Ministry of Cooperation: Critical Analysis

Ministry of Cooperation: Critical Analysis

• In a historic move, a separate ‘Ministry of Co-operation’ has been created by the Modi Government for realizing the vision of ‘Sahkar se Samriddhi’.
• This ministry will provide a separate administrative, legal and policy framework for strengthening the cooperative movement in the country.
• It will help deepen Co-operatives as a true people based movement reaching upto the grassroots.
• In our country, a Co-operative based economic development model is very relevant where each member works with a spirit of responsibility.
• The Ministry will work to streamline processes for ‘Ease of doing business’ for co-operatives and enable development of Multi-State Co-operatives (MSCS).
• The Central Government has signaled its deep commitment to community based developmental partnership. Creation of a separate Ministry for Co-operation also fulfils the budget announcement made by the Finance Minister.

Cooperatives – Inserted in Part 9-B by 97^th Constitutional Amendment, 2011

• It gave Constitutional status and protection to Cooperative societies.
• It made 3 changes in the Constitution

1. Art 19: It made Right to form cooperative societies a FR.

2. It included a new DPSP on promotion of cooperative societies (Art 43 B)

3. It added a new Part 9 B (Art 243 ZH to Art 243 ZT)

• State Legislatures (SL) may make a law on incorporation, regulation, winding up of cooperatives based on principles of voluntary formation, democratic member control, member-economic participation and autonomous functioning.
• Tenure = 5 years (re-election within 6 months) and

Composition

• SL may provide for the directors but the max no. of directors should be less than 21. 1 seat for SC or ST and 2 seats for women.
• SL shall make provisions for co-option of persons having experience in banking, management, finance, etc. but it should be ≤ 2 in addition to 21. Plus, they won’t have the Right to vote in any election of cooperatives society or be eligible to be elected as office bearers of the Board.
• Functional directors of cooperative society shall also be member of the board. They won’t be counted in 21.
• Election of Members of Board: Shall be vested in a body as provided by SL.
• SL may make provisions for maintenance of accounts and auditing of such accounts. Shall be audited within 6 months of close of FY.
• This part shall apply to UTs. But Prez may direct that provisions may or may not apply to UTs.
• These provisions shall also apply to multi state cooperatives.

SC annuls parts of co-op amendment

• In a major boost for federalism, the Supreme Court struck down parts of a Constitution amendment which shrank the exclusive authority of States over its cooperative societies.
• Part IXB, introduced in the Constitution through the 97th Amendment of 2012, dictated the terms for running cooperative societies.
• The provisions in the amendment, passed by Parliament without getting them ratified by State legislatures as required by the Constitution, went to the extent of determining the number of directors a society should have or their length of tenure and even the necessary expertise.
• In a majority judgment authored by Justice Nariman, the court held that cooperative societies come under the “exclusive legislative power” of State legislatures.
• The judgment may be significant in the background of fears voiced by the States whether the new Central Ministry of Cooperation would dis-empower them. The SC, however, said the Centre had power over multi-State cooperative societies.
• Part IX B, which consists of Articles 243ZH to 243ZT, has “significantly and substantially impacted” State legislatures’ “exclusive legislative power” over its cooperative sector under Entry 32 of the State List.
• In fact, the court pointed out how Article 243ZI makes it clear that a State may only make law on the incorporation, regulation and winding up of a society subject to the provisions of Part IXB of the 97th Constitution Amendment.
• “There can be no doubt that our Constitution has been described as quasi-federal in that, so far as legislative powers are concerned, though there is a tilt in favour of the Centre vis-à-vis the States given the federal supremacy principle outlined herein above, yet within their own sphere, the States have exclusive power to legislate on topics reserved exclusively to them,” Justice Nariman wrote in his 89-page majority opinion shared with Justice B.R. Gavai.
• “The 97th Amendment which inserts the chapter dealing with cooperative societies has not been so ratified by the States, though an amendment of the Constitution is the exercise of constituent power which differs from ordinary legislative power, such constituent power does not convert Parliament into an original constituent assembly. Parliament being the donee of a limited power may only exercise such power in accordance with both the procedural and substantive limitations contained in the Constitution of India,” Justice Nariman observed.
• However, the court did not strike down the portions of Part IXB of the Amendment concerning “Multi State Cooperative Societies” due to the lack of ratification.
• “When it comes to Multi State Co-operative Societies (MSCS) with objects not confined to one State, the legislative power would be that of the Union of India which is contained in Entry 44 List I (Union List)... It is declared that Part IXB of the Constitution is operative only insofar as it concerns multi-State cooperative societies both within the various States and in the Union Territories,” Justice Nariman said.
• In his dissent, Justice K.M. Joseph said the doctrine of severability would not operate to distinguish between single-State cooperatives and MSCS. The judge said the entire Part IXB should be struck down on the ground of absence of ratification.