shall be governed solely by the State Cooperative Societies Act or Multi State Cooperative Societies Act as the case may be. Any law of the land shall apply equally to this “juristic person” unless the concerned law expressly grants an exemption from application of all or any of its provisions. As a matter of fact it was not necessary to mention in this Article of the Constitution that Banking Business of a cooperative Society shall be governed by RBI. Business of a Cooperative is to be seen as a special feature of that Cooperative distinct from any other cooperative’s business say Housing Society. Houses of a Cooperative Society are governed primarily by the concerned locations local government Laws for example a House in Mumbai has to abide by BMC Act. If the Board of a UCB has to be suspended because RBI thought so, the Cooperative Law can not save it. It is not violation of Cooperative Law that is dealt with by RBI. For example Malegam Committee Report has a recommendation to have BOM (Board of Management) in every UCB with powers in managing the banking activities. The matters related to cooperative society management as distinct from Banking management still vests in the Board to be elected by the General Body of the members of the UCB. Cooperative can not have an uncontrolled freedom in the business it conducts. Freedom from State interference is in the matter of managing a cooperative as a body and not its business. If members have freedom in managing a cooperative as an organization, its business can be conducted more effectively in their own interest and intervention of the State under any other law (say B R Act) could be minimized.
September 24th, 2012 at 17:31
Naik Sab has clarified a long pending misconception. Thank u sir. Cooperative is a form of management like any other management such as proprietorship, partnership, company etc. It can undertake any legal activity such as industry, business, service etc. Obviously, the activities undertaken by cooperatives shall also be governed by the activity related legislation like BR Act for Banking, BMC Act for Mumbai housing etc. The violations under BR Act can not be sheltered under Cooperative Act. A few legitimate Constitutional benefits may be available to cooperatives but not a compromise of activity related misconduct. Cooperative itself is not an activity. Hope, the misconception carried over since decades will be resolved with effect from 15-02-2013.
September 24th, 2012 at 21:32
I have raised a simple doubt regarding the intention or effect of proviso under article 243ZL.Some of the Parliament members while participating in the discussion in the floor of parliament had raised the same issue. They opposed the amendment alleging that the intention behind the amendment is to bring all the co-operatives having banking business under the control of RBI and is applicable to not only the Co-operative banks but also Primary agricultural credit societies and primary credit societies as defined in sections 5(cc iv) and section 5 (cc iv) under section 56 of BR act which enjoys immunity from BR act as per section3 of the said act at present. Is this true? In other words whether all co-operatives having banking business would come under BR act by virtue of this clause in the constitution.
I personally feel that the proviso under 243 ZL is applicable only in a situation which warrants suspension or supersession of Board of directors of Co-operatives which comes under BR act and in no way it can be interpretted that all the other co-operatives such as Primary Credit societies would come under BR act.
Valuable opinions of co-operators who are seriously analysing the 97th constitution amendment are expected.
September 26th, 2012 at 18:49
Hope you accept me as a serious analyst. Implementation of Package for Revival of Short term Rural Cooperative Credit Structure as recommended by Vaidyanathan Committee by the State Governments itself has brought all PACS partly under the control of RBI. You may please refer Karnataka Cooperative Societies Act more specifically Chapter XI A. However, PACS can not be considered as banks unless it is permitted by RBI to act as bank. Rest you may analyse yourself.
September 26th, 2012 at 21:57
Thank you for the prompt response, Dear Megavath. I had gone through almost all state laws enacted to fulfil the conditions of Central package. But the point raised by me is quite different. Sec.3 of BR act categorically states that “Nothing contained in this act is applicable to PACS,PCARD Banks and Primary credit societies”. The position being so no commission or package or state law can overlook this provision in the BR act unless it is amended by Parliament. It is true that in the states which have signed MOU as per Vaidyanathan committee report and central package PACS have willingly abandoned the immunity provided by section 3 of BR act at the cost of financial assistance received from Central government. PCARD Banks and Primary credit societies still enjoy the benefit of Sec.3 of BR act. RBI in no way has any control on these institutions and cannot interfere in the banking business of these institutions. So is the case of PACS in the states like Goa, HP and Kerala which has not accepted Central package. RBI has little control on the Banking business of these entities. So be kind enough to approach by doubts in this premise. Thank you once again.
September 27th, 2012 at 13:40
Dear KVR, let me go through your original doubt.
Article 243ZL states that “provided that in the case of co-operative societies carrying on the business of banking the provisions of banking Regulation act shall also apply”. Does not this mean that RBI is empowered to suspend or supersede Boards of Multi state co-operative banks even though the bank did not availed government financial assistance? Or can this Article be interpreted as the BR Act will be applicable to all the co-operative societies carrying on banking business. Going through the parliament proceedings it is seen that some MPs have opposed the Bill on the basis of this interpretation. Opinions of Co-operators are solicited.
As I understood the article; 1. No supersede or suspension where there is no Government Assistance. 2. From among the assisted banking societies, no supersede or suspension without application of banking Regulation act. This should be viewed as a protection available to assisted banks from State bureaucracy. However, unassisted societies which are permitted to act as bank obviously attracted by the provisions of B R Act like any other entity permitted to act as bank. Therefore the RBI has the empowerment even without Article 243ZL. Further, please be understand that PCARD and PACS are not banks for the purpose of Article 243ZL.
September 27th, 2012 at 19:51
It is my suggestionr to Shri Meghavath/KVR to look at the following provision in the BR Act 1949.
“36AA. Power of Reserve Bank to remove managerial and other persons from office. — (1) Where the Reserve Bank is satisfied that in the public interest or for preventing the affairs of a banking company being conducted in a manner detrimental to the interests of the depositors or for securing the proper management of any banking company it is necessary so to do, the Reserve Bank may, for reasons to be recorded in writing, by order, remove from office, with effect from such date as may be specified in the order, any chairman, director, chief executive officer (by whatever name called) or other officer or employee of the banking company.”
The situation where RBI has to take an unpleasnt step is explained in simple words as under.
“in the public interest or for preventing the affairs of a banking company being conducted in a manner detrimental to the interests of the depositors or for securing the proper management of any banking company”
These reasons have nothing to do with suspension on account of mimanaging a cooperative organisation per se. These are strictly in relation to the working of the Cooperative Society as a “Bank” REgistrar can step in if the Coo perative Society management is in questionable state and with wise counsel on either side I do not foree a clash between RBI and Registrar also.If things provided so clearly spark a controversy, the drafter of 97th CAA has done a wise thing in inserting a proviso that “provided that in the case of co-operative societies carrying on the business of banking the provisions of banking Regulation act shall also apply. In the absence of this it can be imagined what level of confusion Cooperative Sector ( Banking) would have faced, til SC had cleared it.
I am glad this anlysis takes place well before a relevant time.
September 27th, 2012 at 21:24
There can still be persistence that the Proviso granting immunity agaisnt suspension/removal of Committees of Cooperatives not aided by the Government is a beneficial provision and 97CA being wholly a matter of Cooperatives benefit should go to unaiaded Cooperatives including a “Cooperative Bank.’ It is first a Cooperative than a Bank.” One can stretch. In a matter of interpretation of statutes nothing provided is to end up with redundancy. If this immunity is conceded to Cooperative Bank, the proviso that BR Act sall apply to Banking Cooperative will become redundant. So a combine reading of two provisos have to be given full scope for application in to appropriate cases. Hope fully this will put the agitated minds to rest.
September 28th, 2012 at 13:16
I am fully convinced Naik Sab. Let us thrive for true implementation of 97th CA and gain experience on merits and demerits of its functioning.
September 28th, 2012 at 23:17
My friends Mr.Megavath and Mr.Ishwer naik have misunderstood my point, I afraid. While Sec.36 AA relates to power of RBI to remove managerial and other persons from office in a banking company and for that matter in “Co-operative Banks” also by virtue of section 56 (a)(i) , section 36AAA relates to SUPERSESSION OF BOARD OF DIRECTORS OF A MULTI STATE CO-OPERATIVE BANK. Accordingly Article 243 ZL which speaks of supersession has relevance only on sec.36AAA and not on sec.36AA . This means RBI has power to supersede the Board of Directors of Multi state co-operative Banks only and not of all “Co-operative Banks”. More over the 97th CAA does not speak of ” Banks” but “Co-operatives having Banking business”. That was why I mentioned PACS and Primary Credit Societies. These entities are having banking business and still are not banks as rightly said by Mr.Megavath. Power of RBI, what ever it may be, is limited on “Co-operative Bnaks” only and not on all “Co-operatives having banking business”. I hope my friends can identify the diffrence between Co-operative bank and Co-operatives having banking business..
So the point is whether 97th CAA make BR act applicable not only to “Co-operative banks” but also to all “co-operatives having banking business “. And whether Article 243 ZL empowers RBI to supersede Board of Directors of any “co-operative society having banking business” which are not “Co-operative Banks”. For example :Can RBI supersede the Board of Directors of an Employees credit society having banking business which is a “primary credit Society’enjoying the benefit of Sec.3 , merely on the basis of Article 243ZL?
Please note that I am not discussing on the merits or demerits of the Article 243 ZL but exploring its legal implications.
September 29th, 2012 at 13:14
Sir,
“Banking” means the accepting, for the purpose of lending or investment, of deposits of money from the public, repayable on demand or otherwise, and withdrawal by cheque, draft, order or otherwise. This definition is applicable for “banking business” or “business of banking” wherever it appears in 97th CAA. In my opinion, section 3 societies can be interpreted accordingly.
September 29th, 2012 at 14:08
Some years back when I did not know any thing about Cooperatives I approached one Cooperative the name of which was so and so Cooperative Bank.I wanted to take a vehicle loan. The bank checked my domicile which was that of the bank also and then issued one share of Re 1. After that my loan application was considered. The Manager told me proudly that all our depositors are our members and so the borrowers are also member. We do not deal with public. We create our own public valueing at least Re 1.Nevethe less it was a Bank and a Cooperative Society engaged in a bankig business.
September 29th, 2012 at 14:16
If the Employees’ Credit Society approaches the RBI for a banking licence, yes, it will get covered under B R Act because the license is granted under that Act. Possibly this could clarify the point being diiscussed amongst the trio.
September 29th, 2012 at 21:19
I am very much sorry to say that my anxiety was not understood properly. Whether PACS, PCARD banks and Primary credit societies will be governed by Banking regulation act if they are carrying on banking business is a resolved question. The answer is an emphatic “NO” in the light of sec.3 and several verdicts of Hon.Supreme court and High Courts. Whether 97th CAA would change this position, is the present concern. This doubt was raised not by me but by several MPs in the floor of parliament when the bill was placed for debate. Please go through the parliamentary debates of 21-12-2011 in Lok sabha and on 28th in Rajya sabha.
Here are some:-
DR. K. P. RAMALINGAM (Tamil Nadu):- Primary Agricultural Co-operative Societies (PACS) are functioning in rural areas. They function like rural banks. I am afraid that this amendment will affect their growth.
SHRI M.P. ACHUTHAN (KERALA):- Another aim, I think, is to bring even the primary cooperative societies in the ambit of the Banking Regulation Act 1949.
SHRI P. RAJEEVE (KERALA):- But this provision would open a new door because if this provision, that is, the Banking Regulation Act, 1949, will apply to the co-operative societies, then, what will be the future of the co-operative societies?
I expect a scholarly approach of co-operators towards the fear expressed by our MPs and solicit comments as to whether the said proviso of Article 243 ZL was drafted with an intention to bring all co-operatives having banking business under the ambit of BR act as feared by our MPs.(My personal opinion is article 243 ZL is applicable only in the case of multi state co-operative banks and that also when the necessity arise for supersission.
September 30th, 2012 at 17:30
Though Section 3 societies are appears to be doing banking business, the deposit placed with them can not be withdrawable by cheque/draft, etc., and I doubt any court verdict to declare them as banks. If so please enlighten. As such, 97th CAA will not change the position, they remain as non banking credit cooperative societies. There is provision to convert the non banking credit cooperative societies into cooperative banks and that is how they become banks. I think all the above MPs might be under the impression that any cooperative engaged in money lending activity is a bank.
September 30th, 2012 at 19:43
I am glad RKV is not taking an easy answer.
The 97th CA has seen the light of the day possibly after churning of several tens of years. It is bound to take pretty long to unfold itself fully and well meaning cooperators have to be prepared to be under tension.
The BR Act 1949 has Section 56 running in to more than 20 pages on applicability of that Act to Cooperative Banks!!!
Few days back We read a report(Maharashtra: Co-op banks caught into crossfire Posted on 25 September 2012 by Parasnath Chaudhary) of 6 District Cooperative Banks in Maharashtra which are slated to lose their license to carry on a banking business tomorrow. It’s a sad story but will you and I support the Finance Minister dolling out Rs 51100,00,000 (may be as a loan-to be written off later)?
So agitating on finding a true intent an application of a statute of a stature of Constitutional Amendment through http://www.Indiancooperative.com is an opportunity not to be wasted but to be fully exploited, keeping our eyes open on what is happening around (through this site itself) should also form an integral part of our debate. I hope RKV and Meghavath shares the same concerns as I do. After all cooperative is a coomon man’s tool to improve his economic well being.
October 1st, 2012 at 14:05
These are healthy debates to dig the truth. Let me propose a check list for intended State legislatures in tune with 97th CAA.
1. There should be a lone “State Level Cooperative Society” which shall act as a mother cooperative to all cooperatives in the State. It should have branches at appropriate sub levels.
2. There should be a lone Registrar appointed by respective Government and he shall be the Chief Executive of mother cooperative. There should not be any additional or subordinate registrars.
3. The cooperatives may have sectorwise federations/ unions registered under non cooperative societies act.
4. Only elected persons on the board to be the office bearers.
5. Every cooperative should have constitutional features such as voluntary formation, democratic member control, member economic participation and autonomous functioning. Provision in the State legislature for any direct or indirect political or bureaucratic interference in the affairs of the cooperative may lead a cooperative to change its position from cooperative to non cooperative.
6. Audit by a professional body from the State panel. Audit as well general body to be concluded with in 6 months from the date of annual closing. No provision for extension of audit or extension of time to conduct annual general body.
7. Separate election authority. Interim election to fill vacant positions in the Board if remaining term is more than half.
8. Compulsory cooperative education & training for all the members to be eligible to continue their membership. Providing information to members is compulsory. Provision for minimum level of business and participating in the AGM is compulsory to continue membership.
9. Bifurcation of cooperatives into “Assisted”, “Unassisted” and further banking and non banking among these is necessary for better administration. Non banking again be classified into industrial, business, service (professional or otherwise).
10. Uniformity in nomenclature. The nomenclature pattern should be name, activity, cooperative/ cooperative society, limited. Eg. Banjara Educational Cooperative/ Cooperative Society Limited, Banjara Banking Cooperative/ Cooperative Society Limited, Banjara Housing Cooperative/ Cooperative Society Limited etc.
Please comment on these. A few more will follow.
October 1st, 2012 at 20:12
It is not clear which clauses of 97th CAA suggests the concept of mother co-operative, avoidance of subordinate Registrars (such as Joint Registrars and Assistant registrars) and idea of non co-operative societies act etc. “Compulsory co-operative education and training,providing information to members,minimum level of business etc are not mandatory as CAA use the word ‘may’ instead of ‘shall’. In a legal point of view States have no obligation to include the provisions of Articles 243ZN , ZO,and ZQ in their statutes as these are only suggestive and not mandatory.
October 1st, 2012 at 22:20
The Cooperatives in the States being the State’s domain, the Centre preferred to make certain provisipns in Constitution as that has a different connotation. It is not the same thing as a Law made by the Parliament. The Constitution generally expects the State Governments will give respect to the feelings of law makers as constituion represents more of an all party wish list. So “may in Law and “may” in constitution does make difference. I am saying this based on comments in the Departmental Committee’s 100 page Report on 111th C A Bill.
