CO-OPERATIVE LAWS IN INDIA

July 3, 2020wp-rgaaUncategorizedNo Comments

INTRODUCTION:

A ‘Co-operative’ is a union of people which are voluntarily united to meet common economic objective. Co-operatives inter alia focuses on the development of rural areas as the major population in India is covered under the rural sector. When people come together with a common purpose and set a common goal they form a co-operative organization. This has also enabled individuals in achieving their goals through social relations which they might not achieve otherwise. The co-operatives show their concerns towards the community which helps in building a healthier, fairer and more united economy. Agricultural in India led to a big expansion in the Co-operative sector.

In India provisions for Co-operative societies were enacted by the Government of British India. The movement of Co-operative organizations in India first took place due to distress and disruption in the Country during the late 19^th Century. The worsening condition of the farmers due to rural debts, rigidity of land revenue collection, famine and many allied factors instigated the farmersto protest against the money lenders who were charging them with high interest rates and this led to the formation of various co-operatives in India.. The co-operative laws became an integral part of the five-year plans post independence and gradually the formation of co-operatives increased in India. In an international speech by India’s first Prime Minister Pt. Jawaharlal Nehru addressed the leadership in co-operatives and stated, “the whole future of India really depends on the success of this approach of ours to these vast numbers, hundreds of millions of people“. This led to formulation of various measures in co-operative laws for providing assistance to people and reducing their exploitation. Currently, India has marked a significant achievement in formation of co-operatives and initiating and articulating provision for co-operatives. One of the main objectives of Co-operatives is to utilize and gain from the available resources and to serve people and develop the economic condition of the Country. The co-operative sector also focuses on generating employment, which has been widely achieved by the sector, substantially in rural and backward areas. This has brought about a huge impact on the economic development of India.

CO-OPERATIVES AND THE INDIAN CONSTITUTION:

The constitutional provisions encompassing the co-operatives are as follows:

CONSTITUTIONAL PROVISIONS:
a) Article 14:

Article 14 of the Constitution states, “the state shall not deny any person equality before the law or the equal protection of laws within the territory of India on grounds of religion, race, caste sex, place of birth”. It has been observed by the Indian Judiciary that, “Equality is one of the magnificent corner stone of Indian democracy.”Right to equality guaranteed under Article 14 of the Indian Constitution was also made available to members and employees of the cooperative institutions by the Indian Judiciary. Co-operatives are democratic in nature hence any person can become a member in the co-operation without any discrimination. Thus, debarring any person from becoming a member of any co-operative organization violates the Article 14 of the Indian Constitution

b) Article 19 (1) (c) and Article 19 (1)(g):

The 97^th Amendment of the Indian Constitution makes the right to form Cooperative society a fundamental right under Article 19(1)(c) . This Article guarantees to the citizens of India the right to form association or unions or a co-operative societies with reasonable restriction in the interest of public order, morality, sovereignty or integrity of India. Article 19(1)(c) has a very wide scope that include all kinds of associations, namely, organizations, clubs, political parties, societies, companies, entrepreneurships, trade unions and other allied associations. The right to form an association is the very lifeblood of democracy. However , people are free to decide on joining or not joining the Co-operative organization and the members are free to resign except when indebted to join the society. The co-operatives are free to carry on any business for running their organization. This right is provided to the members of the co-operatives under the Article 19 (1)(g) of the Constitution of India.

c) Article 43(B):

The 97^th amendment inserted a new article in Part IV of the Constitution, the Directive Principle of State Policy, for the co-operative societies. The article 43(B) provides that the state shall promote to voluntarily form, function and control the management of the co-operative societies taking into consideration the opinions of all the members.

d) Part IX B:

Part IX B of the Indian Constitution was inserted by the 97^th amendment. It deals with the provisions to ensure democratic, professional, autonomous and economically sound functioning of the cooperative societies. It further empowers the Parliament and State Legislatures to make appropriate law in respect of co operative societies. However, Part IX B of the Constitution was declared ultra vires by the High Court of Gujarat and a Special Leave Petition has been filed before the Honorable Supreme Court to that effect which is pending as on 03.07.2020.

CO-OPERATIVE LAWS IN INDIA:

At present the laws regulating the Cooperative Societies in India are:

The Co-operative Societies Act,1912 (CS Act)

The Co-operative Societies Act,1912 is a Central Act. The CS Act Act facilitates the formation of the Co-operative Societies for boosting the economy and encouraging self help among agriculturists, artisans and persons of limited means. A society which has an objective of promotion of economic interest of its members in accordance with co-operative principles, or a society which is established with the object of facilitating the operations of such a Society, can register themselves under this Act with or without limited liability.

