Article 243ZJ

Article 243ZJ of the Indian Constitution outlines the constitutional framework concerning the composition, strength, and tenure of the board of directors and office-bearers of co-operative societies. Enacted through the 97th Constitutional Amendment Act, 2011, this article is part of Part IXB, which deals with the governance and functioning of co-operative societies in India. The provision ensures that the management of co-operatives remains democratic, representative, and inclusive, while also incorporating professional expertise for effective functioning.

Constitutional Context and Objective

Co-operative societies have historically been vital instruments of community-based economic development, particularly in rural India. However, before the 97th Amendment, their governance often suffered from political interference, lack of accountability, and exclusion of marginalised groups. To address these challenges, Part IXB was introduced, granting constitutional status to co-operatives and prescribing uniform principles for their management.
Article 243ZJ specifically focuses on the structure and tenure of the board of directors, promoting democratic functioning, representation of weaker sections, and professional management. It ensures that the governance of co-operatives reflects both inclusivity and competence.

Composition of the Board

The composition of the board of a co-operative society is determined by state legislation, subject to the constitutional framework provided in Article 243ZJ.
Key features include:

• The maximum number of directors on the board is twenty-one (21).
• The board must include reserved representation to ensure inclusivity:
  • One seat for Scheduled Castes (SCs).
  • One seat for Scheduled Tribes (STs).
  • Two seats for women members.

These reservations guarantee that marginalised communities and women have a meaningful voice in the decision-making processes of co-operative societies. States are also empowered to specify additional representational provisions based on local requirements.
This structural design reflects the principle of democratic member control, ensuring that co-operatives serve the interests of all sections of society rather than a select few.

Term of Office of the Board and Office-Bearers

According to Article 243ZJ(2), the term of office of the board and its elected members is fixed at five years from the date of election.
Important aspects include:

• The Chairperson, President, or other office-bearers hold office for the same duration as the board.
• In case of a casual vacancy—arising due to resignation, death, or disqualification—a replacement may be nominated from the same class of members, provided that the remaining term of the board is less than half of the original term.
• This ensures continuity in governance while upholding democratic principles.

By mandating a fixed tenure, the Constitution prevents arbitrary removals and political manipulation, thereby enhancing stability and accountability in co-operative governance.

Co-option of Members

Article 243ZJ(3) allows the State Legislature to make provisions for the co-option of expert members on the board.

• Up to two members possessing expertise in areas such as banking, management, finance, economics, or relevant fields may be co-opted.
• Co-opted members are in addition to the twenty-one elected directors, but they do not possess voting rights in board elections.
• They also cannot be elected as office-bearers of the co-operative society.

The inclusion of co-opted members provides access to professional knowledge and skills while ensuring that the democratic character of the board remains intact. This hybrid model strengthens governance by combining member representation with professional expertise.

Functional Directors

Functional directors—such as Managing Directors, Chief Executive Officers, or General Managers—are also part of the board, representing the executive leadership of the society.

• These individuals are responsible for implementing board policies and managing day-to-day operations.
• Functional directors are considered members of the board ex officio, but they are not counted within the 21-member limit prescribed under the Constitution.
• Their inclusion ensures an effective link between policy formulation and operational execution.

This arrangement aligns with modern corporate governance principles, promoting professional accountability and administrative efficiency in co-operative institutions.

Legislative Framework and State Responsibilities

While the Constitution lays down broad guidelines, State Legislatures are responsible for framing detailed laws regarding:

• The procedure for electing board members and office-bearers;
• The qualifications, disqualifications, and tenure of directors;
• The process of co-option and eligibility of experts;
• The roles and responsibilities of office-bearers;
• Provisions for removal, resignation, or re-election of board members.

State laws must conform to the principles of Article 243ZJ and other provisions of Part IXB, ensuring that co-operative societies function democratically, transparently, and efficiently.

Judicial Interpretation and Case Law

The judiciary has played a significant role in interpreting the democratic and inclusive principles enshrined in Article 243ZJ:

• Union of India v. Rajendra N. Shah (2021) – The Supreme Court held that Part IXB applies fully to multi-state co-operative societies, while states retain autonomy over intra-state co-operatives. The decision reaffirmed that state legislation must align with constitutional provisions ensuring democratic governance.
• State of Maharashtra v. Sant Dnyaneshwar Shikshan Shastra Mahavidyalaya (2006) – Recognised the autonomy and democratic character of co-operative societies as essential to their functioning.
• Maharashtra State Co-operative Bank Ltd. v. State of Maharashtra (2000) – Clarified the division of powers between the state and central governments in regulating co-operative banks, highlighting the importance of professional management.

These cases collectively emphasise the constitutional commitment to inclusive, democratic, and professionally managed co-operatives.

Implications and Significance

The provisions of Article 243ZJ have far-reaching implications for the governance and inclusivity of co-operative societies:

• Democratic empowerment: By ensuring elected representation, the article reinforces grassroots democracy in economic institutions.
• Social inclusion: Mandatory reservations enhance participation of Scheduled Castes, Scheduled Tribes, and women, making co-operatives instruments of social justice.
• Professional governance: The provision for co-opted experts integrates professional knowledge into the decision-making process.
• Administrative stability: Fixed tenure of boards prevents arbitrary interference and promotes continuity in policy implementation.
• Transparency and accountability: The defined structure limits scope for political manipulation and fosters good governance.

Challenges in Implementation

Despite its constitutional framework, several challenges persist in implementing Article 243ZJ effectively:

• Political interference in board elections undermines democratic control.
• Limited capacity building among board members affects informed decision-making.
• Inconsistent state laws lead to uneven application of constitutional principles.
• Insufficient female participation, despite reservation provisions, due to social and institutional barriers.
• Lack of transparency in co-option procedures and accountability mechanisms.

Addressing these challenges requires proactive legislative reforms and institutional strengthening at the state level.