Multi-State Cooperative Societies (Amendment) Bill, 2022 – Update (December, 2022)

December 14, 2022

The Multi-State Cooperative Societies (Amendment) Bill, 2022 was introduced in Lok Sabha on December 7 this year. The bill amends the Multi-State Co-operative Societies Act, 2002.

What are the key provisions of the Bill?

Election of Board Members

Under the Act, the elections to multi-state cooperative society board are conducted by the existing board. The amendment Bill proposes to set up the Co-operative Election Authority, whose functions include

Conducting the elections to the board of multi-state cooperative society
Supervise, direct and control the preparation of electoral rolls
Perform other prescribed functions.

The Co-operative Election Authority will have a chairperson, vice-chairperson and up to 3 members appointed by the Central Government based on the recommendation of a selection committee.

To be elected as a board member or office bearer of the cooperative society, he/she must be an active member. Active members are those availing a minimum level of products or services of the society or attending at least 3 consecutive general meetings.

Complaint redressal

Under this Bill, the Central Government can appoint one or more cooperative Ombudsmen with territorial jurisdiction. The ombudsman will inquire into the complaints made by the members of cooperative societies regarding:

Their deposits
Equitable benefits of the society’s functioning
Issues affecting the individual rights of the society’s members

The Ombudsman is required to complete the inquiry process and adjudicate within three months of receiving the complaint. Appeals can be filed against the ombudsman’s directions within a month to Central Registrar, who is appointed by the central government.

Merger of cooperative societies

The Act allows for the integration and division of multi-state cooperative societies through the passing of a resolution at a general assembly. The Act requires at least two-thirds of members present and voting.

The Bill allows the cooperative societies registered under the state laws to merge into an existing multi-state cooperative society. Such a merger can be achieved if a minimum of two-thirds of members of the cooperative society present and voting at the general meeting passed a resolution to allow it.

Revival of sick multi-state cooperative societies

The 2022 Amendment Bill proposes setting up of the Co-operative Rehabilitation, Reconstruction and Development Fund to revive the sick multi-state co-operative societies. A sick multi-state cooperative society is the one that:

Has accumulated losses equal to or more than the total of its paid-up capital, free reserves and surpluses
Has suffered cash losses in the past two years.

The Central Government is empowered to launch a scheme for the rehabilitation and reconstruction of the sick multi-state cooperative societies. The fund shall be financed by multi-state cooperative societies that are witnessing profit for the previous three consecutive financial years. They will deposit either Rs.1 crore or 1 percent of the net profit into the fund, whichever is less.

Specified cooperative societies

The Act allows the Central Government to direct and supersede the boards of specified multi-state co-operative societies. Specified multi-state cooperative societies are those in which the Indian Government has at least a 51 percent share. The Bill amends this definition to include any multi-state co-operative society in which the central government has any shareholding, or has extended any credit, financial assistance, or guarantee.

Composition of the board of directors

Under the Act, the board of a multi-state cooperative society will have up to 21 directors. The board may co-opt two more directors under the Act. The amendment Bill mandates that the board of directors must include one SC/ST member or two women members. The co-opted members must have experience in the field of banking, financing, cooperative management, or specialization in fields related to the functioning of the multi-state cooperative society.

Increase in penalties

The Act recognizes certain offenses by a multi-state cooperative society or its officer or members. These include making false returns, furnishing false information, or disobeying any summons. TSuch offences can attract fines from Rs.2,000 to Rs.10,000. The Bill includes a new offence – the failure to file any return or information. The fine for all these offences has been increased from Rs.5,000 to Rs.1 lakh.

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