October 2nd, 2012 at 15:35
Dear Ishwar Naik,
Do you mean that the when some of the Articles of CAA starts with ” The legislature of the state shall by law……” and some other with “The legislature of the state may by law” have the same connotation?
Whether the report referred is the 12th report of Committee on agriculture laid in both the houses of Parliament on 30-08-2010 which contains 97 pages or some other report. If it is the former could you please cite the portion in which the committee mention such an opinion.
Do you think that the uses of words “may” and “shall” in articles 243ZO and 243ZL have the same connotation?
Does not it mean one is suggestive and other one is obligatory?
October 2nd, 2012 at 18:27
RKV, please think, why district level/ taluk/ tehsil level cooperatives are not defined. In other words, the defined state level cooperative should be the mother cooperative. Hitherto, the State Government employees are being made to enjoy in the affairs of cooperatives on the pretext of assisting the Registrar, which should be stopped forthwith in compliance of 97th CAA. The entire cooperative structure should have its own human resource. The appointment of Registrar need not necessarily from the State Cadre, he can be a retired High Court Judge for a fixed term.
The meaning of “may” or “shall” has no much importance. If “may” is suggestive, can a state law ignore such provisions of CAA and substitute its own. It is not possible, therefore, as far as compliance of CAA is concerned “may” is also to be construed as”shall”.
October 2nd, 2012 at 18:49
Further, there will not be any geographical boundary for cooperatives to operate henceforth. If any society operates beyond a State, it should be registered with MSCS Act. Therefore, the purpose of defining “state level cooperative society” is to have an administrative society at apex level to incorporate, regulate and liquidate cooperative societies in the State. The Registrar should perform the role of Chief Executive of apex society assisted by the cooperative employees and the apex society shall have branches at required levels with cooperative staff. In so far as my knowledge is concerned, there will be only primary or secondary or federal cooperative societies having constitutional features without any geographical restrictions and a lone administrative society at State level or at national level for MSCS as the case may be.
October 2nd, 2012 at 23:06
Where does our debate heading to? I have raised a legal issue and the discussion is seen diverted to prescribe some courses of action for States such as mother co-operatives and appointment of Registrar as CEO which is hitherto unheard on any deliberation of CAA.
October 3rd, 2012 at 09:51
Yes, we have to resolve one way or the other, the question
“Whether BR Act applies to Cooperative banks and the cooperative credit societies leading to suspension of boards whether Government finances/aids are involved or not?”
There are two opposit views. RKV thinks it does not.
October 3rd, 2012 at 12:04
Following is the extract from 97 page Report of the Parliamentary Committee which reviewed the 111th CA Bill
, before it was passed by the Parliament.
“After it becomes a part of their fundamental rights, the responsiveness of members would increase manifold and the cooperative movement would be cured of the ills plaguing it to a great extent. They further recommend that a new sub–clause (h) be added after sub-clause (2) of Clause (1) of Article 19. This should read as follows: „
(h). to form and run co-operatives based on the principles of voluntary formation,
democratic member control, member economic participation and autonomous functioning. The Committee are of the unanimous opinion”
The Cooperative being the State subject the constitution conferring a fundamental right increases the obligation of the States to enact appropriate law and ensure that the State machinery implement it in true spirits to make full sense of it. Indirectly it mandates the States not only to eliminate State interference, but it is now your obligation towards the peoplethat you ensure that the public can form and run co-operatives based on the principles of voluntary formation, democratic member control, member economic participation and autonomous functioning,
Having laid down in a stern manner what the Constitution expects of the Sattes in these words in new Article 43B” The state shall endeavour to promote voluntary formation, autonomous functioning, democratic control and professional Cooperatives: the Parliament has reinforced this constitutional ambition of the people by adding a detal list of “dos” / don’ts”in New Part IXB of the Constitution.
See what the Department Reported to the 111th CA Reivew Commitee :
“Although the provisions of this part (Constitution Part IV Directive Priniples of State Policy)are not enforceable by any court, the principles laid down therein are nevertheless fundamental in the governance of the country and the State is under an obligation to apply them in making laws. The principles laid down therein, therefore, define the objectives and goals, which the State must endeavour to achieve over a period of time. Therefore, whenever the State is required to makelaws it must do so in conformity with these principles with a view to securing social and economic goals considered essential for the establishment of an egalitarian society.
In a distinct part not just “recmmendatory” nor like “unenforceable directive principles” what the States are expected to do through legislative actions is enumerated in Part IXB vide 13 New Articles viz 243ZH to ZT.
The Parliamentary Commitee while reviewing the 111th CA Bill extensively discussed and differenciated a constitutional requirement from that laid down in a central legislation.It is not a Central legislation, it is a Constitution itself.
The intrpretation of the words “may and shall” is acsademic. Just one example:
“May” in Article 243ZM(1) has a force of shall because of subsequent “Shall” appearing 4 times in that Article.,
Why the States are having a last laugh under the pretext of “federalism” that there is no provision in the Constitution for setting up a machinery to periodically review the adherence to “directive principles”
by each State and link the performance to granting State share in fiscal revnue. Its a complicated mechanism but merely on that count its importance in a federal structure can not be undermined as is the case to day
October 3rd, 2012 at 21:19
Yes, that is right. As repeated several times my considered opinion is that as per existing Law RBI does not have any right to interfere with the functioning of PACS,PCARD Banks and primary Credit societies which are doing banking business. The CAA does not alter this situation. RBI has control only on State Co-operative banks, Central co-operative banks and urban banks(primary co-operative banks).
October 4th, 2012 at 09:30
YES.
October 4th, 2012 at 12:33
Friends are running out of arguments. Bad. May be we are not directly interested but have a genuine ademic interest. Our work is to prove with logic as to what we say or our hunch says at times. My hunch is erring cooperatives dealing in public money are bound to come under RBI scanner and how it is done and whether that cuts in to autonomous character of Cooperatives is purely academic and we must explore fully. I am still trying to find plausible support to my hunch
October 4th, 2012 at 16:21
For any fair economy it is desired to have a single regulator for financial activities. In India, we have many husbands for one wife (financial activity), RBI, SFCs, RCS apart from NABARD, SEBI, IRDA etc. As RKV persistently got clarified, a few cooperative societies are appears to be functioning as banks but not governed by RBI. PACS and PCARDs in India are still believed to be banks even by the lawmakers and these lawmakers are dependent on RCS without knowing their role to play. As such, the much awaited autonomous character may be a nightmare! Unemployed politicians needs shelter under cooperative federations and bureaucracy needs employment with cooperative sector under the pretext of “Friend, Philosopher and Guide”. The coffin is being smoothly carried by the politicians and bureaucrat for better bounty leaving us the shout and cry.
October 4th, 2012 at 23:20
As we are discussing about the 97th CAA could you please make it a bit more clear what you are really try to express, dear Mr. Megavath and Mr.Naik?
October 5th, 2012 at 07:36
Dear RKV
The phrase “Democratic, Autonomous and Professional functioning of the co-operatives” is akin to an ocean being churned on http://www.indiancooperative.com just as the Deities and Monster did in Visnu-Purana. Nectar went to the Deities and Venom to Monsters. Have we understood the true meaning of this for our lives? When the churning was on did any one imagine the outcome?
October 5th, 2012 at 21:07
Rightly said Mr.Naik. Now I know what the quote ‘people usually get what they deserve’ really means.
October 17th, 2012 at 20:46
The Calcutta High Court today declared as unconstitutional an amendment brought by the West Bengal government to a section of the West Bengal Cooperative Societies Act, 2010. Justice B Somadder declared the amendment to section 36 of the Act, vide which the tenure of the boards of cooperative banks and societies in the state were reduced from 60 months to 36 months, as unconstitutional. Boards of several cooperative banks and societies were dissolved citing the amendment. The government had earlier this year amended section 36 of the Act, reducing the tenure of the boards of the cooperatives.
October 18th, 2012 at 11:13
I only hope it is not politically attcked as offending the spirit of federal structure of autonomy of States in the matter of Cooperative legislation being a reserved territory for the States to legislate upon. One may also argue that the States havree been granted a breathing time till 14 2 2013 to deal with a provision in State cooperative Act which is contrary to what is provided under 97th Constitution theAmendment The State has an opportunity to revamp the Bank Board as of now. If the reduction in the tenure was by a Satte law prior to enactment of 111th Constitutional Amendment in to Act in February 2012, perhaps this judgment may land up in SC in appeal. Do not be surprised!!!
October 18th, 2012 at 15:50
The amendment was passed on January 30 and came into force on February 6, whereas the 97th CAA was assented on Jan 12 and came into force on February 15. The High Court upheld the petitioners’ plea that the new government amended the state cooperative act with a political motivation so that the ruling party could capture the cooperatives. Though the judgement may land up in Supreme Court, it may not be worth defending State amendment as it is becoming inconsistent with Constitutional provisions shortly.
October 18th, 2012 at 18:50
Thanks Meghavath for inserting the key dates. The Story is complete now. This is a “political world” “We the States have full one year to play politics. We have a breathing time, allow us to breath fully” The new dispensation wanted to (most must have been grabbed already) and continue till 14 2 2013, and after 15 2 2013 these very people in power will have a last laugh because though originally captured for three years, now they are in saddle for 5 years once again. Bonus of 2 years. It’s a very intelligent move only shrewdest politicians could foresee and execute so smartly. In appeal they will succeed for an interim “Stay” My hunch is they will succeed in SC to get reversal of the High Court order, if necessary against a nod that they will restore it to 5 years after 15 2 2013, as if they are obliging. Human Ingenuity is infinite. This is a classic example. “You achieve an unworthy goal officially with full immunity” that’s the politics. It unfolds to people like us very late in the day. Sorry, Bang-Bandhus and Bhaginees.
October 18th, 2012 at 21:18
Wonderful politics !!! Narration is beautiful Naik Sab.
October 24th, 2012 at 13:35
Now right to form cooperatives is a fundamental right. Well. Does this mean that anybody can form a co-operative society without registration or the knowledge of Registrar and without complying with provisions of the Co-operative Law? Opinion of viewers are expected.
October 24th, 2012 at 16:14
If it was so RKV, freedom of speech would mean “Gali unlimited” and freedom of Movement means “Walk in neighbour’s bedroom at midnight”
I hae found this fundamental right quite fuuny as the constitutional rights are granted to individuals as gaisnt State actions -be it laws or what ever- and Cooperative can not be formed by an individual.
So I looked for some guidance and I found this para in Departmental Committee’s Report on 111 th C A N=Bill.
They further recommend that a new sub–clause (h) be added after sub-clause
(2) of Clause (1) of Article 19. This should read as follows: „(h). to form
and run co-operatives based on the principles of voluntary formation,
democratic member control, member economic participation and
autonomous functioning. The Committee are of the unanimous opinion
The fundamental right now mean “form and run”, If on account of state Law, Notification,GR, Departments;s order, Rehistrar’s action or Dy REgistrar’s conduct, a case can be made out that it violates fundamental right because a specific cooperative society was unable to run
“based on the principles of voluntary formation, democratic member control, member economic participation and autonomous functioning.”
the court will intervene to restore the position.
Whether it is so and will it happe time will tell.
October 24th, 2012 at 16:31
Naik Sab, it should not happen “from, loot and run” !!!
October 24th, 2012 at 16:31
Naik Sab, it should not happen “form, loot and run” !!!
October 24th, 2012 at 18:20
My doubt is very simple and genuine. If anybody can form a co-operative society bypassing co-operative law on the basis of article 19(1)(c) as amended? Some national dailies have also expressed the same doubt.
I have raised the question after going through the following documents:-
1. Constitution amendment Bill first introduced in 14th Lok sabha in 2006
2. Standing committee report of August 2007
3. Communication from National Advisory Council to the Government on Autonomy of Cooperatives, April 19, 2005
4. 97th CAA
5. 12 th Report of committee on agriculture of August 2010
I expect a clear answer rather than exercise with words.
October 24th, 2012 at 18:29
NO
October 24th, 2012 at 19:20
Unless a Society is registered along wih bye laws it does not cme in to existence.
October 24th, 2012 at 20:16
That is right Mr.Naik. I also believe so. But what purpose is served by the insertion of “Co-operative societies” along with “associations or unions” in Article 19(1)(C). Law secretary and Department of Agriculture were against this amendment (vide Standing committee report 2010) since they felt it unnecessary as in their opinion the “association” means “co-operative societies” also.
Formation of co-operative societies became a fundamental right in line with associations and unions. Associations and unions can be formed with or without getting any formal registration under any law. Even though fundamental rights are not absolute and are subject to reasonable restrictions as necessary for the protection of public interest is it not possible to form Co-operative societies with out registration just like associations and unions? Can the co-operative law stand in the way of such formation in the wake of Art.19(1)(c). I have seen an editorial of a national daily which stated that by the new amendment Registrar cannot reject but register a co-operative society if such a proposal was received. What is your considered opinion?
October 25th, 2012 at 10:01
If Mr. Sharad Pawar’s statement on the floor is analysed word by word, we can resolve a better answer.
— Provisions in the Bill will not only “ensure autonomous and democratic functioning of cooperatives, but enhance public faith in (these institutions),” Agriculture Minister Sharad Pawar said, moving the Constitution (One Hundred and Eleventh Amendment) Bill, 2009, for consideration and passage. The amendments, he said, are aimed at insulating the cooperatives from “avoidable political and bureaucratic interference”.—
1. Hitherto, the Constitution has not ensured autonomous and democratic functioning of Cooperatives – Why,
what are the reasons?
2. Public faith in Cooperatives are not on par with other ownership (Proprietorship, Partnership, Company etc.) –
Why, what are the reasons?
3. Is that political and bureaucratic interference is so deep rooted in cooperatives which could not be avoided by
the Constitution – Why, what are the reasons?
4. What is the accountability on States to keep cooperatives in such a worst condition for the past 65 years?
5. Is that the 97th CAA is a solution for all the above evils? or the CAA should have been some more stringent?
October 25th, 2012 at 12:00
My question seems to be fallen in dumb ears. May any co-operator enlighten me whether it is possible to form Co-operative societies in line with associations and unions which can be formed without registration? Now the “co-operative societies” were also inserted after “associations and unions”? Hence the doubt. We can analyse pros and cons afterwards.
October 25th, 2012 at 12:16
RKV has pointed out an interesting sitution.
‘Whether the Registar of Societies is prohibited from refusing to register a society since it is now a fundamental right enshrined in the Constitution.?”
The States are given breathing time of one year expiring on 14 2 2013 to align provisions of their laws with those of 97CAA. So one mownay repond to this question in affirmative that Registrar can not refuse to register my society because now it is my “fundamental right”
I would ask him a question.
“Does this mean I can have my own Cooperative Society.RKV can have his and Meghavat have his”
“Fundamental right” is not something of an invention of 97AA. We have the experience of laws being struk down on the plea of negation of fundamental right. We have seen a Property righ having been sntached by the very State relegating it to merely a legal right and not a constitutional guarantee. The whole lot of literature judicial pronouncements exist on Fundamental right. If we want to read all that we will be able to do nothing in life and still the literature will remain unfinished.And we might remain as confused as ever.
The actual implications of fundamental right namely
“19. (1) All citizens shall have the right—(c) to form associations or unions or co-operative societies”
is bound to unfold in to gamut of litigations and some day a constitutional bench of the Apex Court clarifying what is its exact connotation. Lets be part of this process and try to bring forward that day.
October 25th, 2012 at 12:29
It is already answered, it can not be. We can find a suitable answer for amended Art.19(1)(c) only if we discuss the statement of repentance made by Sh. Pawar and unanimously accepted by the Parliament which World has witnessed.
October 25th, 2012 at 12:31
Sorry, the view is overlapped.
