Amendments to the Co-operative Societies Act

Source: The post is based on the article “Amendments to the Co-operative Societies Act” published in Indian Express on 22nd December 2022

What is the News?

The Lok Sabha has referred the Multi-State Co-operative Societies (Amendment) Bill 2022 to a joint committee of Parliament. The Bill seeks to amend the Multi-State Cooperative Societies Act, 2002.

What are the key provisions of the Multi-State Co-operative Societies (Amendment) Bill 2022?

Formation of multi-state cooperative society: Presently, only Multi-state cooperative societies (MCCS) can amalgamate themselves and form a new multi-state cooperative society.

– The bill provides that any cooperative society may by a resolution passed by a majority of not less than two-thirds of the members present and voting at a general meeting of such society can decide to merge into an existing multi-state co-operative society.

– Such resolution shall be subject to provisions of the respective State Cooperative Societies Act for the time being in force, under which such cooperative society is registered.

Cooperative election authority: The Bill seeks to establish a “cooperative election authority” to bring “electoral reforms” in the cooperative sector. The authority will consist of a chairperson, a vice-chairperson and a maximum of three members to be appointed by the Centre.

Fund for sick co-operative societies: The Bill establishes the Co-operative Rehabilitation, Reconstruction and Development Fund for the revival of sick multi-state co-operative societies. 

Audit of cooperative societies: The bill proposes to insert a new Section 70A relating to concurrent audit for such multi-state societies with an annual turnover or deposit of more than the amount as determined by the Centre.

Redressal of complaints: The central government will appoint one or more Cooperative Ombudsmen with territorial jurisdiction. The Ombudsman shall inquire into complaints made by members of cooperative societies regarding (i) their deposits, (ii) equitable benefits of the society’s functioning, or (iii) issues affecting the individual rights of the members.

Penalty: The Bill increases the penalty amount for violation of the law to Rs. 1 lakh and potential imprisonment from six months to a year.  

What are the criticisms against the bill?

Firstly, the bill may lead to the concentration of power of the Centre which could impact the “autonomy” of multi-state cooperative societies and create the potential for “misuse”.

Secondly, the bill seeks to take away state governments’ rights and is against the country’s federal structure. It seeks to amend Section 17 of the principal act to allow the merger of any State cooperative society with an existing MSCS. 

– Opposition members argued that this was beyond the Centre’s legislative competency as State cooperatives are not its domain.