By Surbhi Jain
Introduction
Cooperative Society is not a new concept. It is existing worldwide and is represented in all the sectors. It is an organisation that is made by the people for the people and of the people which has joint ownership and is controlled democratically. It is also known as co-operative, co-op, or coop.
The Indian Co-operative Societies Act, 1912 defines a cooperative under its Section 4 as “a society which has its objective the promotion of economic interest of its members in accordance with co-operative principles”.
Examples of Cooperative Societies in India are Pratibha Mahila Sahakari Bank, Vasudhara Dairy, Karnataka Milk Federation (KMF), Indian Farmers Fertiliser Cooperative Limited, etc. Amul, is an Indian dairy cooperative society, based at Anand in the Indian state of Gujarat. Formed in 1946, it is a cooperative brand managed by a cooperative body, the Gujarat Co-operative Milk Marketing Federation Ltd.
The Constitution (Ninety-Seventh Amendment) Act was passed in 2011 to make states facilitate the creation and working of co-operative societies in their territory. Let’s examine the provisions regarding co-operative societies, given in Article 243ZH to Article 243ZT under Part IX-B.
Definition
Article 243ZH defines a co-operative society as a society registered or deemed to be registered under any law relating to co-operative societies.
Incorporation
Incorporation of co-operative societies:
Just like any other institution or organisation, co-operative societies to need a prescribed procedure for their incorporation. If we want to create a co-operative society today, what are the rules we must follow?
Well, these rules vary from state-to-state. Article 243ZI mentions that a State Legislature can decide the process of incorporation, regulation and winding up of co-operative societies in its territory, keeping in mind the major co-operative principles – democratic set-up, member participation, and autonomy.
Types of Cooperative Society
- Consumers’ Co-operative Society
This society buys goods in bulk from the manufacturer or producer and eliminates the middleman thereby help in procuring the goods for its members at a reasonable price. The society is formed to protect the interest of the general consumer. Kendriya Bhandar, Apna Bazar and Sahkari Bhandar are examples of consumers’ co-operative society.
- Producers’ Co-operative Society
They are usually formed to protect the interest of the small producers by making available items of their need for a production like raw materials, tools and equipments, machinery, etc. This society helps in bargaining the price of the items as they would be in a position to do the same due to ordering the items in a bulk.
Handloom societies like APPCO, Bayanika, Haryana Handloom, etc., are examples of producers’ co-operative society.
- Co-operative Marketing Society
This society is formed by small producers and manufacturers who find it difficult to sell their products individually. It would be the duty of the society to collect all the products from the member and to sell them in the market.
Gujarat Co-operative Milk Marketing Federation that sells AMUL milk products is an example of a marketing co-operative society.
- Co-operative Credit Society
The cooperative society is formed to provide financial assistance and support to the members. The society provides the loan to the members who are in dire need to get one and the rate of interest is also relatively low then the private banks and non banking financial companies. The loan is provided from the deposits of the members. Village Service Co-operative Society and Urban Cooperative Banks are examples of co-operative credit society.
- Co-operative Farming Society
These societies are formed by small farmers to work jointly and thereby enjoy the benefits of large-scale farming. Lift-irrigation cooperative societies and pani-panchayats are some of the examples of the co-operative farming society.
Analysis of Case And Amendment
In the case Thalappalam Coop. vs. State of Kerala,[1] the issue was whether the Cooperative societies are public authorities to be covered under the ambit of RTI Act. The court on the basis of Ajay Hasia vs. Khalid Mujib[2] the case concluded that the level of direct or indirect control is not deep and pervasive thus they cannot be considered as states, however, still, it can satisfy criteria of being a public authority.
The Hon’ble Court scrutinizes the Right to Information Act, which gives right of access to information under the control of public authorities to citizens. The definition of “public authority” is provided under Section 2(h) of the RTI Act.
The court found the outline of the test required for the establishment of “control”. It was found that “mere supervision or regulation as such by a statute or otherwise of a body would not make that body a public authority under the meaning of Section 2(h)(d)(i) of RTI Act. Based on the following observation court engaged in defining the new word “substantially financed” and also established that financing can be direct or indirect.
In addition to that court after referring to the case of Plaser v Grimling[3]expressed that the term “substantially financed” should not be interpreted narrowly, adding on to it that the financing must be “existing actual, positive and real”.The court also acknowledged that on many occasion the state may provide funds for various projects the provision could not be engaged in the body find it difficult to exist by the help of that fund, therefore merely providing exemptions, grants, and privileges don’t satisfy the requirement of the provision.
In case of NGO, although it is not covered under the ambit of statutory control then also it can be established that NGO is substantially financed directly or indirectly by the fund of Government. Thus, the NGO by virtue of being financed by the government would be brought under the definition of public authority.