October 25th, 2012 at 13:31
Unregistered “association” or “Union” does not have a status of a juristic person.It can transact with other entities and have limitations. Same way if we three for example say form an “Unlimited Net Conversation Cooperative Society limited” the http://www.indiancooperatives.com may not object for a long time but more than what that cooperative Society can actually do? The Cooperative Credit Society may borrow from a bank but that will be possible if it has a recognition of law i.e. a registered organisation having submitted itself to a set of discipline the State Government has laid down.
The confusion about this new “Constitutional Guarantee” seems to persists because what exactly is the nature of this guarantee? The answers to many questions raised by Meghavat above may provide a part of the answer. Was the absence of guarantee responsible for the evils that haunted cooperative movement?
In my mind It represents current Parliament’s sincerity (ably led by Shri Sharad Pawar ) about cooperative movement that the 97CAA saw the light of the day despite both the houses being in chaotic state. This is a historic beginning of the end of an era of interference of those in power, also means a lot.
This guarantee definitely is not intended to just form a cooperative. It is providing an answer definitely to ”what was lacking: “a guarantee of letting a cooperative run in an autonomous, professional and democratic manner” The Courts are bound to take the view that the State guarantee does not end with “forming a cooperative” “having formed, running it as a right” is also ingrained in this guarantee and State actions will now be reviewed by the judiciary with a new touch stone – does the State action in any manner abridges the fundamental right of running it the way it should have been run? “Run in accordance with the recognized principles of cooperation” The Law makers themselves will in the first instance try to be guided by the new situation. We have to look for and contribute in to changing the environment.
October 25th, 2012 at 13:57
So Article 19(1)(c) provides fundamental right to form associations or unions or co-operative societies. Indian citizen can form associations and unions bypassing registration but not Co-operative societies. Why? Does the Article differentiate these entities. Which legal provision prescribe that registration is required for co-operatives only and not for associations and unions. Are not unregistred co-operatives possible just like associations and unions.
October 25th, 2012 at 14:14
Registration of Association or Union is optional where as Registration of Cooperative is mandatory as per Art. 243ZH(c) r/w 243ZI. So, unregistered cooperatives are not possible.
October 25th, 2012 at 18:23
But the said Articles are applicable only for ‘PART IXB only. Article 243ZH starts with a phrase “In this Part, unless the context otherwise requires,—”. So can we say this is applicable for the entire constitution as well?
October 25th, 2012 at 19:53
“Conferring fundamental right to form a cooperative society” is a benefitial provision and not a restrictive/prohibitive/regulatory one.Its interpretation is not done strictly as is the case with the later. Unregistered cooperative society shall not have anything to do with what is stated in Article 43B and in PART IX B of the Constitution. So if any one forms a cooperative society and does not register, Constitution is of no consequence. One does not need any gurantee to forn an unregistere cooperative.People are free to do that. There could be many unregistered organisations operating outside the legal system. And they could be happy in themselves. They could do illegal activities also untill noticed by legal system. This is because an unregistered society is of no consequence to other persons natural and juristic. So formation of unregistered cooperative society is not a subject matter of Indian Constitution. What we are discussing is Cooperative Societies covered by Article 43B the new directive principle of state policy.
October 26th, 2012 at 09:20
I regard Mr. RKV as a knowledge bank on cooperative matters and believe that he can share a better answer out of his experience as an ardent proponent of “Co-operation” for Sh. Pawar’s statement of repentance. It can not be treated as an unfortunate because it revealed the true story of Indian Cooperatives. I once again reproduce the statement followed by the questions unanswered yet.
— Provisions in the Bill will not only “ensure autonomous and democratic functioning of cooperatives, but enhance public faith in (these institutions),” Agriculture Minister Sharad Pawar said, moving the Constitution (One Hundred and Eleventh Amendment) Bill, 2009, for consideration and passage. The amendments, he said, are aimed at insulating the cooperatives from “avoidable political and bureaucratic interference”.—
1. Hitherto, the Constitution has not ensured autonomous and democratic functioning of Cooperatives – Why,
what are the reasons?
2. Public faith in Cooperatives are not on par with other ownership (Proprietorship, Partnership, Company etc.) –
Why, what are the reasons?
3. Is that political and bureaucratic interference is so deep rooted in cooperatives which could not be avoided by
the Constitution – Why, what are the reasons?
4. What is the accountability on States to keep cooperatives in such a worst condition for the past 65 years?
5. Is that the 97th CAA is a solution for all the above evils? or the CAA should have been more stringent?
6. Is that the cooperative members and cooperative activists are mere spectators for the daylight molestation on cooperative sector by the politicians and bureaucrats such a long period?
7. Is that the FR conferred to the member under Art. 19(1)(c) is a weapon to destroy the chronic evil contributed by these politicians and bureaucrats?
October 26th, 2012 at 12:14
Let me make some attaempt.
1. Constitution has not ensured autonomous and democratic functioning of Cooperatives BECAUSE
a. It did not confer fundamental right like what was given to (Labor) Unions earlier.
b. It did not lay down directive principle for the state to promote voluntary formation, autonomous promotion functioning, democratic control and professional management of co-operative societies
Now the Constitution has incorporated but does that alone ensure “autonomous and democratic functioning” leads to further enquiries…
2. Public faith in Cooperatives are not on par with other ownership (Proprietorship, Partnership, Company etc.) –BECAUSE
The members of cooperative societies were indifferent to the management of cooperatives like how an “AAM AADMI” is indifferent towards management of the nation despite being “Mera Bharat Mahan” . Result is a few created vested interests be in the governance of the nation or a cooperative in remote area. whatever. Something which belongs to everybody does not belong to a few like what it is in the the ownership of (Proprietorship, Partnership, Company etc.) The few acquired ownership which did cost them nothing, so they do not own like an owner who has work hard to become a proud owner.
So what is the area needing focus as a panacea?
Each and every “AAM AADMI” has to shed the indifference towards “ownership”
Cooperative society belong to each member equally which has been ensured by one member “One Vote”. But we neither go to cast our “vote” nor we attend meetings of members of societies.
Look at Article 243ZO (2) “The Legislature of a State may, by law, make provisions to ensure the participation of members in the management of the co-operative society providing minimum requirement of attending meetings by the members and utilising the minimum level of services as may be provided in such law.”
For democratic functioning of the Parliament is there a similar compulsion built in to the scheme of parliamentary democracy? Why Constitution is silent on this?
3. Political and bureaucratic interference is so deep rooted in cooperatives which could not be avoided by the Constitution.
It is deep rooted in national democratic system itself. Which political onstitution does not empower CEC to deregister a party whic does not hold elections of its Board, like what it is in cooperative society?. Interference in cooperatives is practiced by those who occupy politically influential positions as an outcome of undemocratic processes for reaching at the helm of affairs. How does a constitution ensure democratic functioning when those affirming faith in democracy practice totally opposite practices?
So the Centre has to ensure at national level that thing which it wants the States to implement through State laws.
4. What is the accountability on States to keep cooperatives in such a worst condition for the past 65 years?
The treatment of the desease here is simply symptomatic. Cooperatives can not imbibe democratic functioning in an environment which is completely polluted with wholly undemocratic processes. Keeping Politicians active/passive/retired whatever type outside management of cooperatives will mean instigating them to be more proactive in their mission. The interfering politicians should be democratized first so that they let the cooperatives function in a democratic manner. Let the Boards of Political parties contesting elections be constituted by elections held by Election Commission. Why not? If we do not make a begining, no provision in constitution will come rescue except more litigations.
October 26th, 2012 at 12:29
The number of comments have increased so much that keeping track is becoming difficult. from 97CAA seprate topics be carved out with introductors remarks. For example there is already one on BR Act. Professionalisation is another important matter. Accounts and Audit could be another. Politica interference yet another. Then analysis can be focused.
October 26th, 2012 at 14:00
So let us focus at the core subject only. A lot of unnecessary refernces are seen crept into the dicussion in the the form of ratifications and justifications. My doubt about the legal connotation of Article 19(1)(C) has led us into the wilderness as I feared. It is an unresolved doubt what the effect of the incorporation of “Co-opeartive societies” in the Fundamental rights is. From the responses received it is learned that no change is forthcoming in a legal point of view. So what could be the reason for such an amendment? This question is more relevant as the co-operators are jubilent on the inclusion of “co-operative societies” in the fundmental rights.I reiterate that the question is about the legal implication of the said amendment nothing else. Therefore I hope the responses will be in black and white and to the point.
October 26th, 2012 at 18:07
As I believe you have strait forward knowledge without any simile or metaphor or ratification or justification, I need you to share your answers to the point. This may clear most of the doubts on 97th CAA. Afterwards we may switch over to comfortably.
October 26th, 2012 at 18:37
MEGHAVATH
YOU MEAN RKV IS TESTING US? I THINK HE IS CLEAR THAT FUNDAMENTAL RIGHT IS ABSOLUTE AND CAN NOT BE TIED DOWN TO REGISTRATION AND OTHER NONSEMSES BY REGISTRAR. tHE QUESTION IS WOULD YOU STILL GO TO REGISTRAR AS EVEN NOW HE IS A KEY FUNCTIONERY
October 26th, 2012 at 19:08
Of course, he has clear ideas and authoritative on the subject Naik Sab. The problem is he can not step down to my level and make me understand. Sorry RKV, these loose talks are for the sake of fun in between. Ignore if you dislike.
October 26th, 2012 at 21:56
Why are we going egoistic and personal dear friends. Have I uttered anything to your displeasure? If you don’t like my query why should you spend your (and mine) valuable time to answer my illegitimate doubts. I put forward a point on the purpose and expected change that may occur as a result of the amendment in Article 19(1)(C). There is nothing personal in it. But it seems that you have waged a personal attack.
I once again make my doubt in clear terms. If some persons establish a co-operative society and function in an autonomous and democratic manner but without registration (like what is happening in Denmark where there is no Co-operative Law) can we say it is illegal? Hope the doubt is transparent and straight forward.
Please don’t kill the spirit of the question with arguments.
October 27th, 2012 at 08:50
I am extremely sorry RKV Sir. You are mistaking us time and again. I can not make fun of an elderly person who held top position with Kerala Government in the specific area. Such persons are very rare who shares their idea. We need such personalities to debate so that things will take better shape. No where it is personal attack.
Now coming to the doubt, it is not illegal where there is no law. Even in India, we do not have law for regulating microfinance, is it microfinance activity in India is illegal? Whereas, formation of unregistered cooperative society in India is illegal as it is well defined in the Constitution itself as a registered or deemed to be registered and the Constitution among other things has also made provisions to incorporate, regulate and windup cooperative societies. As I believe, the inclusion of cooperative societies under Art. 19(1)(C) is to insulate the cooperatives from political and bureaucratic interference through their members. As Naik Sab contemplated, there can not be non juristic cooperative societies do exist in India.
October 27th, 2012 at 11:45
There are clubs of people in Mumbai who have migrated from North. Some 20-40 people jointogather, collect a fixed sum in to a “common kity” and every month turn by turn one member taks away the kity of that month, for his major requirement. This is an unregistered cooperative society in principle. Its voluntary,autonomus and democratic. It goes on for years. If there is no taker any month, there is an auction and who is prepared to accept the lowest amount from the kity in lieu of his right gets it. This is need absed. This is regulated automatically. The following does not however apply to these societies. 75.
“The registration of the Society shall render it a body corporate by the name under which it is registered, with perpetual succession and common seal and with power to acquire, hold and dispose off the property, to enter into contracts and other legal proceedings and to do all such things as are necessary for which it is constituted.”
There is an implicit recognistion of an unregistered society , as it startd with the words “The registration of the Society shall… ….
It has to operate without a right like “power to acquire, hold and dispose off the property, to enter into contracts” which are necessary for cooperative societies as one of the basic feature of Cooperative Societies is “economic significance”
So the question perhaps RKV has in mind is whether their can be an unregistered cooperative society which can function like a registered society because forming a cooperative society is now a fundamental right? The answer is No. An unregistered cooperative society can not function like a registered cooperative society.
If there is still an opening to delve on the topic we should not close it. It is “Samudra-Manthan” let us not throw “venum” in the process ourselves and have a genuine churning for the NECTAR.
October 27th, 2012 at 14:41
Thanks Naik Sab for making me understand that there can be unregistered cooperative societies do exist like kitty club, microfinance, SHG etc. but they can not function like registered cooperative societies legally. Now perhaps there may be a question again why there is a Constitutional provision for registration of only cooperative societies and why not for associations and unions? The answer may be, it is not only for registration but also for something more than that to promote and develop the cooperative sector uni-formally across the country.
October 27th, 2012 at 14:56
I read this about registration of unions.
“A trade union can be made permanent and stable only if it is registered under the Trade Union Act. A registered trade union enjoys various privileges, benefits and immunities, and therefore, most sponsors of a trade union are tempted to register it. After registration, a trade union is entitled to represent its members.”
If any one wants to know more about how to register a union please cut- paste OR click this URL
http://www.lawisgreek.com/trade-union-how-to-register-in-india.
October 27th, 2012 at 15:06
On the site mentioned above when you click at the bottom you will find this conclusion which mutatis mutandis apply to cooperative societies referred to in Article 19(1)(c) of Constitution of India.
“The registration of a trade union in India is not mandatory as per the Trade Union Act. That is, unregistered unions are not considered illegal. However, unions registered under the Trade Union Act are entitled to special benefits and protections”.
So rewritten the above conclusion looks like this.
“The registration of a cooperative societies in India is not mandatory as per the concerned State Cooperative Societies Act Act. That is, unregistered cooperative societies are not considered illegal. However, cooperative societies registered under the Trade Union Act are entitled to special benefits and protections” Unregistered cooperative societies may not suffer State interfeence, a distinct advantage.
October 27th, 2012 at 15:25
IT IS SIMPLY GREAT NAIK SAB. A wonderful new dimension on Art. 19(1)(C). I accept this without any doubt.
October 27th, 2012 at 15:49
I applied this new dimension on B R Act (AACS). It is wonder that nowhere the registration of cooperative societies made mandatory. The dual control regime may go automatically. Now, UCB means Unregistered Cooperative Banks licensed by RBI !!!
October 27th, 2012 at 20:31
Sorry guys, I could not differentaite the statements “formation of unregistered cooperative society in India is illegal” and “unregistered cooperative societies are not considered illegal”.
October 28th, 2012 at 11:08
why is the need to differentiate when the later supersedes the former?
October 28th, 2012 at 11:16
RBI is a status quoist institution, it will never supersede the board of District Cooperative Central Banks. DCCBs abound in mismanagement and corruption. They got lot of money under ADWDRS 2008 and STCCS reform package, and all has been ill spent. It is learnt that RBI officials inspected Vijaynagaram DCCB, Andhra Pradesh in Dec 2011under statutory provisions of B R Act for the financial position ending as on 31.03.2011 and found lot of irregularities. But they did not act in their recommendations to GOI or State Govt, which would have been mandatory. It appears that no one is above doubt.
October 28th, 2012 at 12:54
Naik Sab, will it be possible for RBI to register Urban Cooperative Banks under RBI Act after suitable amendment. So that these entities will have a legal status. At present, RCS is registering UCBs directly without any provision in State laws (RCS can register societies not banks) which our Courts may consider such acts as “Bad in law”. If so, even now all our UCBs directly registered as banks are “Unregistered Cooperative Banks” licensed by RBI. RKV may throw some light on legality of RCS registering UCBs directly with the word “Bank”.
October 28th, 2012 at 18:20
I could not get the point of Mr.Megavath?
October 28th, 2012 at 18:25
Megavat sys ““formation of unregistered cooperative society in India is illegal”
Naik says “unregistered cooperative societies are not considered illegal”.
Naik again says” why is the need to differentiate when the later supersedes the former?”
