Co-operative Societies:
Unlocking Collective Potential

• Constitutional Status: Added by 97th Constitutional Amendment Act, 2011 (came into force Feb 15, 2012).
• Made Right to form co-operative societies a Fundamental Right (Art 19(1)(c)).
• Added new DPSP (Art 43B) on promotion of co-operative societies.
• Inserted Part IX-B "The Co-operative Societies" (Articles 243ZH to 243ZT).
• Rationale for Constitutionalisation: Ensure democratic, autonomous, professional functioning; protect members; reduce political interference.
• Salient Features of Part IX-B (Original intent): Board: Max 21 directors. Term 5 years. Reservation on Board: 1 seat for SC/ST, 2 seats for Women. Elections by prescribed authority, before expiry of term. Supersession of Board: Max 6 months (extendable to 1 year). Audit, General Body Meetings, Member's Right to Info, Offences/Penalties. Application to Multi-State Co-op Societies (Parliament to regulate).
• Judicial Scrutiny of 97th Amendment:
  • Gujarat High Court (2013): Struck down Part IX-B (for state co-ops) due to lack of state ratification (Art 368(2)).
  • Supreme Court (Union of India vs Rajendra N. Shah, 2021): Upheld HC verdict: Struck down provisions of Part IX-B related to state co-operative societies (due to lack of state ratification, as 'co-operatives' is a State subject). Upheld validity: Provisions of Part IX-B concerning Multi-State Co-operative Societies (Parliament has power).
• Impact of SC judgment: Most of Part IX-B is not applicable to state co-operative societies unless states individually adopt.
• Ministry of Cooperation: Created by Union Govt in July 2021. Aims to strengthen cooperative movement.
• Issues/Challenges: Politicisation, inefficiency, lack of professionalism, dormancy, financial irregularities, excessive government control.

Constitutionalization of Co-operatives: A Transformative Step, Partially Realized: The 97th Amendment was a significant attempt to bring transparency, autonomy, and democratic functioning to the cooperative sector... aimed to free cooperatives from excessive government control and politicization, fostering genuine grassroots economic empowerment.

Judicial Scrutiny and Federalism: The Rajendra N. Shah Verdict (2021): The Supreme Court's decision to strike down a major portion of Part IX-B (relating to state co-operatives) due to the lack of state ratification under Article 368(2) highlights the fundamental principle of federalism and the constitutional demarcation of powers.

Dual Impact of the Verdict: Created a dual regulatory regime: Part IX-B valid for Multi-State Co-op Societies, but for state cooperatives, provisions are no longer constitutionally mandated unless a state chooses to adopt them through its own state law.

Challenges in the Cooperative Sector (Post-Amendment): Persistent issues like politicization, state control, inefficiency, dormancy, financial irregularities, and lack of member participation.

Ministry of Cooperation: A Renewed Focus: Creation in 2021 signals renewed emphasis on strengthening the cooperative movement, particularly multi-state cooperatives, aiming to provide a unified legal and policy framework.

Role in Inclusive Growth and Rural Development: Cooperatives are vital for promoting inclusive growth, particularly in rural and agricultural sectors (e.g., milk, credit, marketing cooperatives). They provide a mechanism for collective action and economic empowerment.

Contemporary Relevance: "Sahakar Se Samriddhi" vision, role in farmers' income, financial inclusion, and localization of SDGs.

Consider the following statements:

1. The National Human Rights Commission (NHRC) is a statutory body.
2. The Chairperson of the NHRC is a retired Chief Justice of India or a retired Judge of the Supreme Court.
3. The NHRC has the power to inquire into matters after the expiry of one year from the date on which the act constituting human rights violation is alleged to have been committed.

Which of the statements given above are correct?

(a) 1 and 2 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2 and 3

Answer: (a)

Hint: This question tests statutory bodies. The 97th Amendment made co-operative societies a FR and DPSP, and added Part IX-B.

With reference to the Finance Commission of India, which of the following statements is correct?

(a) It is a statutory body, not a constitutional body.
(b) It is constituted by the President of India every five years or earlier.
(c) It recommends the distribution of revenues between the Union and the States and also among the States themselves.
(d) Its recommendations are binding on the Union Government.

Answer: (b)

Hint: This tests constitutional bodies. The 97th Amendment added the function for Finance Commission to recommend measures for augmenting resources of Panchayats and Municipalities based on SFCs, thus linking it to local government.

"What are the Fundamental Duties provided in the Constitution of India? Examine the significance of these duties in a democratic society." (10 marks)

Direction: The fundamental duty to "promote harmony and the spirit of common brotherhood" (Art 51A(e)) is highly relevant to cooperative societies, which are built on principles of mutual aid and collective action. The 97th Amendment made the right to form cooperatives a Fundamental Right, linking it to the promotion of harmonious social life.

"The local self-government system in India has evolved from a purely administrative structure to a more democratic and participatory one. Discuss how the 73rd and 74th Constitutional Amendments have transformed it, while also highlighting the challenges in its effective functioning." (15 marks)

Direction: The cooperative movement is often discussed in conjunction with local self-government as a form of grassroots economic empowerment. The 97th Amendment can be briefly mentioned as parallel legislation aiming for democratic decentralization in the economic sphere, with similar challenges (politicization, financial issues) to PRIs/ULBs.

