Ninety-seventh Amendment

See the PDF: http://legislative.gov.in/sites/default/files/amend97.pdf
SOR: http://legislative.gov.in/sites/default/files/99%20SOR.pdf

SOR Follows:

STATEMENT OF OBJECTS AND REASONS
The co-operative sector, over the years, has made significant contribution to various
sectors of national economy and has achieved voluminous growth. However, it has shown
weaknesses in safeguarding the interests of the members and fil.!fiIment of objects for which
these institutions were organised. There have been instances where elections have been
postponed indefinitely and nominated office bearers or administrators remaining in-charge
of these institutions for a long time. This reduces the accountability of the management of
co-operative societies to their members. Inadequate professionalism in management in many
of the co-operative institutions has led to poor services and low productivity. Co-operatives
need to run on well established democratic principles and elections held on time and in a free
and fair manner. Therefore, there is a need to initiate fundamental reforms to revitalize these
institutions in order to ensure their contribution in the economic development of the country
and to serve the interests of members and public at large and also to ensure their autonomy,
democratic functioning and professional management.
2. The "co-operative societies" is a subject enumerated in Entry 32 of the State List of
the Seventh Schedule of the Constitution and the State Legislatures have accordingly enacted
legislations on co-operative societies. Within the framework of State Acts, growth of
co-operatives on large scale was envisaged as part of the efforts for securing social and
economic justice and equitable distribution of the fruits of development. It has, however,
been experienced that in spite of considerable expansion of co-operatives, their performance
in qualitative terms has not been up to the desired level. Considering the need for reforms in
the Co-operative Societies Acts of the States, consultations with the State Governments
have been held at several occasions and in the conferences of State Co-operative Ministers.
A strong need has been felt for amending the Constitution so as to keep the co-operatives
free from unnecessary outside interferences
and also to ensure, their autonomous
organisational set up and their democratic functioning.
3. The Central Government is committed to ensure that the co-operative societies in
the country function in a democratic, professional, autonomous and economically sound
manner. With a view to bring the necessary reforms, itis proposed to incorporate a new Part
in the Constitution so- as to provide for certain provisions covering the vital. aspects of
working of co-operative societies like democratic, autonomous and professional functioning.
A new article is also proposed to be inserted in Part IV of the Constitution (Directive Principles
of State Policy) for the States to endeavour to promote voluntary formation, autonomous
functioning, democratic control and professional management of cooperative societies. The
proposed new Part in the Constitution, inter alia, seeks to empower the Parliament in respect
of multi-State co-operative societies and the State Legislatures in case of other co-operative
societies to make appropriate law, laying down the following matters, namely:(a) provisions for incorporation, regulation arid winding up of co-operative
societies based on the principles of democratic member-control, member-economic
participation and autonomous functioning;
(b) specifying the maximum number of directors of a co-operative society to be
not exceeding twenty-one members;
(c) providing for a fixed term offive years from the date of election in respect of
the elected members of the board and its office bearers;
(d) 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;

(e) providing for independent professional

audit;

(f) providing for right of information to the members of the co-operative societies;
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(g) empowering the State Governments
and accounts of co-operative societies;

to obtain periodic

reports of activities

(h) 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;

(i) providing for offences relating to co-operative societies and penalties in
respect of such offences.

4. It is expected that these provisions will not only ensure the autonomous and
democratic functioning of co-operatives, but also ensure the accountability of management
to the members and other stakeholders and shall provide for deterrence for violation of the
provisions of the law.