Is it so? What do you think Megavath?
October 28th, 2012 at 18:45
The unregistered cooperative societies are not considered illegal as per Art. 19(1)(C) however, cooperative societies registered under the State/Central law are entitled to be body corporate”
October 28th, 2012 at 20:51
That is right. I agree.Thank you very much Dear Naik and Megavath for your responses. This was a nice experience and I really enjoyed it. Thanks once again.
Some state co-operative laws have a provision that makes the use of the word ‘co-operative society’ by an unregistered co-operative society illegal. I think that provision will not have any relevance since the inception of amendment in Art.19(1)(C). Is it not so?
October 28th, 2012 at 22:25
Once again a cross examination. Will Art. 243ZH(C) ensures compulsory registration of cooperative societies as such constitutional definitions are not available for other entities of Art. 19(1)(C).
October 29th, 2012 at 10:24
Definition of “co-operative society” in Art.243ZH(C) means that where ever there is a mention of “co-operative society” in Part 1X B it means a society registered or deemed to be registered under any law relating to co-operative societies for the time being in force in any State. In other words the provisions of Art.243ZH to Art.243ZT is applicable in the case of the societies defined as above.
Since the formation of unregistered Co-operative societies are possible under revised Art.19(1)C) those entities naturally are out of the definition and provisions of Part IXB.
October 29th, 2012 at 10:49
For once I thought there was unanimity on “Unregistered cooperative societies” to the effect that they can exist as unincorporated bodies. The views of Law Ministry as reported by “Departmental Committee on111th CA” term “Association” included cooperative societies seem to support RKV’s thought of an unregistered cooperative. But then ignoring that view, expressly Cooperatives are added in categories of entities which can be formed by virtue of a fundamental right therefor.
Answer to “how an entity is “formed”? may also be of help. In an application for registration of cooperative society name of the PROPOSED society is required to be stated. This indicates that when an application for registration is made, no society has yet been formed as “unregistered society” The Constitutional concept about giving fundamental right to form Cooperative Societies was “democratic.autonomus, professionally man aged co-opertives” and this assurance presupposes a well laid out scheme with “Norms and Controls” to ensure this objective is ensured. Article 43B is a pointer to that Scheme. Adding a separate Part IXA in the Constitution is a list of Controls that the Constitution lays down simulteneously with such assurances.Associations and Unions have not been given such a comprehensive treatment because Cooperatives have already demonstrated its economic and social significance the world over.So the words “Cooperative Societies” used in the 97CA have to be read an interpreted in a wholesome manner and not in isolation as a stand alone term.
These are some more thoughts on the topic so I thought of sharing.
So assuming that the unregistered cooperative was not illegal, it looks more like a fiction than a reality of life.So there is a freedom to do something, but that freedom’s consequences are if only academic, is it of any use, to devote valuable time of a very few active cooperators?
October 29th, 2012 at 12:17
The question of whether formation of unregistered co-opeartive societies are possible has been resolved and answered in affirmative after a lenghty time consuming debte. True, these Co-operatives will be unincorporated bodies. Before 97th CAA this was not the position. “Unregistered co-opearative societies” were illegal. There is prohibition clause in almost all State acts to the effect that no person other than a registered co-operative society is permitted to use the word “Co-opeartive” with its name. Vide sec.112 of Karnataka CS act., Sec.94 of Kerala CS act. Therefore what I understand is that 97th CAA permits the formation of Co-operative societies which need not get registred and this societies need not follow the provisions of state law. In Andra Pradesh there are 2 state co-operative laws. One of 1964 and the other of 1995. The co-operative societies coming under 1964Act need not abide with 1995law. 1995 Law is more liberal. Co-operative societies are given a lot of powers under 1995 law which 1964 Law do not permit. So co-opeartive societies with no regulation is possible and is not fictional at all. What else could be the result of amendment in Art.19(1)(C)? I reiterate.
I could not understand the logic behind the opinion that formation of such societies looks like fiction while admitting that unlicenced co-operatives are not illegal.
October 29th, 2012 at 14:03
I am glad the Topic is open with lot of new info by RKV. Worth a lot of thinking. Now RKV has revealed what was up his sleeves. Lets ponder for a while.
October 29th, 2012 at 20:57
I am also very happy in getting an opportunity to provide some insights to resolve some misconceptions and querries such as “Will some one explain what difference it will make to people who are given one more Fundamental Right to form Cooperatives. There was no prohibition so far any way. This will help people of India to reap benefit of this new right sooner than otherwise”.
October 30th, 2012 at 10:07
What about Audit of cooperative society? What you mean by proffessional audit that mentioned in CAA?
October 30th, 2012 at 13:53
surendra (October 28)
Following may inspire to have a rethink.
“Sun, May 08 2011. 11 50 PM IST
Mumbai: The Reserve Bank of India (RBI) has dismissed the board of Maharashtra State Cooperative Bank Ltd (MSC) and appointed two state government officials as administrators to run the bank, which is celebrating its centenary year.”
To read more cut paste following link on IE
http://www.livemint.com/Politics/GSrHywfnohoGyZC3PmLffL/RBI-dissolves-Maharashtra-state-coop-bank-board.html
October 30th, 2012 at 14:14
97th CAA does not mention professional audit but audit by auditors or audit firms. State shall prescribe the qualification and experience of such persons and shall prepare a panel of them from which the general body is to appoint the auditor.
Audit firms registerd under ICAI are teams of Chartered Accountants who are members of ICAI.Institute of Chartered Accountants of India, a statutory body set up in 1949, sets the audit standards and its primary function is to regulate the profession of Chartered Accountants and prescribe accounting standards. If these audit firms are entrusted with the audit of co-operatives which audit standard will they follow? Co-operative or Corporate? Which accounting standard will they insist upon?
Anyway the fate of Departmental officers is at stake.
October 30th, 2012 at 14:24
MSCB deserves it. What else can RBI do to a Bank which spent lakhs to buy additional cars to its Board members and for getting fancy numbers for these cars? How was the bulk of deposits received by the Asia’s largest Co-operative bank spent out? Reportedly crores of rupees went into coffers of sugarcane lobbies.
The Regulators are to be more vigilent in such cases.
October 30th, 2012 at 17:18
The State can bifurcate the audit system of the cooperative sector into two. One is cooperative audit and another is corporate audit. It can establish a State owned corporation comprised all departmental auditors and give a name as “Audit Firm” for the purpose of CAA. This firm can be entrusted with the audit of non banking cooperatives and primary credit cooperatives. The Corporate audit firms can be em-paneled to audit banking cooperatives excluding primary credit societies. Thus, the States can retain the departmental auditors in the same profession.
November 11th, 2012 at 12:51
For RKV/Meghavat
In the following News item you should be able to see the benefit of RBI Control on Coop Banks. Incidentally this story is of NCP (Sharad Pawar ) controlled State Cooperative Bank (No less than Maharashtra State).
TOI MUMBAI 11 11 12
18 CRORE PROFIT
State co-op bank back in black
Sandeep Ashar TNN
Mumbai: A year after the Reserve Bank of India (RBI) dismissed the board of the Maharashtra State Cooperative Bank (MSCB) and appointed two state officials to run the bank citing high negative net worth, the apex bank has scripted a turnaround.
The MSCB has wiped out its losses and has collected a net profit of nearly Rs 18 crore. A National Bank for Agriculture and Rural Development audit of the bank’s 2009-10 balance sheet had revealed that its net worth had turned negative by Rs 140 crore on account of money set aside or provided for bad loans.
In May last year, the RBI dissolved the bank’s directorial board and appointed administrators to monitor the running of the bank. The central bank appointed professional valuators for sugar factories under liquidation.
Promod Karnad, managing director, MSCB, attributed profit making to due diligence taken during valuation and the decision to not issue loans without government guarantee to factories with high negative net worth. The accumulated loss came down to Rs 77 crore by March 2012. It has now been wiped out and a profit of Rs 18 crore has been recorded.
Following the RBI’s dictate to dismiss the board, the CM was criticized by the NCP, which controlled the board, for appointing administrators.
If RBI did not act?
November 11th, 2012 at 14:47
Being a guardian of financial sector RBI has performed its role effectively and efficiently without which MSCB would had lost the status of a Bank. RBI deserves all appreciations.
November 11th, 2012 at 21:59
If that is so why cannot we consider entrusting management of all the co-operative societies with the officials of RBI.
Going through financials of MSCB it is interesting to note that the business has not increased during the year 2011-12. Then how could they manage to make a profit without increasing business. Please analyse the balance sheet of MSCB from 2007-08 to 2011-12. You can see that they made profit up to 31-03-2010. What made a land sliding accumulated loss of 251.91 crores in a single year i.e. 20010-11? Is it not because of an additional provisioning to the tune of 1078- crores in that year? Barring this reserves was not the MSCB working on profit that year also. Where was the RBI/Nabard till a situation arose which necessitated to provide for such a huge reserves and provisions in a single year?
I do not think RBI would claim the present position as an achievement. Any way we shall analyse the profit& loss account for 2011-12 before arriving to a conclusion.
November 12th, 2012 at 09:39
RBI is a regulator and has a huge role to play, And if their officials starts working a new regulator will have to be appointed. So lets not disturb present arrangement.
November 13th, 2012 at 23:07
Here below an amended provision in compliance to 97th CAA by Himachal Pradesh CS Act, 2012;
96. Prohibition of the use of the word ‘cooperative’:— (1) Any person other than a cooperative society carrying on business under any name of or title of which the word ‘Co-operative’ or its equivalent in any Indian or foreign language is part, without the sanction of the Government shall be punishable with imprisonment for a term which may extend to six months or fine which may extend to ten thousand rupees or both and in case of a continuing breach with a further fine which may extend to one thousand rupees for every day during which breach is continued after conviction for the first such breach.
Does it mean that the registration of cooperative society is compulsory? If so what about amended Art. 19(1)(C)?
November 14th, 2012 at 13:33
Good Research point.
Some further thoughts.
There are two views with in cooperators on http://www.indiancooperative.com even today.
One of the two is that 19(1)(c) confers a fundamental right to form a cooperative and hence it need not be adversely affected by any law concerning registration.
The other view is that such an “Unregistered Co-operative” does not enjoy a status of a body corporate and benefits of a body corporate are not accessible to such cooperatives.
For example Section 36 of the M. C. S. Act 1960 reads as under:
“The registration of a society shall render it a body corporate by the name under which it is registered, with perpetual succession and a common seal, and with power to acquire, hold and dispose of property, to enter into contracts, to institute and defend suits and other legal proceedings and to do all such things as are necessary for the purpose for which it is constituted.”
The Model Bye law 2009 issued by the Commissioner and Registrar of Cooperative Societies Maharashtra State, Pune for its registration as those of the Cooperative Housing Societies proposed to be registered under The M C S Act 1961 has a Bye Law No 73 reading as under: (a copy of the Section 36).
73. The registration of the Society shall render it a body corporate by the name under which it is registered, with perpetual succession and common seal and with power to acquire, hold and dispose off the property, to enter into contracts and other legal proceedings and to do all such things as are necessary for which it is constituted.
Conversely a Society formed by virtue of fundamental right conferred by Article 19(a)(c) s an registered cooperative society shall not be considered a body corporate and shall be devoid of a status of a perpetual succession with no common seal and without powers to acquire, hold and dispose off property, to enter into contracts, to institute and defend suits and other legal proceedings and to do any such things as are necessary for the purpose for which it is constituted.”
The fundamental right in itself does not extend to forming cooperative society as “a body corporate” But this may itself be a contentious issue. If it does not, then in that itself the fundamental right stands abrogated. Debatable.
November 14th, 2012 at 20:26
I recall my opinion in this tag on October 28th, 2012 at 18:45
The unregistered cooperative societies are not considered illegal as per Art. 19(1)(C) however, cooperative societies registered under the State/Central law are entitled to be body corporate” which was considered fair by debaters.
Now, the opinion itself proved incorrect by the HPCS Act which prohibits use of word “Cooperative” without the sanction of the Government and it is clear that formation of unregistered cooperative societies without prior sanction of the Government is illegal and attracts penal provision. If at all this provision is considered inconsistent, it is not hit by Art. 243ZT. Is it not the amended Art. 19(1)(C) has no effect on cooperative societies other than mere addition of words “cooperative societies”?
November 14th, 2012 at 20:56
Further, in my opinion, the “cooperative” is only a form of ownership. The adjective can be prefixed with any legal activity (Industry, Business, Service etc.) only to denote the nature of ownership and management. As such, it is apt to enact cooperative laws on the lines of Partnership Act or provision for Proprietorship without any political or bureaucratic frills. Thus, we can avoid a huge expenditure on federal cooperatives which are presently a feeding and surviving ground for unemployed politicians.
November 16th, 2012 at 21:14
This amendment will affect the functioning of the societies adversily.Almost all societies will be a centre for corruption and local peoples money will be not safe in the societies without the control of State governments and Registrar of co-operatives.
November 17th, 2012 at 08:27
In most of the States entire RCS system is proved corrupt beyond any doubt which Sh Pawar has openly admitted the exploitation cooperatively before the world without any oppose by fellow politicians. Should we still accept that State Governments & RCS safeguard the public money? I have no hopes to trace even a single RKV at present in any State Government.
November 17th, 2012 at 10:33
For fears expressed by RADHA KRISHNAN.K on November 16th, 2012 at 21:14
that almost all societies will be centres of corruption and local peoples’ money will be not safe in the societies (without the control of State governments and Registrar of co-operatives} are not wholly unfonded. If majrity members are convinced that the management was not functioning in the interest of the Society and needed to be replaced, there is no sytem of mid term elections like what we have for Parliament and State Assemblies. There has been a wide spread allegations that Registrar’s powers threatened democratic functioning. Now when the corrective measures have been initiated, we start talking of Registrar’s Control over Committtes. The sole reason why we have this confusion is the failure of the most important principle of Cooperatuves Viz
“2nd Principle: Democratic member Control
Cooperatives are democratic organizations controlled by their members, who actively participate in setting their policies and making decisions. Men and women serving as elected representatives are accountable to the membership. In primary cooperatives members have equal voting rights (one member, one vote) and cooperatives at other levels are organized in a democratic manner.”
Cooperatives are supposed to be controlled by their members and Men and women serving as elected representatives are accountable to the membership.(NOT TO THE STATE OR REGISTRAR). What we need to debate is how to live by this principle in actual practice. Corruption has become a naotional vice so cooperatives can not be an exception.Fighting corruption in governance has an unform source of remedy the “people themselves” Number of Corrupt is definitely much lower than non-coorupt. How to harnesh?
November 19th, 2012 at 14:54
This post is a reply for the comment of Mr.Megavath- “I have no hopes to trace even a single RKV at present in any State Government.”
You are mistaken at least in the case of State of Kerala where you can find out myself and a lot of other RKVs (who were/are in government service) committed to safeguard the interest of all stake holders of co-operative sector including depositors. Department of co-operation is very much vigilant towards any misappropriation or misuse of money. The co-operative leadership of Kerala irrespective of party politics are from reputed clan of politicians with clean image. They would not allow to misuse a single penny of public money. If you can believe take my word that the Government Department and the co-operative movement in the state is going hand in hand in the broader interest of Co-operative movement. “Corruption” is alien to the co-operatives in Kerala. Want to know more about the activities of this selfless co-operators?
I cannot say what the situation in the other States is.
November 19th, 2012 at 16:31
RKV
YOUR WORDS ARE MUSIC TO THE EARS.
