Multi-State Cooperative Societies (Amendment) Bill, 2022

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Context: Recently, Multi-State Cooperative Societies (Amendment) Bill, 2022 was introduced by Government in the Lok Sabha.

Bill will amend Multi-State Co-operative Societies Act, 2002 under Part IX-B of the Constitution.
Part IX-B of the Constitution was added by 97th Constitutional Amendment Act of 2011.

To strengthen governance, reform electoral process, improve monitoring mechanism and ensure ease of doing business in multi-State cooperative societies.
To improve composition of boards and ensure financial discipline, like enabling raising of funds in the multi-State cooperative societies.
To make governance of multi-State cooperative societies more democratic, transparent and accountable.
To promote inclusiveness with provision related to representation of women and Scheduled Caste/Scheduled Tribe members on the boards of multi-State cooperative societies.
Election Authority will ensure fair, free and timely elections are held.
Debarring electoral offenders will bring electoral discipline.
Specifies prudential norms will bring in financial discipline.
Amendments related to audit mechanism will bring in more transparency and accountability.

Registration-application for registration of multi-State co-operative society shall be disposed by Central Registrar within 3 months.
Board of Directors- out of 21 directors, one Member shall be Scheduled Caste or Scheduled Tribe and two shall be women.
2 co-opt members shall have experience in the field of banking, management, co-operative management and finance or specialisation in field related to activities undertaken by multi-State co-operative society.
They shall not have right to vote in any election of office bearer or be eligible to be elected as office bearers of the board.
It prohibits redemption of shares of multi-State co-operative societies without Central Governemnt’s approval.
It will amend Section 17 of principal Act.
It states that any co-operative society can by a resolution passed by majority of not less than two-thirds of the members present and voting at a general meeting of such society can decide to merge with existing multi-State co-operative operative society.

It seeks to establish "Co-operative Election Authority".
This authority comprises- a Chairperson, a Vice-Chairperson and maximum 3 members appointed by the Central Government.
It aims to bring electoral reforms in co-operative sector.
It will debar electoral offenders for three years.

It will establish Co-operative Rehabilitation, Reconstruction and Development Fund".
It will help in revival of sick multi-state cooperative societies.
Multi-State co-operative societies which are in profit for preceding three financial years shall annually credit 1 crore rupees or 1% of their net profits -whichever is less, to such Fund.
Central government will constitute Committee to administer this Fund and maintain separate accounts and records.

Proposes section related to "concurrent audit" for multi-State co-operative societies having annual turnover more than the amount determined by the Central Government.
It inserts new Chapter IXA related to "redressal of complaints".
It makes provision for appointment of one or more "Co-operative Ombudsman" by Central government.
It will inquire the complaints made by the members.
Enhance monetary penalties on multi-State co-operative societies for violation of provision under the Act.

Articles 243ZH and 243ZI in Part IXB of the Constitution distinguishes between Cooperative Societies of State and Multi-State Cooperative Societies which is governed by Union of India.
Provision of Constitution does not allow merger of cooperative society incorporated under State law with a Multi-State Cooperative Society.
Is indirectly encroaching rights of State Co-operative Societies by allowing its merger.
This is against principle of federalism as State cooperative societies are within exclusive jurisdiction of States.
Is against principles of autonomous functioning of cooperative societies which 97th Constitutional Amendment had introduced.
Takes away autonomy of society by appointing Central Election Authority to be appointed by the Central government.
Will burden cooperative societies and will affects their autonomous functioning.
Administrator may not be a member of the society and can contravene 97th Constitutional Amendment Act.
Cooperative societies come under State subject and may lead to concentration of power of the Central government.
It is against principle of autonomous functioning as provided in Article 43B of the Constitution.
Article 43B says the government shall endeavour to promote voluntary formation, autonomous functioning, democratic control and professional management of cooperative societies.