5. The Bill seeks to achieve the above objectives.

NEW DELHI:

The 11thNovember, 2009.
SHARAD PAWAR
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@ -118,7 +118,7 @@ Right to Freedom
(1) All citizens shall have the right—
(a) to freedom of speech and expression;
(b) to assemble peaceably and without arms;
(c) to form associations or unions;
(c) to form associations or unions or co-operative societies;
(d) to move freely throughout the territory of India;
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@ -71,6 +71,8 @@ State shall take steps, by suitable legislation or in any other way, to secure t
he
participation of workers in the management of undertakings, establishments or
other organisations engaged in any industry.
43B. The state shall endeavour to promote voluntary formation, autonomous
functioning, democratic control and professional management of the co-operative societies
44. Uniform civil code for the citizens.—The State shall endeavour to
secure for the citizens a uniform civil code throughout the territory of India.
45. Provision for early childhood care and education to children

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PART IXB
THE CO-OPERATIVE SOCIETIES
(a) "authorised person" means a person referred to as such in article 243ZQ;
(b) "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;
(c) "co-operative society" 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;
(d) "multi-State co-operative society" means a society with objects not confined to one State and
registered or deemed to be registered under any law for the time being in force relating to such cooperatives;
(e) "Office bearer" means a President, Vice-President, Chairperson, Vice-Chairperson, Secretary
or Treasurer, of a co-operative society and includes any other person to be elected by the board of any
co-operative society;
(f) "Registrar" means the Central Registrar appointed by the Central Government in relation to the
multi-State co-operative societies and the Registrar for co-operative societies appointed by the State
Government under the law made by the Legislature of a State in relation to co-operative societies;
(g) "State Act" means any law made by the Legislature of a State;
(h) "State level co-operative society" means a co-operative society having its area of operation
extending to the whole of a State and defined as such in any law made by the Legislature of a State.
243ZI. Incorporation of co-operative societies.—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 membercontrol, member-economic participation and autonomous functioning.
243ZJ. Number and term of members of board and its office bearers.—(1) The board shall consist
of such number of directors as may be provided by the Legislature of a State, by law:
Provided that the maximum number of directors of a co-operative society shall not exceed twenty-one:
Provided further that the Legislature of a State shall, by law, provide for the reservation of one seat for
the Scheduled Castes or the Scheduled Tribes and two seats for women on board of every co-operative
society consisting of individuals as members and having members from such class of category of persons.
(2) The term of office of elected members of the board and its office bearers shall be five years from
the date of election and the term of office bearers shall be coterminous with the term of the board:
Provided that the board may fill a casual vacancy on the board by nomination out of the same class of
members in respect of which the casual vacancy has arisen, if the term of office of the board is less than
half of its original term.
(3) The Legislature of a State shall, by law, make provisions for co-option of persons to be members
of the board having experience in the field of banking, management, finance or specialisation in any other
field relating to the objects and activities undertaken by the co-operative society, as members of the board
of such society:
Provided that the number of such co-opted members shall not exceed two in addition to twenty-one
directors specified in the first proviso to clause (1):
Provided further that such co-opted members shall not have the right to vote in any election of the cooperative society in their capacity as such member or to be eligible to be elected as office bearers of the
board:
Provided also that the functional directors of a co-operative society shall also be the members of the
board and such members shall be excluded for the purpose of counting the total number of directors
specified in the first proviso to clause (1).
243ZK. Election of members of board.—(1) Notwithstanding anything contained in any law made
by the Legislature of a State, 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.
(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:
Provided that the Legislature of a State may, by law, provide for the procedure and guidelines for the
conduct of such elections.
243ZL. Supersession and suspension of board and interim management.—(1) Notwithstanding
anything contained in any law for the time being in force, no board shall be superseded or kept under
supersession for a period exceeding six months:
Provided that the board may be superseded or kept under suspension in a case—
(i) of its persistent default; or
(ii) of negligence in the performance of its duties; or
(iii) the board has committed any act prejudicial to the interests of the co-operative society or its
members; or
(iv) there is stalemate in the constitution or functions of the board; or
(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:
