Highlights of the Bill

  • The Constitution (One Hundred and Sixth) Amendment Bill, 2006 proposes to insert a new part IX B in the Constitution (adding Articles 243ZH through 243ZT), which provides for incorporation, regulation and winding up of co-operative societies.
  • The Bill specifies the maximum number of Board members and the tenure of the members. Elections have to be held before the expiry of the term of the Board.
  • The Board of a co-operative society that has government shareholding or loans can be superseded for the maximum period of six months.
  • State governments can co-opt upto two nominees on the Board of a co-operative society.
  • The Bill specifies certain offences related to co-operative societies. State legislatures can define the penalties related to co-operative societies.

Key Issues and Analysis

  • The Constitution lays down the framework for governance and the relationship of citizens and various state institutions. It is debatable whether governance mechanisms of voluntary bodies such as co-operatives should be specified in the Constitution.
  • Co-operative societies may be superseded without giving the Board an opportunity to explain the charges.
  • Only co-operatives with government shareholding can be superseded. This contradicts the Banking Regulation Act, 1949, which allows co-operative banks to be superseded by the Reserve Bank of India .
  • The powers of the Registrar of co-operative societies are not specified in the Bill. This leaves scope for interference by the Registrar in the running of co-operative societies.

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