A common man’s curiosity about what cooperative is all about could be responded by a simplistic definition that ‘cooperative business is a business that uses an integrated business structure with the members sharing decision-making authority, profits, and liability for debts. But he will not believe this simple truth, for it is no longer so simple, thanks to avoidable interference of politicians and bureaucracy in cooperatives’ functioning.
Under a regulatory statute of the State every society gets registered so as to acquire a status of a body corporate (juristic person) with a power to acquire, hold and dispose of property, to enter into contracts and other legal proceedings and to do all such things a natural human being could do to achieve his/her business goals. Unlike human beings a Co-operative can exist perennially.
Like any form of business organization be that a proprietary, partnership, or a corporation, all businesses are bound by various laws governing specifics of the concerned business. As per world-wide accepted theory, the democratically elected human beings belonging to its membership collectively operate on behalf of the Co-operative Society with democratic control and autonomous functioning. The business laws have already become complex as the businesses acquired complexities in the wake of competition flared up by market driven economies.
On top of that the regulatory framework for every “incorporated body” lays down a plethora of rules as to how this body shall conduct itself as a “judicial person” in the interest of its membership. This “law making power” has become an attractive tool of interference with significant personal gains but with no responsibility for those in charge of writing these regulations. The interference has literally transgressed in to usurping powers of virtual management on behalf of the elected representatives.
The result: this simplistic movement is in the grip of monster of regulations so much so that bona fide membership started getting disenchant and dominated by a few groups with a political clout. The sector sort of submerged in to State so much so that the Apex Court after more than century of its existence clarified that Cooperative Society is not a “State”. [SC in Thalappalam Services Cooperative Bank Ltd.& … vs State Of Kerala & Ors. NO. 9017 OF 2013 candidly observed “Powers exercised by the Registrar of Cooperative Societies and others under the Cooperative Societies Act are only regulatory or supervisory in nature, which will not amount to dominating or interfering with the management or affairs of the society so as to be controlled” http://indiankanoon.org/doc/37517217/]. Every co-operator must be thinking “Alas it was really so!!!” It is not a secret that de-facto the Co-operative is far from its de-jure status ‘independent of the State” where the State is synonymous with “Politicians and Bureaucrats”.
Host of commercial pursuits have found co-operative as a good form of organization especially in highly populated economies of the world. In India by now there are more than 50 kinds of businesses which are conducted under Co-operative ownership. This offers opportunity to a large number and cross section of the population to own a business. Such a cross section of business presupposes the existence of a very simplistic regulatory regime. Indian Cooperative Society Law is more than 110 years old (1904) and globally its 170(1844) but as if it is ailing from disease having no clue to revive.
Responsibility (which has now become the power of each and every person in public governance) of facilitating and regulating the growth of “Co-operative organizations” within the territory of every State is conferred on the State governments under the Constitution of India. The idea is to ensure that the law recognizes the specific traits of people in different parts of the nation.
An official feature by Press Information Bureau – Government of India candidly admits failure of cooperatives as business organizations in India [ http://www.pib.nic.in/feature/fe0299/f1202992.html ] in these few words;
“The failure of cooperatives in the country is mainly attributable to: dormant membership and lack of active participation of members in the management of cooperatives, mounting over dues in cooperative credit institution, lack of mobilization of internal resources and over-dependence on Government assistance, lack of professional management, bureaucratic control and interference in the management, political interference and over-politicization have proved harmful to their growth. Predominance of vested interests resulting in non-percolation of benefits to a common member, particularly to the class of persons for whom such cooperatives were basically formed, has also retarded the development of cooperatives.”
Faults are found in people‘s conduct (despite the fact that it is for them the cooperatives exist) as also in deteriorating governance pursued by every successive State Governments. First and foremost, a beginning has to be made with very visible emphasis on either of these two.
The Bhram Prakash Committee 23 years ago chose later “improvising governance” and made several recommendations accordingly: The States continued to defy the Committee’s recommendations and went on doing exactly the opposite. Even the Constitution Amendment Act 2011 (97CAA) also did not grab the opportunity to slim down the regulatory framework. It does not expressly give a mandate to the States to keep the Cooperative Society Law simple as a call of the masses. Though indirectly it does indicate to make a simpler people centric law in these words enshrined in the Constitution of India:
“Article 243ZI; Subject to the provisions of this Part, the Legislature of a State may, by law, make provisions with respect to the incorporation, regulation and winding up of co-operative societies based on the principles of voluntary formation, democratic member-control, member-economic participation and autonomous functioning” The Parliament reemphasizing the significance of cooperatives conferred a fundamental right on every citizen to form a “cooperative society” It must be noted with all seriousness that the basic frame work of a State Cooperative law is restated in Article 243ZI backed by a few pertinent Constitutional Mandates through a new Part inserted in the Constitution namely “Part IXB: THE COOPERATIVE SOCIETIES “ .
This Part decisively clarifies the true meaning of the fundamental right of forming Co-operative Society. This right does not merely mean the Registrar registers a Co-operative Society. Not before more co-operative legendary personalities leave this world, as a last hope let the judiciary be activated to force the Executives of every States to forthwith simplify the State Co-operative Regulations so as to enable citizens to exercise their fundamental right in the manner it is envisaged under the Constitution.