THERE ARE HOPES AND HOPES IN THIS WORDS
SOME THING LKE THIS IS I HEARD FOR THE FIRST TIME
KERALA CAN SHOW THE WAY FORWARD
PLEASE KEEP POSTING STORIES ON GOOD GOVERNANCE IN KERALA COOPERATIVES
MILLIONS OF THANKS RKV
December 5th, 2012 at 09:51
Kindly ponder over the following;
Art. 243ZK (2) The superintendence, direction and control of the preparation of electoral rolls for, and the conduct of, all elections to a co-operative society shall vest in such an authority or body, as may be provided by the Legislature of a State, by law:
The board may be superseded or kept under suspension in case;
Art. 243ZL (1)(v) the authority or body as provided by the Legislature of a State, by law, under clause (2) of article 243ZK, has failed to conduct elections in accordance with the provisions of the State Act.
As such, the authority that may be provided by the Legislature of a State, by law can not be other than the Board. In case such authority is other than the Board and it fails to conduct elections on time for whatever the reason, and on account of which the Board is superseded for no fault of it, it is unconstitutional at gross.
Therefore, in my opinion, the election authority for every cooperative should be the respective Boards and not ECI or SECs or any such separate authorities.
December 5th, 2012 at 10:17
Very good observation. Perhaps a provision to continue the existing Committee till such time the Election Authrity organise elections could vindicate the dichotomy. In case of Cooperative Housing Societies registered under Maharshtra bye laws provides for such continuation when the entire commitee wanted to call it a day.
December 5th, 2012 at 11:10
Article 243 ZK (2) cannot be interpreted in such a manner in as much as it states that ” the conduct of all elections to a co-operative society shall vest in such an authority or body, as may be provided by the Legislature of a State, by law”. So it is imperative that the Law should specify the authority or Board.to conduct the election not only to the Board of Directors but also to the office bearers. In no way it can be interpreted that the Board shall be that authority.
Then the question is about the relevance of Art. 243ZL(1)(v). Situations may arise resulting in the failure of conducting election by the authority or Board for various reasons. Interference of court, stoppage of election process by riot, insufficient nomination of candidates etc. may lead to a situation creating a vacuum in the Board. In such cases there is no other way but to supersede the existing committee and appoint an administrator in its place. Most state laws have such provision in the co-operative societies act for a stop gap arrangement in such situations.
December 5th, 2012 at 15:18
1. We have to look for definitio of “Authority” or “Body” to conclusively hold the view if the Board of the Cooperative Society can be authorised by the State Legislature to handle elections.
2. There is an equally important position one can envisage where the elections of new Borad in unaided cooperatives are not held in time for it to take over from outging Board and no provision to appoint an administrtor is in place. Any suggestions?
December 5th, 2012 at 20:04
1. As there are no definitions for “authority” or “body” in the CAA (it is not possible and is unnecessary to define each and every concept when it is expressly meant as per context) it is safe to expound that Art.243 ZK(2) refers to any arrangement as provided by the legislature of State. It can be a ” co-operative election commission” or any “Body” constituted for the purpose. No Co-operative Act will prescribe the Board as the authority or body for conducting elections as that will result in chaos and other practical difficulties.
2. When election could not be held in time before the expiry of the term of a Board for whatever reason then it will be a position envisaged in Art.243ZL(1)(v). This need not be a fault of existing Board or Authority/Body. Practically there will not be a Board after the expiry of the term of Board in power.This situation warrants a remedy and that is what is provided in Art.243ZL(1)(v). This provision is applicable in the case of aided as well as unaided co-operatives. This is to prevent the board in office to continue in power after the expiry of their term. More over Art.243 ZK(1) insists that “the election of a board shall be conducted before the expiry of the term of the board so as to ensure that the newly elected members of the board assume office immediately on the expiry of the term of the office of members of the outgoing board.
December 6th, 2012 at 10:53
Out of Indian cooperative experience, “supersede” is proved to be an instrument available to bureaucracy and politicians to interfere with the affairs of the cooperatives for personal gains. Such malefic intentions of bureaucracy is well protected by Indian laws under the pretext of “acted in good faith” clause. If the respective Boards are made election authorities with certain guidelines as per the proviso of Art. 243ZK(2), the violations if any can be brought under the purview of Art. 243ZQ. By doing so, the benefits are more as well as the overall objective of 97th CAA will be fulfilled as far as elections are concerned, “Insulate cooperatives against political and bureaucratic interference”.
1. Easy for preparing electoral rolls of an individual cooperative
2. Easy for conduct of all elections of an individual cooperative
3. Election authority is made accountable for any violations in election process
4. Unaided or unassisted cooperatives can not take shelter under non-supersede clause
5. En-mass election process can be avoided, further non conduct of elections for various reasons can be avoided.
December 6th, 2012 at 11:12
Further, the Board of the Cooperative Society has been authorised by the State Legislature to handle elections under Kar CS Act as below;
39A. Conduct of elections.- (1) Every general election of members of the Committee other than the members of the first committee of a co-operative society after its registration or any casual vacancy shall be held subject to the superintendence, direction and control of the Registrar.
The autonomy available to conduct election of first committee can be made applicable to all the elections of a cooperative society. It will be more appropriate and well compliant to 97th CAA.
December 6th, 2012 at 13:58
This matter had been discussed at length by Standing committee on agriculture in their report on 111st CAB in paras 2.17 to 2.21 and had arrived in a logical conclusion.
“2.17 The power to conduct elections Clause 243ZK(2) for co-operative societies is proposed to be vested in an authority or body as may be provided by the Legislature of a State by Law and not with the Board of a co-operative society.”
2.21 ……………… The Committee, therefore, recommend that a specialised agency on the lines of the Election Commission be set-up and entrusted the task of conducting elections in co-operatives in a timely, free and impartial manner. In their considered view this step would go a long way in ensuring full democratization of the co-operative sector.”
Once the bill has become Law it will be worthwhile to discuss on its implications rather than proposing amendments to Constitution.
December 6th, 2012 at 18:07
So, it is a well cremated issue. Thanks for clarification.
December 6th, 2012 at 19:47
RKV’s point of view of December 5 analysed:
1. A Board of directors of Cooperative Society is also called a “body” as per the constitution itself, as can be seen in the Article 243ZH(b) which reads as “board” means the board of directors or the governing BODY of a co-operative society, by whatever name called, to which the direction and control of the management of the affairs of a society is entrusted to;
[Responsibility of elections through a Returning Officer can also be entrusted to this governing body]
2. The General Clauses Act defines authority in the sense of a local authority as under.
“Local authority” shall mean a municipal committee, district board, body of port, commissioners, or other authority legally entitled to or entrusted by the Government with the control or management of municipal or local fund”
If Society Boards are entrusted with the duty of elections under a State Law [as distinguished from a duty cast under the Bye Laws being what it is at present T Lest in CHS in Maharshtra], they become the designated “body” by the state.
3. The second Proviso to 243ZL. (/) is in relation to 1 or more of the 5 reasons for which necessity of superseding the board of a cooperative society may arise and in that the boards of unaided societies are declared totally untouchable by that Proviso inserted immediately after Clause (v) in 243ZL(1). This proviso can in no way be read down to mean that upon expiry of the board’s term, if a new board has not been elected administrator steps in automatically, even in unaided societies.
4. There is nothing in 97CAA to interpret it that way.If the State Law makes an express provision it may not be in contradiction to 2nd Proviso to Article 243ZL(1) as what is prohibited is supersession of the Board in unaided societies before the completion of the tenure.
5. As a matter of fact 243Zl(1)(V) is a bit confusing in the sense that upon failure of the election authority to elect new board in time, as at the end of the tenure the board will not be there in power so how the question of suspension will arise..
6. Upon expiry of the term in defiance of the Article 243ZK. (/) would result in “no board” after expiry of the term of 5 years. It is not the same as supersession. Administrator is envisaged only upon supersession.
7. Sub-section 2 of Article 24ZL envisages appointment of administrator in cases of suspension of the Boards as permissible.
8. Absence of board on account of failure to hold elections in time does not automatically come under administrator.
9. Superintendence, direction and control of the preparation of electoral rolls for, and the conduct of, all elections to a co-operative society is a herculean task and entrusting it State level authority means engaging bureaucracy on a massive scale at its usual perils.
10. The wisdom lies in keeping the onus on the boards with appropriate intervening powers to State Registrar to ensure holding elections in case of failure of the Board as is the case now. They do not act at present but that can not be remedied by Constitutional amendment..
11. I wish failure to hold elections was listed in Article 243Zq(2) as a punishable offence.
12. The Registrar should take action against erring boards and that is where the failure is. I know of a board of society overshooting its tenure with no action from the State Machinery.
December 6th, 2012 at 23:02
I agree that conditions for supersession or suspension of Board mentioned as (i) to (v) in Article 243ZL(1) are not applicable in the case of unaided co-operative societies. Then what is the recourse to be adopted if these situations arise in such co-operatives? Cannot be supersession or suspension. Situation may arise in an unaided co-operative society in which the term of Board expires and a new board could not be constituted or an elected board was prevented from taking charge or there may be a stalemate. Since Constitution does not prescribe a solution it is safe to assume that provisions (including appointment of Administrator or special officer) for a stop gap arrangement should be incorporated in State Law to overcome such situation. What the constitution prevents is supersession and suspension of Board of unaided co-operatives. Constitution does not limit the appointment of administrator in such cases only.
Regarding authority or Body for conducting election, as Art.243 ZK (2) empowers State legislature to make provisions in Law let them decide which Body, Board or EC,should conduct the elections in co-operative societies.
December 7th, 2012 at 01:34
I am unable to find Articles 243ZH to 243ZT anywhere. Please help me to get these new articles of our constitution.
December 7th, 2012 at 08:43
Log into http://www.sahakari.net —- orders- to get the Government gazette notification
December 7th, 2012 at 10:57
Yes, eventually they will decide as to who conducts elections in unaided cooperatives like reservations in unaided educational institutions!!!. In what way they hold this right when they contribute nothing? We should nevertheless insist society’s own Boards should themselves hold elections and in case of failure what is the Federal Society therefor? They should come out of internal fight and help member cooperatives to run them better. This in fact the edifice of cooperation. Help themselves in mutual interest. Let the State be a third force to step in where even federal society fails.
December 7th, 2012 at 22:46
See the provision in old CAB 2006 on this matter:-
“243ZK (2)The superintendence, direction and control of the preparation of electoral rolls for, and the conduct of, all elections to a co-operative society shall vest in the general body of the co-operative society: ”
Also see what the comment of Standing committee (14th Lok sabha) on the proposed Article was :-
“The Committee feel that though the cooperative societies are not part of local governance like panchyati raj institutions and municipalities and should be allowed to conduct their own elections, however, they are of the opinion that major ill of cooperative sector is their election process. They, therefore, recommend that the matter should be further examined so as to have free, fair, impartial and timely elections of the cooperative societies conducted by the State Election Commission or any other appropriate independent body.”
Opinion of Department of Agriculture to finalise the issue was :-
“Under the Multi-State Co-operative Societies Act, the responsibility to conduct the election is that of the board of directors. To make the cooperatives member driven organizations the concept of conduct of election by a cooperative itself conforming to principle of democratic management. However, in practice, as observed by the Committee the election process is a major ill of the cooperative sector. The elections are not held regularly or the election process is vitiated for one reason or another. Moreover, the magnitude of the problem has to be examined in view of the large spread of primary cooperative societies in the states. Most of these societies are financially weak and many of them even may not bear the expenses if the elections are held by the State Election Commission on pattern of the panchayat raj institution. It is, therefore, proposed that accepting the recommendation of the Committee elections may be held by an authority as may be provided by the State Legislature in law.”
Standing committee (15th Lok sabha) also subscribed the above views and recommended revision of the Article in its present form. Therefore who are we to suggest otherwise?
December 8th, 2012 at 12:44
Himachal CS Act, 2012 has a provision as below;
(1-A) “apex society” means a secondary society of which at least ten co-operative societies are member and the area of operation of which extends to the whole of the territory of Himachal Pradesh, or even beyond;
Is it Constitutional?
December 8th, 2012 at 13:25
DEAR RKV
WE ARE ALL MAKING SUGGESTIONS AS PER CONSTITUTION:
ARTICLE 19. (1) All citizens shall have the right—
(a) to freedom of speech and expression;
NOT TO LISTEN IS GOI’S PREROGATIVE
December 8th, 2012 at 13:57
First we should study before we opine.
Article 19(4) put limitation on citizens’ right as
” Nothing in sub-clause (c) of the said clause shall affect the operation of any existing law in so far as it imposes, or prevent the State from making any law imposing, in the interests of the sovereignty and integrity of India or public order or morality, reasonable restrictions on the exercise of the right conferred by the said sub-clause.”
Does not morality counts?
December 8th, 2012 at 14:19
Definition for “Apex Society” is provided in the proposed HP Co-operative Societies Amendment Bill 2012. It is yet to be come into Act. Neither Sec.2 of MSCS Act which deals with application of the Act nor the provisions of constitution prevent the concept of such societies.
December 8th, 2012 at 14:31
A doubt on a proviso of Article 243ZL(1) is once again put forward for expert opinion of Co-operators and legal experts.
What is really meant by “Provided also that in case of a co-operative society carrying on the business of
banking, the provisions of the Banking Regulation Act, 1949 shall also apply:
Provided also that in case of a co-operative society, other than a multi-State co-operative society, carrying on the business of banking, the provisions of this clause shall have the effect as if for the words “six months”, the words “one year” had been substituted.”
The proviso appears in the context of supersession of Board of Directors of a co-operative Society. What can be the intention of law makers?
What I expect is the legal aspects and not suggestions.
December 8th, 2012 at 16:03
It’s a liberal use of “also” otherwise there is more than what its plain meaning is.
December 8th, 2012 at 16:06
Meghavat seems to be concerned about the State law on cooperatives crossing the border of the State. Your worries not are not unfounded. May be many more States will join HP so lets wait and see.
December 8th, 2012 at 16:11
Which provisions of BR act are referred in the Article?
December 8th, 2012 at 16:27
I do not feel any illegality or inconsistency with Constitution in the proposed definition of apex society in HP Act. If any states follow suit what is to be worried about?
December 9th, 2012 at 08:16
My concern is exactly same as what Naik Sab has observed and RKV felt there is nothing wrong. In that case the definition, isn’t conflicting with Sec. 2 “It extends to the whole of Himachal Pradesh”? and what about an apex or any society which extends its operations beyond that?
December 9th, 2012 at 10:50
One more question is whether that part of Apex Society’s which extends beyond Himachal say Delhi, whther that will be governed by Delhi Coppertaives Act?
December 9th, 2012 at 21:06
There are several co-operative societies registered under state Acts having business in other states. ” Co-optex” of Tamil nadu is one among these. I do not summarily reject a contention that such co-operative may create legal problems as feared above but so far such litigations are unheard. In the absence of specific provision which prevent such a definition why should we ponder on this issue? Let the “Apex societies” of HP enrol member co-operatives from anywhere in India which are willing to affiliate with it. Was it not the spirit of MOU under central package based on Vaidyanathan Committee recommendation which states that ” 9.6. allowing freedom of entry and exit for any unit of CCS at any level with no mandated restrictions of geographical boundaries for its operations;”
December 17th, 2012 at 10:18
Dear Sir,
According, 97th amendment act, 2011, is state to maintain independent auditors panel.
Whether state has power to make law to carry out audit through its audit department who are working in audit department on the direction of Directorate of Co-operative Audit.
December 17th, 2012 at 12:01
A very genuine question amidst a junk of philosophical arguments. Thank you Mr.Basavaraj. What we should discuss is such issues. Let me express my opinion on the question raised by you which is very vital at this point of time.
Governments intention by incorporation of Article 243ZM as revealed by “statement of objectives ” was independent professional audit. But for unknown reason no words “independent” and ‘professional” were seen included in the Article. Therefore the auditors panel need not be independent. This means that the auditors of the panel may be Department auditors who are under the control of Director of Co-operative audit. Invariably state has power to make law to carry out audit through its audit department.
