Cooperative
Governance
The Constitution 97th
Amendment Act 2012, one of the very progressive legislations of the UPA
Government aims to correct misgovernance of cooperative societies in the
country among other important provisions at a time when speaking of good
governance is akin to smelling jasmine
in fish and fowl market. The Act itself specified that the States shall amend
their respective cooperative Acts before February 14, 2013, one year from the
date of notification of the Act in line with the provisions of this Act. If the
States do not amend their Acts as above, the 97th Amendment Act
shall govern the State Cooperatives.
Article 19(4) defined
Cooperative Society as one that is promoted, managed and controlled by members.
This would mean that the control of the Cooperative Societies to whatever
extent it rested with the Registrar of the Cooperative Societies shall be
unconstitutional. All such provisions in the existing Acts shall be removed
from the modified Acts.
It also specified in section 243ZO that such
member to participate in elections should be actively availing the services of
the Society and should be attending its meetings with certain regularity. This
called for defining the Active Member in the new Act of the States.
This Act under article
243ZK also specified that the States shall also set up a State Election
Authority to conduct elections to the Cooperative Societies in the State and
these should be conducted once in every five years. If the State Government so
chooses, it can entrust the responsibility to the State Election Commission,
but with specific mention in the newly amended Cooperative Act. It has also
mentioned that such elections should be conducted in a manner that the new
Board should assume charge immediately after the first Board concludes its
term. There are around six lakh cooperatives in the country with estimated
23million members. It has become a habit with the States conducting such
elections irrespective of party in power to go in for enrollment of members just
before elections as anybody paying a small share capital of ten rupees can
become a member. To prevent such malpractice the Act in section, 243ZO
specifies the eligibility of members who can participate in voting.
The Act clearly defines
Board as the ‘Board of Directors or the Governing Body of the Society, or
whatever name called, to which the direction and control of the management of
the affairs of a society is entrusted to.’ There is brazen violation of the
Constitution by even the UPA ruled State like Andhra Pradesh. The 97th
Constitution Amendment Act 2012 dealing with Cooperative legal reforms and
governance statutorily seeks a State Election Authority to conduct elections to
cooperatives and the States are to carry out all the amendments required before
February 14, 2013. The State that has been postponing elections to cooperatives
for the last two years announced them hurriedly to have the last laugh on their
subversive methods of winning the elections. The New Act would not allow
non-active members to cast their vote. The ruling party is afraid of losing
hold on the cooperative societies that hitherto formed the bedrock of State
politics. States like Tamil Nadu and Karnataka issued ordinances repeating the
Central Act that were returned promptly.
The Board shall have
maximum 21 members and provided for reservation of SC/ST and women not
exceeding three provided the Society base itself does not have such
constituency. General Body has been given supreme authority thus conferring
autonomy in the Society. The rights of members have also been defined along
with the information the society should provide to the members and the
regulator. The Board shall have three independent professional directors but
would not have voting rights. These directors should submit to the General Body
their statement of assets and liabilities and shall not be defaulters to the
society in terms of their obligations.
No Board can be
superseded by the Government for more than six months with the exception of
cooperative banks where the supersession can be for one year under the
direction of the RBI.
Governance of
cooperatives through this Act provides for better participation in its
management and control and has prospect of superior governance over the
existing Companies, where the shareholders of the Company have to understand
the company only from their half-yearly and annual reports. Cooperatives as
body corporate managed and controlled by members could compete on their own
terms effectively with other forms of business organizations.
Edited form appeared in http://www.scribd.com/doc/117937064/Business-Advisor-December-25-2012
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