Cooperative Societies and 97th Amendment of the Constitution

Cooperative Societies

The cooperative movement in India owes its origin to agriculture and allied sectors.

Towards the end of the 19th century, the problems of rural indebtedness and the consequent conditions of farmers created an environment for the chit funds and cooperative societies.

The farmers generally found the cooperative movement an attractive mechanism for pooling their meagre resources for solving common problems relating to credit, supplies of inputs and marketing of agricultural produce.

The experience gained in the working of cooperatives led to the enactment of Cooperative Credit Societies Act, 1904.

Subsequently, a more comprehensive legislation called the Cooperative Societies Act was enacted.

This Act, inter alia, provided for the creation of the post of registrar of cooperative societies and registration of cooperative societies for various purposes and audit.

Under the Montague-Chelmsford Reforms of 1919, cooperation became a provincial subject and the provinces were authorised to make their own cooperative laws.

Under the Government of India Act, 1935, cooperatives were treated as a provincial subject.

The item “Cooperative Societies” is a State Subject under entry No.32 of the State List of the Constitution of India.


Constitutional Provisions

The 97th amendment of the constitution has made forming cooperative societies as a fundamental right.

The 97th Constitutional Amendment Act of 2011 gave a constitutional status and protection to co-operative societies.

It added a new Part IX-B in the Constitution which is entitled “The Co-operative Societies” (Articles 243-ZH to 243-ZT).

The Act Provides for—

[1] incorporation, regulation and winding up of cooperative societies based on the principles of voluntary formation, democratic member control, member economic participation and autonomous functioning;

[2] specifying the maximum number of directors of a co-operative society to be not exceeding twenty-one members;

[3] a fixed term of five years from the date of election in respect of the elected members of the board and its office bearers; and an authority or body for the conduct of elections to a cooperative society;

[4] a maximum time limit of six months during which board of directors of a co-operative society could be kept under supersession or suspension;

[5] independent professional audit;

[6] right of information to the members of the co-operative societies;

[7] empowering the State Governments to obtain periodic reports of activities and accounts of co-operative societies;

[8] reservation of one seat for the Scheduled Castes or the Scheduled Tribes and two seats for women on the board of every cooperative society, which have individuals as members from such categories; and

[9] penalties in respect of offenses relating to co-operative societies.