"Constitutional morality is rooted in the Constitution itself and is founded on the essential principles of the constitutional structure. Explain the doctrine of 'constitutional morality' with the help of relevant court cases." (15 marks)

Direction: The 97th Amendment (particularly Part IX-B) aimed to uphold democratic principles and prevent politicization in cooperatives. The Supreme Court's intervention (Rajendra N. Shah case) in striking down parts of it due to lack of state ratification reinforced constitutional morality by upholding federal principles and the integrity of the amendment process.

Which of the following constitutional provisions were introduced by the 97th Constitutional Amendment Act, 2011, relating to co-operative societies?

1. Making the right to form co-operative societies a Fundamental Right.
2. Adding a new Directive Principle on the promotion of co-operative societies.
3. Inserting a new Part IX-B in the Constitution.
4. Providing for a maximum of 15 members in the board of a co-operative society.

Select the correct answer using the code given below:

(a) 1 and 2 only
(b) 1, 2 and 3 only
(c) 3 and 4 only
(d) 1, 2, 3 and 4

Answer: (b)

Explanation: Statements 1 (Art 19(1)(c)), 2 (Art 43B), and 3 (Part IX-B) were all introduced by the 97th Amendment. Statement 4 is incorrect. Part IX-B (Art 243ZJ) provides for a maximum of 21 directors on the board of a co-operative society, not 15.

With reference to the 97th Constitutional Amendment Act, 2011, and its judicial scrutiny, consider the following statements:

1. The Supreme Court, in the Union of India vs Rajendra N. Shah case (2021), struck down the entirety of Part IX-B of the Constitution.
2. The Supreme Court upheld the validity of Part IX-B with respect to Multi-State Co-operative Societies.
3. The lack of ratification by at least half of the State Legislatures was the reason for striking down some provisions of Part IX-B.

Which of the statements given above are correct?

(a) 1 and 2 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2 and 3

Answer: (b)

Explanation: Statement 1 is incorrect. The SC did not strike down the entirety of Part IX-B. It struck down only the provisions related to state co-operative societies. Statement 2 is correct. The SC specifically upheld the validity of Part IX-B provisions concerning Multi-State Co-operative Societies. Statement 3 is correct. The reason for striking down provisions related to state co-ops was the lack of mandatory state ratification under Article 368(2), as 'co-operatives' is a State List subject.

"The 97th Constitutional Amendment Act, 2011, aimed to democratize and professionalize the cooperative sector, yet its implementation has been significantly impacted by judicial scrutiny and the complexities of federalism." Critically analyze the key provisions of the 97th Amendment designed to empower co-operative societies, and discuss the implications of the Supreme Court's judgment in the Union of India vs Rajendra N. Shah case (2021) for the cooperative movement in India. (15 marks)

Key Points/Structure:

• Introduction: Introduce the 97th Amendment as a landmark for co-operatives, aiming for democratic and professional functioning, while acknowledging the impact of judicial scrutiny and federal complexities.
• Key Provisions Designed to Empower Co-operative Societies: Constitutional Status (Adding Part IX-B), Fundamental Right (Art 19(1)(c)), DPSP (Art 43B), Democratic Control (fixed term, limited supersession), Reservations (SC/ST, Women), Professional Management (audit, general body meetings).
• Implications of Union of India vs Rajendra N. Shah Case (2021):
  • Context: Challenge to 97th Amdt for lack of state ratification.
  • Ruling: Struck down provisions of Part IX-B relating to state co-operative societies; Upheld validity for Multi-State Co-operative Societies.
  • Implications for Cooperative Movement: Loss of Uniformity, Reaffirmed Federal Balance, Dual Regulatory Regime, Continued Challenges for states.
• Conclusion: Conclude that while the 97th Amendment had a transformative vision, the SC verdict, by upholding federal principles, has significantly altered its impact on state co-operatives.

"The creation of the Ministry of Cooperation in 2021 signals a renewed focus on strengthening India's cooperative movement. Analyze the key issues and challenges faced by the cooperative sector in India, and discuss how a dedicated central ministry can potentially address these, especially in light of the 97th Constitutional Amendment and recent judicial pronouncements." (10 marks)

Key Points/Structure:

• Introduction: Introduce the creation of the Ministry of Cooperation (July 2021) and its 'Sahakar Se Samriddhi' vision.
• Key Issues and Challenges: Politicization & Government Control, Inefficiency & Lack of Professionalism, Dormancy, Lack of Member Participation, Fragmented Legal Framework, Financial Weaknesses.
• How Ministry of Cooperation can Potentially Address Challenges: Policy & Legal Framework (for Multi-State Co-ops), Promoting Best Practices (encouraging states to adopt 97th Amdt features), Capacity Building, Addressing Financial Weaknesses, Coordination, Promoting Democratic Functioning, 'Sahakar Se Samriddhi' vision.
• Conclusion: Conclude that the Ministry, coupled with the 97th Amendment's principles and lessons from judicial scrutiny, offers a promising pathway to revitalize India's cooperative sector.