Part IXB: The Co-operative Societies

Constitutional Framework

Part IXB comprises Articles 243ZH to 243ZT, which lay down the constitutional provisions governing cooperative societies. The key features include:

• Article 19(1)(c): The amendment inserted the words “or cooperative societies” after “unions” to explicitly guarantee the right to form cooperative societies.
• Article 43B: This article mandates that the State shall endeavor to promote the voluntary formation, autonomous functioning, democratic control, and professional management of cooperative societies.
• Article 243ZH to 243ZT: These articles specifically pertain to the governance and regulation of cooperative societies, detailing aspects such as definitions, legislative powers, and the applicability of laws.

Legislative Competence and the 97th Amendment

The 97th Amendment was passed by Parliament but faced challenges regarding its ratification by the requisite number of State legislatures. The =Supreme Court addressed this issue in the case of Union of India v. Rajendra N. Shah (2021). The Court held that:

• Non-Ratification: The amendment was not ratified by at least half of the State legislatures, as required under Article 368(2) of the Constitution.
• Doctrine of Severability: The Court applied the doctrine of severability, declaring that provisions concerning multi-State cooperative societies and societies in Union Territories remain operative.
• Impact on State Cooperative Societies: Provisions affecting single-State cooperative societies were rendered inoperative due to the lack of ratification.

Key Provisions of Part IXB

Article 243ZH: Definitions

This article defines key terms such as “cooperative society,” “multi-State cooperative society,” “board,” “office bearer,” and “registrar,” providing clarity on the scope and application of the provisions.

Article 243ZJ: Number and Term of Members of Board and Office Bearers

This article stipulates:

• Board Composition: The board shall consist of a maximum of 21 directors.
• Reservation: One seat for Scheduled Castes or Scheduled Tribes and two seats for women must be reserved.
• Term of Office: The term of office for elected members and office bearers is five years.
• Co-option: Provisions for co-option of persons with expertise in relevant fields.

Article 243ZL: Election of Board and Office Bearers

This article mandates that:

• Direct Elections: The board and office bearers must be elected directly by the members.
• Timely Elections: Elections should be conducted within the time frame prescribed by law.
• Supervision: The process must be supervised by an independent authority to ensure fairness and transparency.

Article 243ZM: Audit of Accounts of Cooperative Societies

This article outlines:

• Maintenance and Audit: Cooperative societies must maintain accounts and have them audited at least once every financial year.
• Qualifications of Auditors: The legislature of a State shall, by law, lay down the minimum qualifications and experience required for auditors and auditing firms.
• Appointment of Auditors: Auditors must be appointed from a panel approved by the State Government or an authority authorized by the State Government.
• Audit Report: The audit report of an apex cooperative society shall be laid before the State Legislature.

Article 243ZT: Power to Make Laws

This article empowers the legislature of a State to make laws for the incorporation, regulation, and winding up of cooperative societies, subject to the provisions of Part IXB. However, such laws must align with the principles of voluntary formation, democratic member control, member economic participation, and autonomous functioning.

Judicial Oversight and Interpretation

The Supreme Court’s interpretation of Part IXB has been pivotal in delineating the scope of cooperative governance:

• Union of India v. Rajendra N. Shah (2021): The Court emphasized the necessity of ratification by State legislatures for provisions affecting single-State cooperative societies.
• Doctrine of Severability: The Court applied this doctrine to uphold provisions concerning multi-State cooperative societies, ensuring their continued applicability despite the procedural lapse.

Conclusion

Part IXB of the Indian Constitution represents a significant step towards strengthening the cooperative sector by ensuring democratic governance and professional management. While the Supreme Court’s decision in 2021 highlighted procedural shortcomings, it also reinforced the importance of adhering to constitutional mandates in the legislative process.