One who goes through the background papers of Constitution Amendment Bill of 2006 and 2009 it can be easily find out that the provisions of Article 243 ZM were drafted in view of curbing the tendencies of appointment of auditors by General body without any stipulation of eligibility and experience. Several State co-operative Societies act permits such appointments.
December 17th, 2012 at 18:48
Proviso to Article 243ZM reads thus:
“Provided that such auditors or auditing firms shall be appointed from a panel approved by a State Government or an authority authorized by the State Government in this behalf.”
Term “Independent” in the context of any audit means the auditor is not under any direct or indirect control/influence of the “auditee” i.e. the entity being audited by an auditor.
If a Chartered accountant being otherwise eligible to conduct audit of a Society and is on the panel, he is still not independent from the “auditee” the society of which he is a member also responsible to make his appointment.
As the State has to maintain a panel Departmental auditors finding their names on such panel seem some what difficult as the Panel auditors are independent of a boss and are directly responsible for their conduct. In that Departmental audit is ruled out.
December 17th, 2012 at 20:08
97th CAA is intended to insulate the cooperatives from “avoidable political and bureaucratic interference”. Hence, instead of avoiding, finding out the ways and means of technical loopholes to continue Government employees for encroaching Cooperative employment further is not desirable. Thus, any workforce including “Registrar” under 97th CAA need not be a Government employee or body. As such, propounding an idea of audit by a Government department under Art. 243ZM is beyond one’s imagination.
December 17th, 2012 at 21:11
Initially the proposal for 243 ZM (3) was as:-
(3) Every co-operative society shall cause to be audited by an auditor referred to in clause (2) appointed by the general body of the co-operative society. [106th Const. Amend. Bill 2006]
Report of standing committee reviewed the deficiency in the above proposal as:-
“The Committee observed that the spirit of an independent audit may be diluted if the cooperative society being audited has a hand in the choice and appointment of its auditors. There may be chances that although officially the general body will appoint the auditors, it is the Board of Directors of the concerned cooperative society, whose choice will actually prevail to the detriment of auditing ethics, given the reality that most of the members of the cooperative society are neither deeply involved nor have the time and information required to make the best choice. The independent audit can be ensured only if audit is carried out by the auditor from the government approved panel of auditors / audit firms or through a separate government organization say for example Directorate of Audit. The Committee are of the opinion that the Director of Cooperative Audit should be made answerable to the State Legislature. [32nd report of standing committee of Agriculture]
Views of the Ministry of Department of Agriculture and Co-operation on the above finding were as:-
“The Committee has recommended that in order to ensure independent and impartial audit, the auditor should be appointed from the Government approved panel or through a separate Government organization say Directorate of Audit.
Accepting the recommendation of the Committee, it is proposed to provide a provision in clause 243 ZM to the effect that the auditor shall be appointed out of a panel approved by the Government/Registrar.
Thus came the revised clause of Article 243 ZM as:-
(3) Every cooperative society shall cause to be audited by an auditor or auditing firms referred to in clause (2) appointed by the general body of the cooperative society. Provided that such auditors or auditing firms shall be appointed from a panel approved by a State Government or an authority authorized by the State Government in this behalf.
Now it is the privilege of everybody to imagine and interpret/misinterpret on who should conduct the audit of co-operative societies and on the relevance of Directorate of Co-operative Audit.
December 17th, 2012 at 21:45
“The independent audit can be ensured only if audit is carried out by the auditor from the government approved panel of auditors/audit firms or through a separate government organisation say for example Directorate of
Cooperative Audit. The Committee are of the opinion that the Director of Co-operative Audit should be made answerable to the State Legislature”.
In the above statement, “a separate government organisation say for example Directorate of Cooperative Audit” refers to “an authority authorised by the State Government in this behalf” under Proviso of Art. 243ZM. Nothing more than this.
December 17th, 2012 at 22:11
!!!
December 17th, 2012 at 22:57
OK. So we shall rule out the ideas that audit by a Government department under Art. 243ZM is beyond one’s imagination and that Departmental audit is ruled out.
December 18th, 2012 at 12:51
Dear Sir,
Sec.243ZM sub-section (2) : The Legislature of a state shall, by law, lay down the minimum qualification and experience of auditors and auditing firms that shall be eligible for auditing accounts of the co-operative societies.
The words appearing in the above section – “auditors and auditing firms” – whether this mean that auditors and auditing firms should be one or combination of same persons like chartered accountants and chartered accountant firms. as they used the word “and”.
December 18th, 2012 at 13:38
Chartered Accountants are popularly known as “Auditors” The C As carry out auditing practice as individual or in a professional name approved by and registered with, the Institute of Chartered Accountants of India. This name is popularly referred to as “auditing firm” which may or may not have more than 1 member.
While drafting a constitution provision it would have been better if in place of popular terms as aforesaid a professional term was used. For instance in case of “Auditors” Chartered Accountant(s) in practice having a prescribed experience” could have been used.
December 18th, 2012 at 21:55
243 ZM(3) use the word “or ” i.e Every co-operative society shall cause to be audited by an auditor or auditing
firms. There are a variety of auditors in India other than Chartered Accountants and CA firms. CAG is one of them. Local fund auditors, Auditors under Accountant Generals , Tax auditors etc. are other examples. So “auditors of co-operative societies” as well as auditors of associations and unions are not absurd concepts. There are thousands of “audit firms” other than the CA firms in India.
Regarding CA firms a single CA cannot practice as a firm. Firm means a partnership firm. A single person cannot form a partnership firm. Vide sub section (2) of section 2 of THE CHARTERED ACCOUNTANTS ACT, 1949 and explanation thereunder.
There is a news item regarding CA firms:-
PTI Sep 6, 2012, 05.12PM IST
NEW DELHI: The government today said 316 companies and 73 audit firms have been found guilty for violating accounting principles and other financial irregularities in the last three years.
“During the last three years, 316 companies and 73 audit firms were found guilty of violation of accounting principles and other financial irregularties for non-compliance of disclosure norms,” Minister of State in Corporate Affairs R P N Singh informed the Lok Sabha.
He further said prosecutions have been filed against such companies and audit firms under the provisions of the Companies Act 1956 for such violations.
Out of the 171 Indian CA firms who have reported to the the HPC, 36 have submitted only partial information, the Minister said.
December 19th, 2012 at 05:01
rticles 243ZK to 243ZS will be given in next part, that is next letter.
December 26th, 2012 at 18:25
In the context of supersession of Board of Directors of co-operative societies proviso of Article 243ZL(1) states that “Provided also that in case of a co-operative society carrying on the business of banking, the provisions of the Banking Regulation Act, 1949 shall also apply:
Provided also that in case of a co-operative society, other than a multi-State co-operative society, carrying on the business of banking, the provisions of this clause shall have the effect as if for the words “six months”, the words “one year” had been substituted.”
What is the legal relevance of this proviso when there is no provision in the Banking Regulation Act for the supersession of Board of directors of a Banking company/Co-operative society carrying on the banking business?
I think this proviso was inserted in anticipation of inclusion of Sec.36ACA in the Banking Law Amendment bill which was introduced in lok sabha earlier in 2005 i.e. before introducing 106th CA bill of 2006,the predecessor of 97th CAA.
January 7th, 2013 at 14:07
http://innlivenews.in/2012/12/05/two-phase-cooperative-elections-on-jan-21-25/
AP seems to comply with mid FEB 2013 target to comply with the constitutional amendment. No signs of elections in TamilNadu yet.
Anyone has any idea?
January 16th, 2013 at 20:10
I once again put forth a serious point for discussion and opinion of co-operative intelligentsia on the proviso of
Article 243ZL(1) which states that “Provided also that in case of a co-operative society carrying on the business of banking, the provisions of the Banking Regulation Act, 1949 shall also apply:” What sense does this proviso make?
January 17th, 2013 at 09:12
We have already discussed the matter in length. However, to simplify, any cooperative society carrying on the business of “Banking” as defined in B R Act attracts all provisions of B R Act (AACS). Sec. 3 Societies are not supposed to carry on banking business per se (Inapplicability clause does not empower free entry). As such, the provisions of B R Act (AACS) are also applicable to Sec. 3 societies if they carry on the business of “Banking” as defined in B R Act.
January 17th, 2013 at 21:34
Sorry to say that the proviso 3 and 4 under Article 243ZL have some other meaning. I expect the response of somebody who is ready to analyse the proviso in its entirety and in its real meaning. Definitely the purpose of proviso 3 and 4 under Article 243ZL(1) is something else than what was interpreted above.
January 18th, 2013 at 09:50
My opinion on proviso 4 is;
1. No supersede for unassisted banks.
2. Maximum period of supersede for assisted multi-sate banks is six months and others one year.
January 18th, 2013 at 23:48
Provisos 3 and 4 are interrelated. Both being limbs of Article 243ZL(1) deals with supersession of board of directors. Therefore proviso 3 relates to a situation of supersession of the BoD of Co-operative societies having banking business. This proviso speaks of the relevant provisions of BR act connected with supersession and not the entire BR act or applicability of BR act to co-operatives as a whole. Some web sites have reproduced this proviso without the words “provided that”. This distortion make the sentence as “in case of a co-operative society carrying on the business of banking, the provisions of the Banking Regulation Act, 1949 shall apply” which makes the intention of the proviso topsy turvy.
I am very much disappointed and surprised to see how much sluggish our co-operators are in interpreting legal matters.
January 19th, 2013 at 09:29
Probably, the co-operators may be interested to keep the cooperative banking activity separate from the filth of RCS and finding every possible means to get rid of. Henceforth, the cooperative legislations are constitutionally backed and politicians & bureaucrats will have an axe on their whims and fancies to molest cooperative sector further. So, co-operators particularly from banking side are definitely putting all efforts to fight against RCS nuisance. As such, co-operators can not be treated as sluggish or misinterpreting the law. Once banking cooperatives show the way others may follow suit.
Though the deadline is fast approaching, no State has brought amendment to cooperative law in consistent with 97th CAA so far. The reason for delay may be seen as the existing laws are highly inconsistent and bureaucrats are not ready to give up their uninterrupted enjoyment.
January 19th, 2013 at 10:43
Instead, I am now compelled to use some extreme words. Co-operative leaders and most of the members of parliament who participated in the discussion of 111th CAB are not literate enough to grasp the real meaning of the provisions of the bill. So is the case of so called intelligentsia or academicians of Co-operative educational institutions such as VAMNICOM, ICM, ACSTI etc.
This is not the case of 97th CAA only but the Banking Law amendment act 2012 also. Is this the way the whole matters are being decided in India? Where is our nation heading to?
Without intelligent co-operators how can the movement protect itself from politicians & bureaucrats. How can the nation prosper without knowledgeable parliament members?
January 19th, 2013 at 10:50
I request any of the experts or academicians or co-operators or advocates or faculties or MPs or anybody to please let the co-operative movement know the real idea or purpose behind proviso 3 of Article ZL(1).
January 24th, 2013 at 02:02
One more vital observation;
243ZL. (1) Notwithstanding anything contained in any law for the time being in force, no board shall be superseded or kept under suspension for a period exceeding six months.
(2) In case of supersession of a board, the administrator appointed to manage the affairs of such co-operative society shall arrange for conduct of elections within the period specified in clause (1) and handover the management to the elected board.
In the above Article, there are two separate situations; one is supersession and other is keeping under suspension. The question of election arises only on supersession. In case of suspension, the suspended board gets revoked on or before six months (one year for banking cooperatives).
January 24th, 2013 at 09:53
Enigma about 3rd proviso of Article 243ZL(1) remains unresolved.
February 3rd, 2013 at 21:19
If anybody come forward to explain what 3rd proviso of Article 243ZL(1) of Indian Constitution means it will be very helpful to those, including myself, who are keen in the exploratory study of 97th Constitution Amendment Act. Lawyers,Parliament members, Faculties of Co-operative Training Institutions like VAMNICOM, ICMs, experts in law or anybody who have understood the purpose of the said proviso are requested to share their knowledge. Proper comment will be suitably rewarded.
February 5th, 2013 at 15:45
As reported in The Telegraph – Calcutta – On 04.02.2013, the Bengal government promulgated an ordinance disbanding the elected boards in 2,000-odd co-operative societies that will be headed by government-appointed special officers till fresh polls. The West Bengal Co-operative Societies (Amendment and Validation) Ordinance, 2013, supersedes a Calcutta High Court order that had scrapped the state government’s earlier efforts to prune the tenure of the boards from five to three years.The timing of the ordinance is significant as the state is headed towards rural polls in which the boards of the co-operative societies are expected to play a critical role because of their clout in villages. As 90 per cent of the disbanded boards were under Left control, it is clear that the ordinance has been brought with a political motive. The ordinance had been kept under wraps till the last moment. Sources said that the government had been clearing the decks for the ordinance for some time since its attempt to bring an amendment drew a blank following a legal challenge in the high court. The court had termed the amendment, which sought to reduce the tenure from five to three years, “invalid, unconstitutional and ultra vires”.
February 5th, 2013 at 16:40
The furious lady get six months time constitutionally to enjoy politics through cooperatives !!!
February 7th, 2013 at 10:01
Governor returns Uttarakhand cooperative societies Bill
http://www.indianexpress.com/news/governor-returns-uttarakhand-cooperative-societies-bill/1068565/
February 9th, 2013 at 19:03
The U.P govt has also amended state act by reducing the term of cooprative soceities from three to two years. No body has challenged the amendment. The elections of the soceities is taking place even after 13the Feb. 2013 when New central act will come into affect all india. The term was reduced on 19th October, 2012.
February 13th, 2013 at 13:13
This should be a useful link for the people looking for an update. The same is http://timesofindia.indiatimes.com/city/kolkata/HC-tells-Bengal-to-explain-co-op-order-urgency/articleshow/18475147.cms
February 18th, 2013 at 15:43
@ Mr. Iswer Naik: Please note that ours is the oldest surviving Society in West Bengal, without any govt. stake, shareholding,loan etc. I would like to know whether the State Government has the power to dissolve our board & take charge after 14.02.2013 since the 97th Amendment of the Constitution became effective on that date. Secondly, if anybody designated by the State Govt. comes to our Society now to take charge of the affairs, are we supposed to hand over the charge. We feel we are guarded by Article 243ZL of the 97th amendment of the Constitution. Kindly help us with your comments.
February 27th, 2013 at 17:25
No you dont have to fear, though there are Dy. Registarars like S M Patil in Bandra West Mumbai dismissing a Committee of 94 year old C H S a few days back.So be alert.
February 27th, 2013 at 17:40
RKV
Proviso 3 of Article 243ZL(1) is an exception to the Rule laid down under Proviso 2 namely:
Provided further that the board of any such co-operative society,(..*..,) shall not be superseded or kept under suspension where there is no Government shareholding or loan or financial assistance or any guarantee by the Government:
In otherwords as if the following words are inserted in space marked (..*…) of Proviso 2 above :
“other than a cooperative society carrying on baknikng business”
February 27th, 2013 at 21:49
Could not be.
As per 1st proviso a society shall not be superseded or suspended where there is no Government assistance. 2nd and 3rd provisos are in addition to this proviso; not an exception. The word “also” in the 2nd proviso denotes this aspect. Therefore Board of a co-operative society having banking business cannot be superseded or suspended where there is no Government assistance.
Even if it is otherwise which provision of Banking Regulation act is referred to in the 2nd proviso to derive such a meaning still remain a mystery ?
It is interesting to see that States view this proviso differently. For example:
Karnataka co-operative societies amendment act interprets this proviso as previous sanction of RBI is necessary to supersede or suspend BOD of a banking co-operative society. Most of the States reproduce the proviso verbatim as seen in the CAA as they are not sure what it exactly mean. Maharashtra CS amendment act incorporates this proviso in two places, one in the context of prescribing total number of Board members and the other in the context of supersession.