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:
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.
(2) In case of supersession of a board, the administrator appointed to manage the affairs of such cooperative society shall arrange for conduct of elections within the period specified in clause (1) and hand
over the management to the elected board.
(3) The Legislature of a State may, by law, make provisions for the conditions of service of the
administrator.
243ZM. Audit of accounts of co-operative societies.—(1) The Legislature of a State may, by law,
make provisions with respect to the maintenance of accounts by the co-operative societies and the auditing
of such accounts at least once in each financial year.
(2) The Legislature of a State shall, by law, lay down the minimum qualifications and experience of
auditors and auditing firms that shall be eligible for auditing accounts of the co-operative societies.
(3) Every co-operative society shall cause to be audited by an auditor or auditing firms referred to in
clause (2) appointed by the general body of the co-operative society:
Provided that such auditors or auditing firms shall be appointed from a panel approved by a State
Government or an authority authorised by the State Government in this behalf.
(4) The accounts of every co-operative society shall be audited within six months of the close of the
financial year to which such accounts relate.
(5) The audit report of the accounts of an apex co-operative society, as may be defined by the State Act,
shall be laid before the State Legislature in the manner, as may be provided by the State Legislature, by
law.
243ZN. Convening of general body meetings.—The Legislature of a State may, by law, make
provisions that the annual general body meeting of every co-operative society shall be convened within a
period of six months of close of the financial year to transact the business as may be provided in such law.
243ZO. Right of a member to get information.—(1) The Legislature of a State may, by law, provide
for access to every member of a co-operative society to the books, information and accounts of the cooperative society kept in regular transaction of its business with such members.
(2) The Legislature of a State may, by law, make provisions to ensure the participation of members of
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.
(3) The Legislature of a State may, by law, provide for co-operative education and training for its
members.
243ZP. Returns.—(1) Every co-operative society shall file returns, within six months of the close of
every financial year, to the authority designated by the State Government including the following matters,
namely:—
(a) annual report of its activities;
(b) its audited statement of accounts;
(c) plan for surplus disposal as approved by the general body of the co-operative society;
(d) list of amendments to the bye-laws of the co-operative society, if any;
(e) declaration regarding date of holding of its general body meeting and conduct of elections when
due; and
(f) any other information required by the Registrar in pursuance of any of the provisions of the State
Act.
243ZQ. Offences and penalties.—(1) The Legislature of a State may, by law, make provisions for the
offences relating to the co-operative societies and penalties for such offences.
(2) A law made by the Legislature of a State under clause (1) shall include the commission of the
following act or omission as offences, namely:—
(a) a co-operative society or an officer or member thereof wilfully makes a false return or furnishes
false information, or any person wilfully not furnishes any information required from him by a person
authorised in this behalf under the provisions of the State Act;
(b) any person wilfully or without any reasonable excuse disobeys any summons, requisition or
lawful written order issued under the provisions of the State Act;
(c) any employer who, without sufficient cause, fails to pay to a co-operative society amount
deducted by him from its employee within a period of fourteen days from the date on which such
deduction is made;
(d) any officer or custodian who wilfully fails to handover custody of books, accounts, documents,
records, cash, security and other property belonging to a co-operative society of which he is an officer
or custodian, to an authorised person; and
(e) whoever, before, during or after the election of members of the board or office bearers, adopts
any corrupt practice.
243ZR. Application to multi-State co-operative societies.—The provisions of this Part shall apply
to the multi-State co-operative societies subject to the modification that any reference to "Legislature of a
State", "State Act" or State Government" shall be construed as a reference to "Parliament", "Central Act"
or "the Central Government" respectively.
243ZS. Application to Union territories.—The provisions of this Part shall apply to the Union
territories and shall, in their application to a Union territory, having no Legislative Assembly as if the
references to the Legislature of a State were a reference to the administrator thereof appointed under article
239 and, in relation to a Union territory having a Legislative Assembly, to that Legislative Assembly:
Provided that the President may, by notification in the Official Gazette, direct that the provisions of this
Part shall not apply to any Union territory or part thereof as he may specify in the notification.
243ZT. Continuance of existing laws.— 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.]