Explained: What is Multi-State Cooperative Societies (Amendment) Bill, 2022?

The amendments to the 2002 Bill will improve governance, reform the electoral process, strengthen monitoring mechanisms and enhance transparency and accountability

New Delhi, Dec 07: The Multi-State Cooperative Societies (Amendment) Bill, 2022, which aims to strengthen co-ops and make a tool of 'Sahakar se Samariddhi', has been introduced in the Winter Session of Parliament. For the last 20 years, though co-ops expanded far and wide, the laws governing them sadly remained unchanged.

The Multi-State Cooperative Societies (Amendment) Bill, 2022 seeks to 'strengthen governance, enhancing transparency, increasing accountability and reforming electoral process' in the multi-state cooperative societies by supplementing existing legislation and incorporating the provisions of 97th Constitutional amendment.

The Union Cabinet has approved the Multi-State Cooperative Societies (Amendment) Bill, 2022, which seeks to amend the Multi-State Cooperative Societies Act, 2002, I&B Minister Anurag Thakur told reporters here after the Cabinet meeting. He said the amendments have been brought in to improve the ease of doing business.

The Bill will incorporate the provisions of the 97th Constitutional Amendment. The amendments have been brought to improve governance, reform the electoral process, strengthen monitoring mechanisms and enhance transparency and accountability.

The Bill also seeks to improve the composition of board and ensure financial discipline, besides enabling the raising of funds in the multi-state cooperative societies. To make the governance of multi-state cooperative societies more democratic, transparent and accountable, the Bill has provisions for setting up of Cooperative Election Authority, Cooperative Information Officer and Cooperative Ombudsman.

What's the Bill about?

Former agriculture minister Sharad Pawar introduced the Multi-State Cooperative Societies (Amendment) Bill, 2010 in the Lok Sabha on 15 November 2010. Under the law, the Centre could appoint a central registrar of cooperative societies.

A multi-state cooperative society can be registered if its main object is to serve the interest of members in multiple states. Its bylaws provide for the social and economic betterment of its members in accordance with cooperative principles.

The Bill amends the Multi State Cooperative Societies Act, 2002, which regulates multi-state cooperative societies, i.e. cooperatives which serves the interest of members in more than one state. This includes federal cooperative societies whose membership is available only to a cooperative society or a multi-state cooperative society and 21 national cooperative societies specified.

The Central government may appoint a central registrar of cooperative societies. A multi-state cooperative society may be registered if its main object is to serve the interest of members in multiple states, its bye-laws provide for social and economic betterment of its members in accordance with the cooperative principles.

The key amendments to the Act pertain to time limit for disposal of application for registration, distribution of shares, constitution of interim board, holding of elections, constitution of fund and dispute settlement.

Disposal of registration: The Act states that the central registrar has to dispose of an application for registration within four months. The Bill adds that the time may be extended to five months after giving reasons in writing.

According to the Act, an application shall be refused within four months. If it is not disposed within that period, the application shall be deemed to have been refused. The Bill increased the time period to five months and adds that if an application is not disposed off within the time period, it shall be deemed to have been accepted as a member.

Distribution of shares:

The Act states that the shares of a cooperative society are redeemable by a member according to the provisions of the bye-laws. The redemption of shares shall on face value of shares. The Bill adds the proviso that the cooperative society may refund the share capital held by the government. The redemption of shares shall be on face value or book value of shares, whichever is higher.

Constitution of interim board: The Bill allows the central registrar to declare any multi-state cooperative society as sick. The Central government may, on the recommendation of the registrar, appoint an interim board for a maximum of five years. The central registrar can also declare a cooperative to be viable within the five years. The board of directors before the cooperative was declared sick shall be reinstated.

Elections: The Act states that elections shall be conducted by the existing board. The Bill amends this to state that the Central government may appoint a Cooperative Election Authority to conduct elections in cooperative societies to be prescribed.

Constitution of Fund: The Bill states that the central government shall set up the Cooperative Rehabilitation and Reconstruction Fund. A cooperative society shall credit 0.005% to 0.1% of its turnover to the fund, provided it does not exceed Rs 3crores per year.

Dispute settlement: Under the Act, all disputes shall be referred to arbitration under the Arbitration and Conciliation Act, 1996. The Bill amends it by stating that all disputes shall be referred to the Central Registrar. If there is a question as to whether a dispute touches the constitution or management of a society, it shall be decided by the Central Registrar and shall not be questioned by the court.