So it is very clear that State Governments did not understand what the 2nd proviso really mean. The intention of law makers both of 97th CAA and State laws are yet to be find out.
I thank Mr.Naik for boldly coming forward to trying to offer his finding on the said proviso. Shall we have further discussion on it in order to reach into a meaningful conclusion.
February 28th, 2013 at 12:42
The reason for this could be the Vaidyanathan Committee Report;
“5.07 The State Governments need to make legislative amendments to enable the Reserve Bank of India (RBI) to exercise its regulatory powers under the BR Act directly, and not through the Registrar of Cooperative Societies (RCS), if the cooperative banks are to be regulated effectively. The State Governments should in the meantime, enter into an appropriate memorandum of understanding (MOU), agreeing to desist from interfering directly or indirectly in the management of the finances of these banks”.
Therefore, most of the State laws have such provisions. Instead of this, the State laws could have been more generous and broad by respecting all “Functional laws” under single definition, say for example; Housing law, Insurance law, Education law, Medical law, Consumer law etc.
February 28th, 2013 at 13:01
Further;
5.21 Since a new enactment is a time consuming process, the Task Force has identified and recommended specific parameters on actions that can be initiated, by participating State Governments, by means of Executive Orders issued under the extant CSA. Such an Executive Order would cover the following:
o Ensuring full voting membership rights on all users of financial services including deposits
o Removing State intervention in administration and financial matters
o Withdrawing restrictive orders, if any, on financial matters
o Permitting cooperatives wider access to financial institutions
o Permitting cooperatives registered under parallel Acts (in States applicable) to be members of cooperatives, registered under the CSA and vice versa
o Limiting the exercise of powers of the State Governments to supersede Boards
o Ensuring timely elections and audits
o Facilitating effective exercise of the regulatory authority of the RBI, in case of cooperative banks
o Exiting state equity and participation on Boards of financial cooperatives
o Prescribing prudential norms, including CRAR for PACS on lines suggested
February 28th, 2013 at 14:14
Vaidyanathan committee’s draft report is dated 30-12-2004. Documents reveals that the amendments proposed in the Constitution was discussed in the meeting of State co-operative ministers on 07-12-2004 and that States had agreed for the amendments. Even though a conspiracy cannot be ruled out there is no proof to believe that the proviso was originated on the basis of Vaidyanathan committe report.
Moreover Vaidyanathan committee report is confined to St.CBs, CCBs and PACS only. Committee recommends RBI control on “Co-operative Banks” only and not on “co-operative societies having banking business”.
Therefore, puzzle of 2nd proviso of article 243ZL(1) still remains unresolved.
February 28th, 2013 at 14:24
Respected Sarad Pawarji, would you please enlighten us what did you mean by the 2nd proviso of article 243ZL(1). Most admired Ministers for Co-operation in all State, would you please let us know what did you understand by incorporating the proviso in the State co-operative Laws.
February 28th, 2013 at 17:10
RKV Sir, let me clarify a line from your above statement;
“Committee recommends RBI control on “Co-operative Banks” only and not on “co-operative societies having banking business”
Please go by the definition on “banking” or “banking business” as defined in B R Act to construe whether a cooperative society carrying on OR having banking business. As per the definition, no cooperative society other than a cooperative bank in India is carrying on OR having banking business. A few DCC banks pending issuance of licence from RBI may be having banking business and they are under RBI scan. This is the basis for future fight against RBI. So knowingly or unknowingly, there is no point in putting all primary credit societies under the threat of RBI license with illusions.
The above request is only to drive the thoughts in right direction.
February 28th, 2013 at 18:32
Sorry to say that your knowledge on Banking Regulation act and co-operative banking sector are not even at the basic level, dear Megavath.
To have an idea on licencing of co-operative banks you may go through the reports of Mahava Rao committee, Mahav das committee and Malegam committee and innumerable papers of RBI on the subject. There you can find out what is “co-operative Bank” and what are “co-operative societies having banking business”. You will learn how baseless is your statement “As per the definition, no cooperative society other than a cooperative bank in India is carrying on OR having banking business”. THERE ARE THOUSANDS OF CO-OPERATIVE SOCIETIES HAVING BANKING BUSINESS IN INDIA OTHER THAN CO-OPERATIVE BANKS.
I had already given you a lot of inputs somewhere in this web site regarding the co-operative societies having banking business and which do not require banking licence. I feel myself guilty being unable to convince you on this matter otherwise the post might not have appeared.
A tip for you:- As per BR act (AACS) 1965:
“Co-operative bank” means a state co-operative bank, a central co-operative bank and a primary co- operative bank”
“primary co-operative bank” means a co-operative society, the primary object or principal business of which is the transaction of banking business”
“primary credit society” means a co-operative society, the primary object or principal business of which is the transaction of banking business”.
If it is the definition of “Banking” that prevents you from getting a clear idea on the matter ponder on the word “otherwise” appearing twice in the definition. Remember a blind cannot lead others to right direction.
February 28th, 2013 at 19:04
ATTENTION ALL CREDIT CO-OPERATIVE SOCIETIES
Government has given effect to Banking law amendment act from 18-01-2013. Therefore
(1) All primary credit societies should wind up Banking business within 1 year i.e.from 18-01-2014.
(2) All primary co-operative credit societies (with share capital of 1 lakh and above) should stop Banking business
immediately if they had not applied for licence from RBI.
Hereafter all these societies can accept deposit from members only.
I hope co-operators all over India will convey this message to these societies.
March 1st, 2013 at 10:51
RKV Sir, I have taken all the inputs given by you and concluded with a proper logic which will prevail forever.
Not only you, others including RBI & RBI Committees are also on a wrong foot to determine “THERE ARE THOUSANDS OF CO-OPERATIVE SOCIETIES HAVING BANKING BUSINESS IN INDIA OTHER THAN CO-OPERATIVE BANKS”.
WOULD YOU PLEASE GIVE ME A SINGLE EXAMPLE OF SUCH SOCIETY USING NEGOTIABLE INSTRUMENTS AND PARTICIPATING IN PAYMENT SYSTEM WHICH ACTIVITIES ARE PART OF BANKING BUSINESS?
If you are unable to find any such society, please be understand that the societies which are purported to have carrying on banking business are only carrying cooperative credit business. Obviously, they ought to have member deposits and as cooperative societies why at all they need business with non-members. It is very simple to analyse.
Kindly keep this logic of truth and wage war against RBI, you would definitely succeed.
March 1st, 2013 at 22:54
So Megavath believes that there is not a single Primary Credit Society in India !!!!!!!!!!!!!!!!!
March 1st, 2013 at 23:42
Confusing tactics will not hold water anymore. There may be innumerable Primary Credit Societies in India but none is carrying on banking business. The meaning of second “or otherwise” in the banking definition is “or in other ways” or “indirectly”. There are small cooperative banks in India using negotiable instruments and participating in payment system indirectly though other banks. Nevertheless, among other things using negotiable instruments and participating in payment system directly or indirectly is must for any entity to be determined as carrying on banking business as per the very definition.
You may quote well stored Court verdicts which impugned Kerala cooperative societies to substantiate misinterpretation. Had the plea carried this logical truth, the verdicts would had been otherwise. Now the blind is showing the way, please go ahead and prevent further such damage.
March 1st, 2013 at 23:50
I understand that Mr.Megavath has a vague idea on “Banking”.
As per section 5(b) of BR Act 1949 “Banking” means the accepting, for the purpose of lending or investment, of deposits of money from the public, repayable on demand or otherwise, and withdrawal by cheque, draft, order or otherwise.
Transaction of negotiable instruments or participation in the clearing house are not necessary conditions to call a business as “banking” because withdrawal of deposits can be ‘otherwise”.
This business is being done by thousands, if not lakhs, of Primary Credit Societies and PACS in India. By definition principal business of Primary Credit Societies is transaction of Banking business. [Sec.5 r/w sec.56].
Sri Pranab Mukherji introduced the amendment in Sec.22(1) of BR Act (aacs) for the reason:-
“For a sound and healthy banking system and to protect the interest of depositors, it has become necessary to ensure that only the co-operative societies licensed by the Reserve Bank should carry on the business of banking by fulfilling all the requirements specified by the Reserve Bank and it has become essential to provide the time limit of one year to be extended to three years within which a primary credit society should carry on the business of banking or stop the business of banking.”
If there is no such primary credit society doing banking business what was the purpose of this amendment?
March 2nd, 2013 at 09:33
No dispute over withdrawal of deposit can be “or in other ways” or “differently”. No dispute over Primary Credit Societies or B R Act amendment or Statement of Sh. Pranab Mukherjee. One has to understand that usage of negotiable instruments and enabling such NIs to participate in payment system are prime factors to determine whether any entity is carrying on banking business or not. When cooperative societies are not at all carrying on banking business what to stop? Why don’t RKV try to define cooperative credit business rather than linking the cooperative activities with banking business? Why he is pushing the cooperative societies into the fold of RBI overwhelmingly under the pretext of “banking business” to substantiate his misunderstanding? I repeat again and again “NO ENTITY INCLUDING COOPERATIVE SOCIETY IN INDIA OTHER THAN A LICENSED BANK IS CARRYING ON BANKING BUSINESS”.
It is utterly wrong to say that transaction of negotiable instruments or participation in the clearing house are not necessary conditions to call a business as “banking” because withdrawal of deposits can be ‘otherwise”. When It is obvious that once the public keep the amount with any entity there are many timeframe to withdraw it either on demand or in installments or in lumpsum, is it prudent to call such withdrawal as “banking business”? It is totally illogical to construe withdrawal activities of all such entities as “banking business” either by RKV or anybody including RBI if it does so.
March 2nd, 2013 at 12:08
Mr.Megavath says :- I repeat again and again “NO ENTITY INCLUDING COOPERATIVE SOCIETY IN INDIA OTHER THAN A LICENSED BANK IS CARRYING ON BANKING BUSINESS”.
Report of the High Power Committee on Urban Cooperative Banks 1999 says:-
Existence of large number of unlicensed banks has become a cause of concern for regulators. As on 30 September 1999, as many as 181 banks are still unlicensed entities. Of these, 97 banks continue to be unlicensed for over 3 decades. Existence of such large number of unlicensed banks over 3 decades places the RBI in a state of “regulatory discomfiture”.(Para 5.1)
Who can be correct? Megavath or Madhav Rao?
March 2nd, 2013 at 12:34
Both Meghavath and Madhav Rao are correct.
The referred banks (unlicensed entities) are StCBs and DCCBs and certainly not cooperative societies. There are still cooperative banks (unlicensed entities) are continuing with banking business without RBI license. It is a continued concern for regulators to regularise them with license and therefore further amendment to B R Act (AACS), 2012. (Hope you got the answer for your anxiety “If there is no such primary credit society doing banking business what was the purpose of this amendment?”)
March 2nd, 2013 at 13:19
So you believe that Report of the High Power Committee on Urban Cooperative Banks 1999 was referring to St CB and DCBs. And you also believe that BR Act(AACS) 2012 was amended to bring these St CBs and DCBs within the fold of BR Act. Is it so?
March 2nd, 2013 at 14:48
As primafacie the committee is on UCBs there might be unlicensed Urban Cooperative Banks carrying on banking business (among other things using NIs and participating in payment system) and might have got license from RBI subsequently or may be continuing unlicensed still. Obviously, the 2012 amendment is to take care of such unlicensed UCBs including StCBs and DCCBs. So, understand the objective at gross without diluting the issue on technical grounds such as 181 banks are not StCBs or DCCBs etc. Though these unlicensed entities are continuing as banks for all practical purpose, they are still cooperative societies from RBI point of view. Hence, the objective of amendment or statement of Sh. Mukherjee or intention of various committees or issues related to automatic status of primary cooperative banks etc. are mainly to regularise the cooperative societies carrying on banking business (among other things using NIs and participating in payment system). Other than these unlicensed entities no cooperative society is eligible to be determined as carrying on banking business. That’s it.
March 2nd, 2013 at 23:57
Poor Megavath. He neither knows what the BR act is nor has an idea on Banking law amendment act. This is evident from the statements like “Obviously, the 2012 amendment is to take care of such unlicensed UCBs including StCBs and DCCBs.” Still he is trying to misguide the viewers and abuse others with his half cooked knowledge.
I could not help myself from challenging Megavath to prove his competency by explaining the amendments in sec.22(1) and 22(2). So study well and then come back with right understanding on these simple amendments and receive my reward of Rs.10000/- for correct information.
I am not ridiculing you but trying to help you to come out of misconceptions. It is your responsibility also to prove that you know the provisions of the Amendments well since you attacked my friendly warning to the co-operative societies in my comment of 28th feb and tried to create a notion against it.
Therefore I once again ask you to reveal what you understood by those amendments. Your reward will soon reach you. Please mention your address or bank account number.Good luck.
March 3rd, 2013 at 10:56
Shri. Naik – Thank you so much for your valued opinion and the observation made by you with respect to the subject in question is duly noted.
March 3rd, 2013 at 10:57
Shri. Naik – Thank you so much for your valued opinion and the observation made by you with respect to the subject in question is duly noted. My apologies for the delay in acknowledgement.
March 4th, 2013 at 16:55
An extract from DICGC site upon a telepathy from Sh. Sharad Pawar !!! Hope, this may resolve the puzzle of 2nd proviso of article 243ZL(1) and relevant provisions in State laws;
1. Which banks are insured by the DICGC?
Commercial Banks: All commercial banks including branches of foreign banks functioning in India, local area banks and regional rural banks are insured by the DICGC.
Cooperative Banks: All State, Central and Primary cooperative banks, also called urban cooperative banks, functioning in States / Union Territories which have amended the local Cooperative Societies Act empowering the Reserve Bank of India (RBI) to order the Registrar of Cooperative Societies of the State / Union Territory to wind up a cooperative bank or to supersede its committee of management and requiring the Registrar not to take any action regarding winding up, amalgamation or reconstruction of a co-operative bank without prior sanction in writing from the RBI are covered under the Deposit Insurance Scheme. At present all co-operative banks other than those from the State of Meghalaya and the Union Territories of Chandigarh, Lakshadweep and Dadra and Nagar Haveli are covered by the DICGC.
Primary cooperative societies are not insured by the DICGC.
March 4th, 2013 at 20:34
States and the entire India are really confused on the 2nd proviso of Article 243 ZL(1) which is as follows:-
“Provided also that in case of a co-operative society carrying on the business of banking, the PROVISIONS of the Banking Regulation Act, 1949 shall also apply:” (emphasis added). WHICH ARE THOSE PROVISIONS?
The context is supersession of BOD of Co-operative societies. So which are the provisions referred here? If it means the entire provisions/all provisions related to co-operative societies then how did it appear under the Article related with supersession of Committee?
To some States the said proviso insists prior permission of RBI for supersession. To some other states the proviso means supersession of BOD by RBI itself. To academicians the proviso is incorporated to make BR Act applicable to all co-operative societies carrying on banking business. There are people who believe that all the above interpretations are correct.
What could be the real intention of law-makers in adding such proviso?
March 5th, 2013 at 04:36
A totally fresh look:
There are 4 Provisos to the main Clause 243ZL(1) viz Notwithstanding anything contained in any law for the time being inforce, no board shall be superseded or kept under suspension for a period exceeding
six months:
Our focus is on the 3rd about Supersession of the BOD of Cooperative Banks.
Very simplistic meaning of the first proviso could be to say that only on account of one or more of the following reasons a BOD may be superseded or kept under suspension for a period not exceeding six months: (Clause 1 and Proviso 1 as one combine rule).
Assuming this is correct, Proviso 2 viz “Provided further that the board of any such co-operative society shall not be superseded or kept under suspension where there is no Government shareholding or
loan or financial assistance or any guarantee by the Government:” is an exception to the Rule and it is to prohibit the BOD’s supersession completely in those societies. { Let the GBM decide through requisitionedmeeting of members).
