Cooperative Union urges Centre to relook at draft amendments to multi-state cooperative societies act

The Centre should relook at the proposed amendments to Multi-State Cooperative Societies Act 2002 as some provisions are against the "democratic and autonomous principles of cooperatives", according to NCUI.

The Cooperation Ministry has proposed amendments to the Act to bring it in line with the 97th Constitutional Amendment and undertake reforms with an aim to enhance contribution of multi-state cooperative societies to its members and the national economy at large.

The ministry has sought views from stakeholders on the draft amendments which are related to elections, governance, recruitment, transparency and efficiency in multi-state cooperative societies.

"...The government should have a relook into some of the restrictive provisions of the draft amendments so that the democratic growth of the cooperatives is not hampered," National Cooperative Union of India (NCUI) said in its comments submitted to the ministry after a detailed discussion with members.

The members representing various cooperative organisations found some of the provisions of the draft amendments "not aligning with cooperative principles," it said.

The draft amendments are not in accordance with the democratic and autonomous principles of cooperatives, it added.

According to the NCUI, members have raised objection to a provision on setting up of a Cooperative Rehabilitation, Reconstruction and Development Fund for revival of sick multi-state cooperative societies (MSCS) where MSCS which are in profit for three years may credit fund.

"The members felt that this is an additional burden for profit-making MSCS and will hamper requirements of funds for further business development," it added.

The members have objected to another provision that does not allow cooperatives to redeem shares without prior approval of the government, and the redemption will be on face value, or book value of shares which is agreed by the authorities.

The members felt that as per cooperative principles, the shares of cooperative societies are issued and redeemed on face value only. They felt the shares of cooperatives are neither tradable nor listed on stock exchanges.

"The provision for refund of share capital on book value to the government authorities is not practical to implement as it is against the principle of equality," the NCUI said in a statement.

On a proposal to appoint auditors from the panel of Reserve Bank of India for non-credit MSCS, NCUI said the members felt this will adversely affect the functioning of such societies as the nature of business conducted by MSCS and Multi-State Cooperative banks are entirely different, so the existing provision in the Act should be retained.

The members also objected to another clause that proposes maintaining of the Cooperative Education Fund by the central government and proceeds to be used for cooperative education and training through NCUI or any other agency.

This will diminish the importance of NCUI which is an apex body of the cooperative movement with focus on cooperative education and training. Therefore, the existing provision of NCUI being given the authority to collect and manage the fund as present in the Act, must remain unchanged.

That apart, members felt that a restriction on employment of relatives of sitting directors of MSCS is infringement of fundamental rights under the constitution to earn livelihood.

With regard to draft bye-laws provision that a member who has been a director of the Board of any MSCS or bank, where such board has been superseded, shall not be eligible to be elected as director of the board of another MSCS or cooperative bank for a period of 5 years, the members felt that the proposed clause is arbitrary.

This provision is also against the principles of natural justice which the cooperative principles emphasize, the NCUI added.