THE CONSTITUTION (ONE HUNDRED AND ELEVENTH AMENDMENT) BILL, 2009

THE CONSTITUTION (ONE HUNDRED AND ELEVENTH
AMENDMENT) BILL, 2009
A
BILL
further to amend the Constitution of India.
BE it enacted by Parliament in the Sixtieth Year of the Republic of India as
follows:—
1. (1) This Act may be called the Constitution (One Hundred and Eleventh Amendment)
Act, 2009.
(2) It shall come into force on such date as the Central Government may, by notification
in the Official Gazette, appoint.
2. In Part IV of the Constitution, after article 43A, the following article shall be
inserted, namely:—
“43B. The State shall endeavour to promote voluntary formation, autonomous
functioning, democratic control and professional management of co-operative
societies.”.
Short title and
commencement.
Insertion of
new article
43B.
Promotion of
co-operative
societies.
TO BE INTRODUCED IN LOK SABHA
Bill No. 107 of 2009
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3. After Part IXA of the Constitution, the following Part shall be inserted, namely:—
‘PART IXB
THE CO-OPERATIVE SOCIETIES
243ZH. In this Part, unless the context otherwise requires,—
(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 co-operatives;
(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. 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.
243ZJ. (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 or 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,
Insertion of
new Part IXB.
Definitions.
Incorporation
of cooperative
societies.
Number and
term of
members of
board and its
office bearers.
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management, finance or specialisation in any other field relating to the objects and
activities undertaken by the co-operative soceity 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 proviso to clause (1):
Provided further that such co-opted members shall not have the right to vote in
any election of the co-operative 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 first proviso of clause (1) of this
article.
243ZK. (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
assumes 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. (1) Notwithstanding anything contained in any law for the time being in
force, no board shall be superseded or kept under suspension for a period exceeding
six months:
Provided that the board may be superseded or kept under suspension in 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 cooperative
society or its members; or
(iv) there is a stalemate in the constitution or functions of the board; or
(v) the authority or body as provided by the Legislature of the 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 co-operative society shall arrange for conduct of elections
within the period specified in clause (1) and handover the management to the elected
board.
Election of
members of
board.
Supersession
and
suspension of
board and
interim
management.
10 of 1949.
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(3) The Legislature of a State may, by law, make provisions for the conditions of
service of the administrator.
243ZM. (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. 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. (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
co-operative society kept in regular transaction of its business with such member.
(2) The Legislature of a State may, by law, make provisions to ensure the
participation of members in 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. 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, 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. (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.
Audit of
accounts of cooperative
societies.
Convening of
general body
meetings.
Right of a
member to get
information.
Returns.
Offences and
penalties.
5
(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 cooperative
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 hand over 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. 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. 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. 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 (One Hundred and Eleventh Amendment) Act, 2009, 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.’.
Application to
multi-State
co-operative
societies.
Application to
Union
territories.
Continuance of
existing laws.
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 fulfilment 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, it is 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 and 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 of five 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 to obtain periodic reports of activities
and accounts of co-operative societies;
(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; SHARAD PAWAR
The 11th November, 2009.
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LOK SABHA
————
A
BILL
further to amend the Constitution of India.
————
(Shri Sharad Pawar, Minister of Agriculture, Consumer Affairs and
Public Distribution System)
GMGIPMRND—4711LS(S5)—24-11-2009.