By I C Naik
New thrust to co-operative movement in India as recently enshrined in the Constitution (vide 97th Constitutional Amendment effective 14 2 2013) (Article 243ZI) has four mandatory principles on which State laws must guarantee the functioning of cooperatives registered in the Stae:
1.Voluntary formation,
2.Democratic member-control
3.Member-economic participation and
4.Autonomous functioning
Democratic member-control has made its mark in a recent order of the Supreme Court of India [(2015) 42 SCD 494 -19th March 2015]. The Division Bench of Anil R. Dave and Kurian Joseph Jj. delved at length into the principle “democratic member-control” in the matter of ouster of Chairman Vipul Chaudhary by Amul’s Board by passing a No-Confidence motion against him. The fact that the Board had no authority to move such a motion either under the Act or Rules or the Bye Laws has lost relevance after 97th Constitutional Amendment, the Apex Court ruled.
The Apex Court ruled interalia: “Democratic functioning and autonomy have now become the core constitutional values of a cooperative society” (In Para 44)
The Apex Court insists that in terms of Constitutional aspirations, all 4 cardinal principles of cooperatives must be conspicuously present in the functioning of every cooperative society. The Bench has made a candid observation in Para 8 of the Order(Supra) namely “it appears that the cooperatives in India did not have effective autonomy, democratic functioning and professional management” Although the statement of objects and reasons for 97th Constitutional Amendments was reproduced by the Bench in the order, the Bench lent far more credibility to the National Policy on Cooperatives issued by Government of India in 2002 by recognizing that it has inscribed the above 4 principles in its fold besides the globally accepted definition and values of cooperatives and observed in Para 8 “97th Amendment to the Constitution of India, in fact, gave a constitutional frame to this policy.”
In Para 3 of this National Policy various constraints to the growth of Indian co-operative movement are described, which include mutually complimentary constraints i.e. a lack of “legislative and policy support” resulting in “excessive bureaucratic and governmental controls and needless political interference in the operations of the societies.”
Para 7 of this National Policy contains 16 Sub-Paragraphs each one being an indivisible part of a comprehensive Cooperative Policy statement. Sub-Paragraph (iv) as reproduced below should catch the attention of the Apex Court if at all the issue of “effective autonomy” were to come up before it for adjudication namely: “the regulatory role of the Government will be mainly limited to the conduct of timely elections, audit of the cooperative societies, and measures to safeguard the interest of the members and other stake holders in the cooperatives. There shall, however, be no interference in the management and working of the cooperatives. The Government recognizes the apolitical nature of cooperatives;”
Pioneer work to reform cooperatives to let them operate on International Values and the 4 main Principles was the Report submitted in 1990 by the Committee headed by Chowdhary Brahm Perkash on Model Co-operatives Act. In the matter of effective autonomy the Committee made an important observation:”The Model Act gives no rule making power to the government. The law itself lays down the broad parameters necessarily to be observed by cooperatives and leaves all other matters relating to constitution, management and business of the society to be conducted in accordance with its bye-laws.”
Will cooperative activists all India federations cooperative unions etc, jointly and severally, give a call on the Apex Court seeking declaration that the cooperatives are not able to secure their autonomous functioning on account of excessive delegation of legislative functioning of the State by empowering the executive to make Rules on any matters. These Rules themselves enable the bureaucracy to issue directions by way of clarifications and instructions on several matters from time to time, keeping cooperatives under dark as to what is the correct law, and therefore Section 165 of the MCS Act 1960 has to be held unconstitutional as it is not inconsonance with constitutional mandate under Article 243ZI. And the State is better directed to suitably amend the other provisions of the MCS Act 1960 such that as per this amended legislative frame work with the help of the registered bye-laws the cooperative societies can function as per the 4th criteria viz autonomous functioning.