Then Proviso 3 under debate viz: “Provided also that in case of a co-operative society carrying on the business of banking, the PROVISIONS of the Banking Regulation Act, 1949 shall also (Explanatory One ) apply IN CASE WHERE A QUESTION OF SUPERSESSION OF ITS BOD AROSE. Phrase in capital completes the untold storey. Just one possibiity. Complete negation of proviso 2 to banks by an explanatory nature of Proviso 3 .This is offered as a sort of salvaging of an utterly confused “political mind” (for BOD is a political tool).Of course this is shifting the onus of Bank’s Board to RBI ( but a better proposition than Registrar in my view).
March 5th, 2013 at 08:46
What I understand as a layman is the proviso is inserted to take care Section 36AAA of B R Act which is presently applicable to Multi State Cooperative Banks and the MOU which covers other than Multi State Cooperative Banks (An extract from Malegam Committee Report – “4.2 Under the MoUs, State Governments have agreed to take immediate action on requisition by RBI for supersession of the Board of Directors, appointment of liquidators, initiation of action for removal of CEO / Chairman of a bank, enhancing quality of HR and IT resources on lines required by RBI, work to raise the standards of corporate governance, the institution of special audit by Chartered Accountants when necessary, the introduction of long form reports by auditors, the appointment of Chartered Accountants as Statutory Auditors in respect of larger UCBs and other matters”).
The immediately next proviso differentiates the period of supersession between State and Multi State. So, why don’t we take this as a concluding factor for this puzzle.
March 5th, 2013 at 09:06
Further to support this;
— An extract from Report of the Task Force dated 02-08-2000 —
2.14 The Committee to Review Arrangements For Institutional Credit for Agriculture and Rural Development (CRAFICARD) in their report had recommended that an appropriate provision be incorporated in the Banking Regulation Act, 1949 (AACS) to make it obligatory on the part of the state governments to seek prior consultation with RBI when it proposed to supersede the Board of Management of the cooperative banking institutions. In the case of SCARDBs also which are not yet covered under the BR Act, 1949 (AACS), the RBI/NABARD should make it a condition for providing financial assistance that supersession of the Boards of Management of these banks should be done only by prior consultation with NABARD.
— An extract from Report of the Committee on Financial Sector Assessment dated 30-03-2009 —
There is dual control of UCBs, inasmuch as the regulatory and supervisory responsibilities are shared between state registrars of co-operative societies (the central registrar of co-operative societies in the case of multi-state co-operative banks) and the Reserve Bank. Though supervisory oversight of the Board for Financial Supervision (BFS) extends to UCBs, there is a multiplicity of command centres and an absence of clear-cut demarcation between the functions of State Governments, Central Registrar of Co-operative Societies (CRCS) and the Reserve Bank. The ‘Vision Document for the UCB Sector’ formulated in March 2005 to address the issue of dual control provides for a two-track regulatory framework and a Memorandum of Understanding (MoU) between the Reserve Bank and the other regulators, viz., the State Governments and CRCS.
—- An extract from recent Report of the Expert Committee to examine Three Tier Short Term Cooperative Credit Structure (ST CCS) dated 24-01-2013 —-
— An autonomous cooperative election authority to be set up in each state as per the requirements of the Constitutional amendments would conduct elections for StCBs and CCBs also. On lines of the conditions of the Vaidyanathan Task Force for election to PACS, the Committee recommends an amendment in the respective State Cooperative Societies Act to provide that any director on the board of CCB or StCB removed or superseded by RBI for any financial irregularity or if the bank incurred losses in any three years during their term of five years may be barred from contesting elections in that CCB or StCB or any other CCB for a period of five years. —-
March 5th, 2013 at 20:42
The proviso under discussion refers to PROVISIONS of BR Act not MOU or vision statement related to Urban banks. As far as I know at the time of enactment of 97th CAA there was only a single provision in BR Act which deals with supersession of BOD and it is 36AAA (supersession of BOD of Multi co-opertive Bank) .
The legal premises being so 4th proviso of the Article 243Zl(1) prescribes the maximum period of 1 year for supersession in the case of co-operative society other than multi state co-operative society,carrying on banking business. Were there any such provision in BR act related with supersession of Co-operative society having banking business at that time? If yes, which are they? If no, what sense does the 3rd proviso make.
Since CAA use the words “provisions of BR Act” it necessarily ought to pin point the related provisions of the BR Act which are in existence. In the absence of such provisions the proviso is irrelevant and meaningless.
March 5th, 2013 at 23:22
Probably, the conclusion is nearing soon. The proviso “Provided also that in case of a co-operative society carrying on the business of banking, the provisions of the Banking Regulation Act, 1949 shall also apply” does not necessitates to pinpoint the relevant provisions in B R Act. There can be single provision or in any number or in any manner. As we know that there is only a single provision, the same shall be applied for co-operative societies carrying on the business of banking. The limitations of the single provision shall be taken care by the MOU or Vision Document as may deem fit.
Therefore, the provisions of B R Act related to supersession need alone be made applicable under this proviso. Except this no other provisions of B R Act will encroach Cooperative laws as per 97th CAA.
However, as far as cooperative societies carrying on banking business are concerned this proviso negates its previous proviso “Provided further that the board of any such co-operative society shall not be superseded or kept under suspension where there is no Government shareholding or loan or financial assistance or any guarantee by the Government”.
March 6th, 2013 at 20:47
I cannot agree with the view that the proviso does not refers to specific provisions of BR Act. The proviso reads as “Provided also that in case of a co-operative society carrying on the business of banking, the provisions of the Banking Regulation Act, 1949 shall also apply” and so definitely mention some provisions of BR Act related with the context of supersession.
If the intention behind the constitution was to bring the co-operative banks under BR Act the probable way would have been incorporation of separate Article for that purpose. That is not the case here.The proviso states that the provision of BR act shall apply in the circumstances of supersession of BOD of Co-operative societies carrying on banking business or say, co-operative banks. So the proviso refers to some explicit provisions in BR Act and I am trying to find it out.
March 6th, 2013 at 23:20
The puzzle is resolved except the view of RKV Sir that there should be a reference of specific provision and he is trying to find it out. If he succeeds in finding the provision other than Section 36AAA, the new provision will prevail over my assessment. I request Naik Sab to record his final view so that we can switch over to resolve “banking business” meaningfully.
March 7th, 2013 at 19:04
There is no other provision except Sec.36AAA at the time of enactment of 97th CAA. I know that. There is no doubt this section relates to supersession of Multi state co-operative banks only. But the provision under dscussion refers to not only that section. It is evident that the period of supersession is to be limited for 6 months in the case of Multi state co-operative bank.vide. proviso 4. In other cases it is1year. My doubt is what could be the other case as per BR Act in which the period is 1 year?
There is a humble request. First we should understand what the riddle or puzzle really is before concluding it as resolved. I have raised a genuine issue that is to be resolved. Do not take it otherwise. The gravity of interpretation of that proviso reflects in many state laws after amendment. I repeat my question once again. WHAT COULD BE THE PROVISIONS REFERRED IN THE PROVISO 3 OF ARTICLE 243ZL(1)?
I am even ready to reward the right answer.
March 7th, 2013 at 23:16
RKV Sir, it is something like “I reward the correct answer but your answer can not be correct” !!! Let me try to take the reward by continuing the existing view on 3rd proviso unaltered.
Kindly peruse the views of the DAC on Article 243ZL(1);
“The Multi-State Co-operative Societies Act, 2002 provide for supersession of a multi state society only in the case where Government equity is not less than 51%. The existing provision in clause 243 ZL was proposed keeping in view the overall spread of cooperative societies in the country, the stake of the State Governments by way of share holding, loans, government guarantee, etc. In case of Multi-State Cooperative Societies Act, there are very few multi-state cooperative societies where the Government equity is there. Otherwise also safeguards have been provided in this clause to prevent misuse of the provision by the Government such as; maximum period of supersession not exceeding six months (one year in case of cooperative banks), responsibility of the administrator to arrange for the elections of the board within this period and supersession of board only on tangible grounds. Therefore, this recommendation of the Committee could not be accepted.”
What I understand from the above is that the quantity of Government stake in case of MSCBs is very less as also the number of banks, so the period is six months whereas the quantity of Government stake in case of non MSCBs is on higher side as also the number of banks, so the period is one year, so as to enable the administrator and election authority to complete their assignment in time. I don’t find a better reason than this for 4th proviso.
March 8th, 2013 at 22:38
The view of the DAC was not related with PERIOD of supersession. They were disagreeing with the Standing committee on the quantum of Govt shareholding as a precondition for supersession. Recommendation of Standing committee was that the BoD of a society which has a meagre 1 rupee shareholding of Government shall not be superseded and that the board of cooperative society should not be superseded where government shareholding is less than 51 per cent. DAC rejected this recommendation. That is what is meant by the quote of DAC in the above post. It is not related with proviso 3 and 4. There is nothing in the opinion of DAC to substantiate that DAC envisaged a supersession period of of 6 months for MSCBs and 1 year for non MSCBs.
Even if it is so where is the provision in BR act to supersede non MSCBs? Where are the provisions which are referred in the 3rd proviso?
March 9th, 2013 at 00:36
The sole reason for DAC to justify its rejecting the recommendations made by the committee was PERIOD of supesession. Hence, PERIOD plays a predominant role in solving the issue. As it is a universal fact that there is no such provision in B R Act to supersede non MSCBs, the existing provision to supersede MSCBs should be read with other RBI documents where non MSCBs are also enabled to be superseded. Though there is no provision in B R Act to supersede non MSCBs, the RBI ensured amending State laws to enable such provision through them. The enabling provision contained either in B R Act or State laws does not make any difference, the effect is same. As such the sole provision 36AAA implied in the 3rd proviso. The difference in PERIOD of supersession expressed in 4th proviso is associated with the responsibility of the administrator to arrange for the elections of the board within the period of supersession only on tangible grounds. Therefore, the 4th proviso is purely an administrative provision in nature and does not call for any confusion.
When shall I get the reward?
March 10th, 2013 at 16:10
These are irrelevant discussions. What I enquired from the experts is which provisions of BR act are denoted in the 3rd proviso of article 243Zl(1). I only need to know the particular provision in BR act in specific terms i.e. Section or clause or proviso in the BR act which have any connection with the said proviso.
Any elaborate discussion on this topic is a waste of time energy and valuable space.
I know it is definitely not Sec.36AAA only because this section is related with supersession in multi-state co-operative societies only and Proviso 4 anticipates supersession in other societies also.
March 10th, 2013 at 17:50
As far as Indian laws are concerned an existing title can be invalidated only by a better title. Likewise, my views are valid until and unless somebody finds an answer better than mine. Hence, I deserve for the reward. The reward can be taken back once my views are invalidated. I repeat my simplified views;
1. Section 36AAA of B R Act and RBI documents enabling State laws on similar provisions are implied in Proviso 3.
2. Proviso 4 is an administrative provision for enabling the administrator to complete the election process with in the period of supersession.
3. Proviso 4 is applicable to all assisted cooperative societies and all cooperative banks irrespective of getting Government assistance or not.
March 10th, 2013 at 21:51
Megavath’s views are definitely invalid as he failed to answer my question ‘ WHAT COULD BE THE PROVISIONS in BR ACT REFERRED TO IN THE PROVISO 3 OF ARTICLE 243ZL(1)?”
Who does not know that RBI documents are not Provisions of BR Act.
The question is open to everybody for a try and to get a reward.
March 11th, 2013 at 08:36
WHAT COULD BE THE PROVISIONS in BR ACT REFERRED TO IN THE PROVISO 3 OF ARTICLE 243ZL(1)?
It is repeatedly answered;
Section 36AAA of B R Act and RBI documents enabling State laws on similar provisions are implied in Proviso 3. Therefore, Section 36AAA of B R Act and RBI documents enabling State laws on similar provisions could be the provisions refereed in Proviso 3 of Article 243ZL(1).
I further repeat that my views are valid until and unless somebody finds an answer better than mine.
March 11th, 2013 at 23:06
Which documents could be the RBI documents referred to in the post of Mr.Megavath?
March 12th, 2013 at 05:52
Dear All.. It’ll be very kind of you people if u could help me with 111th CA bill.. What is its present status?has it been signed by the president?its details as of now. Thank u:-)
March 12th, 2013 at 11:03
Vision Document dated 04 Mar 2005;
6.2 Memorandum of Understanding with State Governments
As per provisions of the State Cooperative Societies Act as also the BR Act 1949 (AACS), the Reserve Bank is not empowered to take action against the management of an urban cooperative bank, in case of need, as in respect of commercial banks. It may be useful to have a working arrangement in the form of Memorandum of Understanding (MOU) between the RBI and the State Government/CRCS to ensure that the difficulties caused by dual control are suitably addressed through such MOU/s. The State Governments may, through the MOU, agree to take immediate action on requisitions of RBI for supersession of the Board of Directors, appointment of liquidators, initiating action for removal of CEO/Chairman of a bank, enhancing quality of HR and IT resources in the banks on the lines required by RBI, work to raise the standards of corporate Governance by putting in place certain minimum fit and proper criteria for members to be eligible for seeking election for the post of director, institute special audit by Chartered Accountants, the cost of which may be borne by the RBI, and furnish reports of the findings within a given time frame, introduce long form audit reports for conducting statutory audit, modify its audit rating models to bring it on par with the gradation system of RBI, conduct statutory audit only through external Chartered Accountants in respect of banks with deposits over a specified minimum level etc. The draft MOU is given in Annexure –I. The TAFCUBs would be set up in states that sign the MOUs with the RBI. In respect of the states that sign the MOU but do not fulfill the commitments therein, the TAFCUB would cease to function and RBI would be at liberty to initiate appropriate corrective action.
As also similar MOU with RBI/NABARD in respect of StCBs and DCCBs.
March 12th, 2013 at 11:18
I wonder how we can imagine that the proviso in constitution refers to an RBI document.
March 12th, 2013 at 13:15
Further, any provision available in B R Act or State laws with reference to supersession of cooperative bank boards are implied in Proviso 3.
http://indiancooperative.com/lawslegislations/parliament-passes-historic-cooperative-bill-2009/comment-page-7/#comment-23208
March 12th, 2013 at 14:57
This kind of discussion is again a waste of time, energy and space.
I am sure that legal experts will agree with me that the 3rd proviso which reads as “Provided also that in case of a co-operative society carrying on the business of banking, the provisions of the Banking Regulation Act, 1949 shall also apply” definitely mentions some provisions of BR Act related with the context of supersession. One of such provisions is Sec.36AAA which is related with supersession in Multi State CS. Since proviso 4 anticipates supersession in other societies also there must be another provision in BR Act itself and not in any other documents whatever it is. In the absence of provision other than Sec.36 AAA the 3rd proviso r/w proviso 4 was badly drafted/enacted and definitely has no meaning.
Any effort to provide meaning to the proviso is futile.
March 12th, 2013 at 18:30
It is not so. Proper meaning has been assigned in may ways as above after careful study. It is left to the viewers or needy to take the best. I fully agree with you that “This kind of discussion is again a waste of time, energy and space”.
March 12th, 2013 at 19:41
I conclude the session on 3rd proviso of Article 243 ZL(1) with a view that the said proviso has no relevance in the case of State Laws as there are no provision for supersession of BoD in the BR act other than that of Multi State Co-operative societies.
March 12th, 2013 at 19:49
State Governments have misunderstood the proviso and that is why State laws are seen amended in different ways to make it in consonance with that proviso.
I personally feel that it was the Draft Sec.36ACA of Banking Law amendment Act in the minds of the people who were behind the said proviso.
Thank you for the enthusiasm shown throughout the discussion , Megavath.