The CS Act specifies which societies can be registered under Act and the conditions for its registration . It also specifies the rights and liabilities of each member of the Co-operative societies, followed by the duties and privileges of the members. In addition, it inter alia provides for dissolution of a co-operative Society

Cooperative Society is a State Subject (Entry 32 of List II of Seventh Schedule to Constitution, i.e. State List) and has been specifically repealed by most of the States which have enacted their own Co-operative Societies Act. However, this Act is still in force.

Multi-State Co-operative Societies Act,2002.(MSCS Act)

The MSCS Act facilitates incorporation of primary and federal cooperative societies. With an objective to spread over to several states this Act facilitates registration of cooperative societies that aims to serve the interest of the members in more than one state in order to facilitate voluntary formation and democratic functioning of Co-operative societies and enable the members to promote the economy and social betterment. For the registration of a multi –co-operative society under this Act , an application is to be made to the Central Registrar.

National Cooperative Policy, 2000 (NCP)

The Government of India, implemented the National Cooperative Policy in 2000 with the objective to facilitate all round development of the cooperatives in the country. Under this policy, cooperatives would be provided necessary support, encouragement and assistance, to ensure that they work as autonomous, self-reliant, and democratically managed institutions accountable to their members and make a significant contribution to the national economy, particularly in areas which require people’s participation and community efforts. It also aims for ensuring the proper functioning of the cooperatives and promote the basic cooperative values and principles.

In addition to the above the Government has implemented various schemes and measures for development of Cooperative Societies

PRINCIPLES OF CO-OPERATIVE:

The following principles are adopted by the International Co-operative Alliance

Voluntary and Open Membership:

Co-operatives are voluntary organizations which are open to all the people who are willing to accept the responsibility of membership without any discrimination of religion, caste, political or social.

Democratic Control of the members:

The Co-operatives are democratic in nature and are controlled by the members of the organizations who have their active participation in framing the policies and decisions for the co-operatives. The members are also provided with equal voting rights i.e one member one vote. Members contribute equally towards the capital of the co-operatives. Usually the members receive limited compensation in cooperative organization. As the members control the management of the co-operatives even if any agreement is made with the outsider or with the government these outsiders will have no control over that co-operative organization and the members will maintain co-operatives autonomy.

Co-operation among the Co-operatives:

The members should cooperate with each other and serve the organization effectively and work together at local, regional and national level to bring new opportunities in the organization. Co-operatives provide education to their members so that they can effectively work for the development of the o-operative.

Concern toward the Community

While working on the process of the co-operatives the members of the co-operatives have to take into consideration the development of the community as well. These co-operatives should work on the sustainable development of their community.

KINDS OF CO-OPERATIVES:

Agricultural Co-operatives :

An Agricultural Co-operative is a collective action by farmers for the marketing at local, state and regional level. The production of food grains, jute, cotton, sugar, milk fruits and nuts are some of the commodities that are mostly handled by the Agricultural Co-operatives. This helps the farmers financially and also provides them with better quality of farm products. Agricultural Co-operatives was initially started for the purpose of conducting farm activities, nevertheless, at present there are many such co-operatives in the Agricultural sector which provides help in producing agricultural products. In India, the state governments have provided measures for better support to these Agricultural Co-operatives.

Producer Co-operative:

Producer Cooperative plays an important role in removing hierarchy in the market that is faced by producers while selling products to the buyers. In Producer Co-operative the product is produced by the members of these co-operatives and they carry out all the activities which includes right from collecting the raw material till the product is reached to the customer. This helps to avoid the middle link thereby facilitating the producers to connect with the customers directly. Producer Co-operatives includes product such as handlooms, organic products, ayurvedic products, herbal medicines, diary products etc. These Cooperatives further help to protect the interest of small producers.

Marketing Co-operative:

One of the major reasons for exploitation of the farmers is their inability to reach out to the market for their goods and lack in marketing skills . Marketing Co-operative helps such types of farmers in selling their farm fresh products in the market. The profits are then distributed on basis of the contribution at the time of production. These Co-operatives educate the small farmers and also help them in getting loans and gives knowledge about the marketing strategies. Mahagrape-co-operative federation marketing, Maharashtra and Gujarat Milk Federation, Co-operatives for marketing in pomegranate, Co-operatives marketing banana in Jalgaon district, Vegetables co-operatives in Thane District are some of the successful marketing Co-operatives in India.

Consumer’s Co-operative:

The main objective of this society is to provide the consumer with the goods at a reasonable price. Therefore, through these Co-operatives the goods are directly sold to consumers without the chain of retailers and wholesalers. Apana Bazar, Sarkari Bhandar are the examples of Consumer Co-operative.