As an illustration of how the Cooperative Law has become complex, look at the composition of the Maharashtra Co-operative Societies Law namely;
1.The Maharashtra Cooperative Societies Act 1960 [ Sections 1-168]
2. The Maharashtra Cooperative Societies Rules 1961 [ Population 110 Forms 38]
3. The Maha. Specified Cooperative Societies Election to Committees Rules 1971- P94 F 16]
4. The Maharashtra Cooperative Tribunal Regulations 1962 P 37 Forms 16]
5. Orders issued under Section 79A of the M C S Act 1960 [NUMEROUS]
6. The Maha. Cooperative Societies Election to Committees Rules 2013 [P 87 F 17 ] DRAFT
7.The Maharashtra Cooperative Societies (Amendment) Rules 2013 [ P108 F 31]DRAFT
8.Registered (Exclusive) Bye-Laws of the Society [Population 176 FORMS 30]
(Internal Regulations which must be framed on the matters the Registrar may specify to every society out of those listed under Rule 7 of M.C.R.1961 plus some more which members may decide but which do not violate M.C.S. Act 1960 or M.C.R.1961 or any State Order)
It’s a huge regulatory frame work!!! [ Population 436 and Forms 120 in 2-7 ]Business laws are not covered in this list.
The Bhram Prakash Committee recommended that the above list be pruned to just 1 and 8. All matters presently contained in the Intermediary Component s No 2 to No 7 shall be shifted either to 1 or to 8 after a smart-prune of each one of them.
The Constitutional right implies that it shall be taken as abrogation of fundamental right if it cannot be exercised as contemplated under provisions of the Constitution on account of the regulatory framework. It’s a call to eliminate the Intermediary Component s No 2 to No 7 – it’s a kind of a middle men that is to say “the Executive’ operating in between the Statute makers (Legislature) and Co-operative membership the bye-law makers; akin to a call of competition to eliminate the middlemen in between the producer and the consumer in a market driven economy.
It’s time that India has an Executive working so smartly that the Statute is made much more effective; That has everything in it, that each co-operative frames its bye-laws also equally efficiently and concentrate on core business and not struggle for compliance of a regulatory framework. It has to be long lasting arrangement needing a review only after a century. After all “cooperative” is just a vehicle; Critical is the journey and not the vehicle. It is the business that is important and not the means of doing business that should matter so much. Cooperators are bound to get disheartened in a situation like this.
It is possible to take up each and every thread of the intermediary components 2-7 either to thrash the most of them or to upgrade the deserving to a level of Statute or to demote to internal contractual terms inter se the membership of co-operatives- the bye-laws. Let there be a far more integrated regulatory frame work for every cooperative sector providing additional input of regulations on key management responsibility areas in the concerned business so that management team in each sector finds it easy to run the business through a cooperative structure much better than any other form of business. Let cooperative movement emphasize ‘business professionalization’ and de-emphasize “the regulatory framework.” Let many things be governed under mutually agreed contractual terms namely the bye-laws. There should be people as DY/JT REGISTRARS specialists in the concerned businesses guiding the managements on business issues, leaving the regulatory frame work to monitor by the desk officers.
One latest example of the bureaucracy’s vehemence to thwart exercise of fundamental right of forming a cooperative society should open the eyes of those who have high hopes in the recent reforms for speedy growth of cooperatives. Remember “forming a cooperative is a fundamental right” Existing provision of registration in the Maharashtra Co-operative Societies Act 1961 Viz:- Section 9 – Registration reads as under:
“(1) If the Registrar is satisfied that a proposed society has complied with the provisions of this Act and the rules, or any other law for the time being in force, or policy directives issued by the State Government under section 4 and that its proposed by-laws are not contrary to this Act or to the rules, he shall, within two months from the date of receipt of the application register the society and its by-laws. “
On a plain reading of this provision it is clear that the Registrar is duty bound within two months from the date of receipt of the application to register the society and its by-laws if he was satisfied that
“a proposed society has complied with the provisions of this Act and the rules, or any other law for the time being in force, or policy directives issued by the State Government under section 4 and that its proposed by-laws are not contrary to this Act or to the rules”
What the State’s bureaucracy is up to, we will just see. Vide Rule 4 of the Intermediary Component 7 namely “The Maharashtra Cooperative Societies (Amendment) Rules 2013 [ Rules 1-108]draft dated 31 12 2013, existing Rule 7 of the Maharashtra Cooperative Societies Rules 1961 is proposed to be amended to confer an extremely critical (arbitrary) decision making power i.e. to frame ”the norms and conditions for registration of societies or class of societies” Look at this Rule that will read after the insertion proposed and stated in “…….” by the State Bureaucracy;
“Rule 7 Refusal of Registration:- Where any society does not furnish the information in regard to the society as required by the Registrar or fulfill any of the conditions laid down in the Act or these rules, “and the norms and conditions for registration of societies or class of societies as specified by the Registrar”, the Registrar may refuse to register that society.”
In exercise of fundamental right citizen has to register a cooperative society conforming to the norms and conditions for registration specified by the Registrar himself!!! One more notification or by giving oral orders? What a great fundamental right, governed by whims of an individual!!
Does it not look like a classic Example of Avoidable Bureaucratic Interference to Terrorize struggling Cooperators. The entire Intermediary Component 7 has to be thrashed going by this one example as it sets the direction for all 108 Rules being framed to amend 110 existing Rules.