The court also declared that for getting the benefit of Right to access the information, the burden is on the applicant to prove that from the body he is seeking the information. And also declared that the Court keeping in mind the privacy rights concluded that if the information is personal and does not relate to any public activity or interest, then the public authority or officer is not obliged to comply with the request of the applicant
Lastly, the Cooperative Societies registered under Cooperative Societies Act would not be considered as “public authority”, since it cannot be shown that they are owned, controlled or substantially financed by the government.
Amendment
Although the Supreme Court in the case Thalappalam Services Cooperative Bank Ltd. vs. State of Kerala stated that the RTI act was not applicable to cooperative societies. But after the enactment of the 97th amendment, the conception of that time reverted and led an institution of cooperative societies towards better future.
The Constitution of India, under Article 19 has given the Right to Freedom of Speech and Expression, to form associations or unions, to move freely throughout the territory of India, to reside and settle in a part of the territory of India and to practice any profession or to carry on any occupation, trade and business and to assemble peacefully and without arms.
As we are well aware of the fact that after the 97th Amendment, forming a cooperative society has also been recognized as a fundamental right and moreover forming the cooperative society is now also extended to fundamental duty under Article 43-B of Part IV which says that It is the duty of the states to promote autonomous functioning, democratic control, voluntary formation and professional management of the cooperatives to enhance the economic activities of India.
Also, Part IX given in Constitution of India has the provision of self-government which talks about Panchayats. Now with the advent of Part IX C, the cooperative societies have got the status of Local Self-Government.
However, there is no clarity as such about the applicability of the RTI Act to the cooperative societies.
Several courts had given a contradictory view on this matter but cooperative societies were earlier considered out of the realm of the RTI Act because it was not recognized as ‘authority’ or ‘body’ or an ‘institution’ of self-government established under the Constitution.
Therefore, attempts of bringing the cooperative societies under the RTI failed and also authorities of these cooperative societies have always taken the stand of not coming under the realm of RTI Act.
Illustration
In Maharashtra, which is known for having a large number of cooperative societies where politics is also influenced by the cooperative sector. There the scale of corruption, scam, and illegalities in this sector is also very high. Irresponsibility in this sector is also very high and also on the name of information that current statistics of cooperative societies are also not easily available.
The statistics of the department of cooperative societies of Maharashtra in 2009-10 show that there were 2, 18,320 cooperative societies in Maharashtra and the total membership of these societies was five crores forty-two lakhs. Thus, one can imagine how this sector such as this was uncontrolled and unaccountable until the amendment came into existence. After the promulgation of the 97th amendment, one can hope that in future this sector will move in a positive direction. This is evident from the fact that a large number of states is taking positive steps by amending their earlier provisions.
Now there are various provisions came into effect imposing penalty imposing a penalty for defaults, not ordering an election within a specified time, corruption, irregularity etc.[4]
It is pertinent to note that before 1992 panchayats and municipalities were not recognized bodies by the Constitution of India that did not mean that at that time there were no panchayats or municipalities. These bodies were in existence. But due to the independent status, their functioning was arbitrary.
Thus, they did not acquire the reputation of being a responsible entity because of the absence of regular elections, prolonged suspension and insufficient representation of the weaker section etc. Therefore, to give continuity certainty and strength to panchayat raj Part IX was inserted in the Constitution.
Also, Urban Local Bodies were not able to perform effectively as vibrant democratic units of self-government but with the insertion of Part IX B, municipality acquires the new reputation of being a prominent democratic unit. Now with the 97th Amendment, Part IX B has been inserted to give cooperative societies a status of local self-government.
As per RTI Act section 2 (h) “public authority” means any authority or body or institution of self-government established or constituted—
(a) by or under the Constitution;
(b) by any other law made by Parliament;
(c) by any other law made by State Legislature;
(d) by notification issued or order made by the appropriate Government, and now as per section 2 (h) (a) of RTI act, Cooperative Societies have become an “authority” or “body” or “institution of self-government” established or constituted by or under the Constitution and hence are under the ambit of the RTI Act.
Conclusion
After the 97th amendment i.e. Right to form Cooperative societies and it’s including it in Article 19 of the Constitution, the practice of forming cooperative societies has become one of the fundamental rights of an Indian citizen.
In addition to that, they have also been given the status of local self-government in the line of rural and urban municipal bodies in Part 9 of the Constitution. Cooperative societies have thus come under the ambit of the Right to Information Act.
But now also there is no surety that constitutional amendment will fully revive this institution. The dark shadow of state-level politician will continue to remind us of the memories of parochialism which was done in case of panchayat amendment. But the coming of Cooperative societies under RTI act in future will hopefully deter numerous loopholes and will push this institution in a positive direction.
References
- CO-OPERATIVE SOCIETIES – mospi.nic.in
- Characteristics of Co-operative Society old.nios.ac.in
- indiankanoon.org
- 2013 ↑
- Ajay Hasia v Khalid Mujib, 1981 AIR 487, 1981 SCR (2) ↑
- Palser v. Grimling. (1948) 1 All ER 1, 11 (HL) ↑
- Co-operative societies under RTI, Money Life, available at moneylife.in ↑