Credit Co-operative:

These are financial societies which helps the members of the cooperative society to get the loans at a low interest rate. Financial co-operatives provides to the members of the co-operatives with various schemes in order to help them to do their businesses with ease. Thes co-operatives banks also provide with various facilities such as loans to the farmers at low interest rates for the growth of agricultural sector and for other activities. Rural industries are also provided with easy access to the credit facility. Co-operative banks provide financial services where the banking facilities are limited. However, at present the government has promulgated ordinance to ensure safety of depositors in Co-operative Banks hence the Co-operative banks are regulated under provisions of the Reserve Bank of India.

Housing Co-operative:

A co-operative housing society is a co-operative which provide housing facility to the middle and low income groups. The Co-operative societies purchase land for development of the said land and for construction houses, flats, units, commercial spaces therein. One becomes a member of the society by purchasing shares in the said Housing Co-operative.

SOME REMARKABLE CO-OPERATIVE ENTERPRISE IN INDIA:

Indian Farmers Fertilizers co-operative Limited (IFFCO):

IFFCO is one of the India’s largest co-operative societies established in 1967. With a small start , the IFFCO, at present has diversified its business in various fields. The main aim of this co-operative is to provide farmers with high quality of fertilizers and adequate quantities to increase the productivity of crops. The main focus of IFFCO is to empower the farmers and connect to the grassroots and to enable the Indian farmers for a better present and future. It also makes plans to conserve energy. Further, this co-operative aims to provide with health, safety to enrich community life of the farmers and to enhance itspresence in the international market. It also aims in diversifying in other sectors for financial stability. . The initiatives by IFFCO by organizing various programs to provide benefits to the famers helps the farmers in their overall development which is very essential for the Indian economy .

Maharashtra State Co-operative Sugar Factories Federation Ltd.

In 1945, Late Padmashree Vithalrao Vikhe Patil successfully established Co-operative Sugar Factory in Ahmednagar, Maharashtra . As Maharashtra has a favorable climate for cultivation of sugarcane many sugar industries were established in this region. Initially 12 places were announced for setting up of sugar factories however, gradually with increased establishment of sugar factories in this region, at present Maharashtra contributes 20% of the sugar production in India. The development in the sugar factories it has also has also provided employment to the people in rural areas.

Gujarat Co-operative Milk Marketing Federation Ltd. (GCMMF):

The Gujarat Co-operative Milk Marketing Federation Ltd. is one of the India’s largest food product marketing organization established in the year 1973, which has made a turnover of US$5.1 Billion. The daily milk procurement is approx 23 million litre per day from 18600 village milk co-operative societies. It is considered to beone of the largest exporters of dairy products. GCMMF has been awarded with many awards for their excellence in diary product exports and also for their outstanding performance in export and expanding their presence all over the world. It is the apex organization of the diary Co-operative of Gujarat i.e Amul which is considered to be one of top diary players in the world trade. Through this formation of co-operative farmers own the diary, their elected representative manage the village societies and the district union, this has also created employment. Also the co-operatives assists and meet any needs of the farmers. The model of Amul has helped India to emerge as the largest milk producer in the world and ensured a better life for the millions.

Shir Mahila Griha Udyog Lijjat Papad (SMGULP):

SMGULP is an Indian Women’s Co-operative specializing in manufacturing of various consumer goods such as p apads, spices, bakery products, soaps detergents etc and various other goods. The SMGULP which was started by only 7 (seven) women has now generated employment opportunity to more than 50000 women across the country thereby creating indecency among the women and facilitating them to support their families. The members of SMGULP are referred to as sisters and all decisions in the SMGULP are takenby these sisters with the consensus of each other. Membership to men are not available in SMGULP, however, their aids are taken for the purpose of accounts, drivers or security guards. This Co-operative society is formed in order to make the women self confident and independent and the organization is of the view this is one of the right platform to any women.

Challenges faced by Co-operatives:

Despite various measures by the Government of India to uplift the co-operatives , these co-operatives lack in proper management and adequate support. The performance in the co-operatives have also failed to meet the level of satisfaction. Generally the co-operatives in India face a major problem in the finance therefore no quality products can be produced by these Co-operatives. People in the rural areas are generally illiterate and this has an impact on the management of the co-operatives. Further, influence of political leaders in the cooperatives sometime lead to a negative impact on the growth of such cooperatives. In addition, infrastructure is one of the major problems as the co-operatives in rural areas lack in modern technologies and due to such inadequacy the organization fails to operate.

Conclusion:

The co-operatives are a democratic sector which is governed by democratic principles of management encompassing the members of the co-operatives. The moto of the co-operative organization “each for all and all for each” is aptly justified as these co-operatives are created in order to meet the economic, social and moral obligations which are necessary for the success of any community and human in general. There are many remarkable instances of various co-operative organizations flourishing in its businesses and elevating their businesses to a great height, however, it cannot be denied that the co-operatives has its own shortcomings and lack in many areas and aspects which need the attention of both the State and individuals.

CO-OPERATIVE LAWS IN INDIA

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