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Lok Sabha Debates
Consideration And Passing Of The Multi-State Cooperative Societies ... on 6 May, 2002

15.00 hrs. Title: Consideration and passing of the Multi-State Cooperative Societies Bill, 2000. (Bill passed) MR. CHAIRMAN: Now, we go to item No. 11 – Multi-State Co-operative Societies Bill, 2000. The time allotted is three hours. Shri Ajit Singh.

THE MINISTER OF AGRICULTURE (SHRI AJIT SINGH): Madam Chairperson, I beg to move:

"That the Bill to consolidate and amend the law relating to co-operative societies, with objects not confined to one State and serving the interests of members in more than one State, to facilitate the voluntary formation and democratic functioning of co-operatives as people’s institutions based on self-help and mutual aid and to enable them to promote their economic and social betterment and for matters connected therewith or incidental thereto, be taken into consideration."


 The Multi-State Co-operative Societies Bill, 2000 is intended to replace the existing Multi-State Co-operative Societies Act, 1984. The ‘Co-operative Societies’ is a State subject under entry 32 of the State List. The States have accordingly enacted their own Acts. In order to facilitate the organisation and functioning of the co-operative societies having jurisdiction in more than one State, the Parliament enacted the Multi-State Co-operative Societies Act, 1984 under entry 44 of the first List of the Constitution.

In view of the increasing demand from the co-operative sector and recognising the need for promoting democratic and autonomous functioning of the co-operatives, the Planning Commission appointed a Committee in 1990 under the Chairmanship of Ch. Brahm Perkash to examine the whole issue. The Committee submitted its Report in 1991 and, inter alia, recommended a ‘Model Co-operatives Law’ for the States aimed at providing a genuine character to the co-operatives with the deletion of restrictive provisions in the existing State Acts and to facilitate the building of an integrated co-operative structure. The Government of India in the Department of Agriculture and Co-operation constituted an Advisory Committee under Shri R.N. Mirdha to advise the Central Government on matters relating to ensuring autonomous functioning of the multi-state co-operatives.

Based on the recommendations of Ch. Brahm Perkash Committee and Mirdha Committee, a legislative proposal to replace the existing Multi-State Co-operative Societies Act, 1984 was formulated and accordingly the Multi-State Co-operative Societies Bill, 2000 was introduced in this august House in the winter session of the year 2000. The Hon’ble Speaker referred the Bill to the Parliamentary Standing Committee on Agriculture for examination and the Committee has since submitted its Report.

The object of the Bill is to remove the so identified restricted provisions in the existing Multi-State Co-operative Societies Act, 1984 and to provide full functional autonomy and democratic management of the multi-state co-operative societies. As the hon. Members are aware, the process of co-operative reforms has been engaging the attention of the Government for quite sometime. There is a general view that co-operative institutions suffer from the undue Government interference and bureaucratic control. These institutions should in fact be member- driven institutions. With the passing of the Bill, a new era in the co-operative history will be ushered in which would enable them to function as real democratic and autonomous institutions for the mutual benefit of the members. The Bill will restore the faith of members in these institutions and will increase awareness amongst them. The co-operatives consist of the small and marginal farmers, the artisans, the workers and members of the weaker sections of the society. The new co-operative approach would enable these sections to improve their social and economic lot by availing the benefits of economy of scale. After the enactment of this new law, the State Governments will also be requested to amend their Acts on similar lines as most of the co-operative activities take place in the States.

The salient features of the Bill are as follows:

(i) Preamble of the Act is proposed to be widened to reflect the policy of the Government based on the internationally recognised co-operative principles.

It is proposed to widen the preamble of the Act to reflect the policy of the Government towards the co-operatives. The basic co-operative principles as internationally recognised have been included in the first schedule.

(ii) Registration process is proposed to be simplified and made time-bound.

Procedure for registration of the co-operative societies has been simplified by reducing the time from six months to four months and by providing for deemed registration if the Central Registrar fails to register the societies or their byelaws within the stipulated period.

It is proposed to omit the provision of prior consultation or approval of the Central Registrar for amalgamation or division of a society.

Co-operative societies will be enabled to form subsidiaries. It is proposed to enable a society to form subsidiary institutions for furtherance of its stated objects which may be registered under any law for the time being in force.

It is proposed to give greater responsibilities to the federal co-operatives towards their affiliated members.

To ensure active participation in the management, provisions for disqualification of a member have been made on account of absence from the three consecutive General Body meetings or failure to use services to the minimum level as provided in the bye-laws of such society.

Besides disqualifications prescribed in the existing Act, the Bill proposes to add a new provision rendering a person disqualified to become President or Vice-President or Chairperson or Vice-Chairperson, if he holds office of a Minister in the Central or State Government.

It is proposed that the tenure of the elected members of the Board shall be such as prescribed in the bye-laws, but not exceeding five years instead of three years as in the existing Bill.

It is proposed that the elections shall be held by the society itself, failing which, the Central Registrar shall cause the conduct of elections at the cost of the society.

The Government nominees on the Board will be in proportion of shareholding, but not exceeding three or one-third of the total number of members of the Board, whichever is less.

The Government shall continue its role of promoting and assisting the co-operatives. On the request of a society, the Government shall continue to promote and assist the co-operative by way of share capital, loans and advances, guarantee and financial assistance in any other form including subsidies.

The societies will have full liberty to raise resources and utilise its surplus funds. It is proposed to enable a society to raise resources to augment its funds and to utilise its surplus funds in accordance with its bye-laws without approval of the Central Registrar.

The societies will have power to get the audit conducted on their own. It is proposed that the audit of the society shall be conducted by the auditor appointed by the society itself and not by the Central Registrar. However, in case of failure on the part of the society, the Central Registrar may appoint the auditor.

The powers of the Central Registrar for inquiry and inspection have been restricted. It is proposed that the Central Registrar shall invoke powers of inquiry and inspection only on an application of the federal society or a creditor or a complaint filed by at least one-fifth of the total number of members of the society and after a reasonable notice and opportunity to the management of the society.

It is proposed that the disputes of a society shall be settled by an arbitrator as per provisions of the Arbitration and Conciliation Act, 1996 and not by the Central Registrar.

In order to make the management of a society accountable, it is proposed to widen the area of offences and stringent penalties.

It is proposed to restrict the powers of the Central Government to give directions or supersede the Board of Directors, to such societies only in which the Government holds not less than 51 per cent of the equity.

It is proposed to withdraw the powers of the Central Government to exempt a society from any of the provisions of the Act and Rules.

Now, I request the House to consider and pass this Bill.

MR. CHAIRMAN : Motion moved:

MR. CHAIRMAN: Now, Shri Shivraj V. Patil.