Monday, March 11, 2013

Forming Co Operative society now fundamental right With status of local self Government, under ambit of RTI act

With the enactment of the 97th amendment to the Constitution of India and its inclusion in Part IX of the Constitution, formation of cooperative societies has become one of the fundamental rights of an Indian citizen. Cooperative societies have thus come under the ambit of The Right to Information Act. Cooperative societies normally include cooperative banks, credit societies, sugar factories, distilleries, handloom-power loom factories, distilleries, milk producing societies, water supply societies etc. Henceforth, all such institutions will have to appoint public information officers, appellate authorities and comply all the provisions of the RTI act. This is the most revolutionary event in the history of our country in the recent past.
Normally there are three sectors of industries; Public, private and cooperative sectors. The first one is wholly owned by a state or the central government and the governments have complete control over its investments and management and it is accountable to the governments as well as to the public. Although the private sector abides by the laws, rules and regulations of the governments it is not answerable or accountable to the governments or the public for the losses/profits or management. It is accountable only to its owners or shareholders as per the law of the land. The cooperative sector was a blend of the public and private sectors. So far, it was enjoying the facilities available to the public sector such as loans, share capital from the state etc. but was not accountable to the state or the public. With the 97th amendment, the scenario has changed and the cooperative sector is now accountable to the state and the public.
Article 19 of the Constitution of India protects certain fundamental rights of the citizens. All citizens have the right to freedom of speech and expression, to assemble peaceably and without arms, to form associations or unions, to move freely throughout the territory of India, to reside and settle in any part of the territory of India; and to practise any profession, or to carry on any occupation, trade or business. Now forming a cooperative society is also fundamental right. Not only  that , as per article 43B of Part IV it is now the duty of the States to promote voluntary formation, autonomous functioning, democratic control and professional management of cooperative societies to encourage economic activities of cooperatives which in turn help progress of rural India.
Part IX of the Constitution consists local self-governments. Part IX is about panchayats, Part IX B is about municipalities and now with insertion of Part IX C, cooperative societies have acquired the status of local self-governments. Correspondingly, cooperative societies have come under the RTI Act.
So far, there was no clarity about the applicability of the RTI Act to cooperative societies. Several information commissions and courts had given contradictory verdicts on this matter. Cooperative societies were out of the ambit of the RTI Act because it was not an ‘authority’ or ‘body’ or an ‘institution’ of self-government established or constituted by or under the Constitution. Hence, attempts to bring a cooperative society under the RTI Act, claiming it to be an ‘institute’, a ‘body owned, controlled or substantially financed by notification issued or order made by the appropriate Government’ failed. In addition, authorities of these institutes always took the stand that they did not come under the RTI act.
In reality, considerable part of the country’s economy is occupied by the cooperative sector. It is said that about 1/6th of this part is of Maharashtra. A major part of Maharashtra politics is also influenced by cooperative sector. The scale of illegalities, scams and corruption in this sector is also high. The cooperative sector including banks and societies block substantial government funds going into hundreds of crores.
Anarchy in this sector is so high that current statistics of cooperative societies in the state and the country are not easily available. The statistics of the department of cooperative societies of Maharashtra in 2009-10 show that there were 2,18,320 cooperative societies in Maharashtra and the total membership of these societies was five crores forty-two lakhs. One estimate of the number of societies is at about 2,30,000 with a membership of about six and half crores. For the entire country, this number could go up to six and half lakh societies with thirty crores members.
A giant sector such as this was uncontrolled and unaccountable till now. One can hope that this sector will move in a positive direction after the 97th amendment to the constitution. After the amendment was enacted, a period of one year was given to the States to amend as well as repeal existing provisions of law to bring in line with the new provisions in the Constitution. Usually, State Assemblies approve such amendment. However, as the assembly was not in session, the Government of Maharashtra introduced an ordinance on 15 February 2013 and thus these amendments have now become law.
The highlights of the Maharashtra Cooperative Societies Act and Rules after amendments are:
(i)                      Incorporation of cooperative societies on the principles of voluntary formation, democratic member control, member economic participation and autonomous functions;
(ii)                    Conduct of election of a cooperative society by an independent electoral authority;
(iii)                  A fixed term of five years for the office bearers of the cooperative society;
(iv)                  Supersession of Board of cooperative society for a period of not exceeding six months;
(v)                    Independent professional audit of the cooperative societies;
(vi)                  Convening of the General Body meeting of every cooperative society within a period of six months of the close of the financial year;
(vii)                Access to every member of the society to the books, information and the accounts of the cooperative society;
(viii)              Filing of the returns by every cooperative society within six months of the close of every financial year;
(ix)                  Free, fair, impartial and timely elections of cooperative societies by independent body .
(x)                    Audit of the cooperative societies to be carried by the auditors from the government approved panel of auditors or firms;
(xi)                  Maximum number of 21 Directors to be applicable to all cooperative societies irrespective of their size with two seats reserved for women; and
(xii)                Co-opted members not to be eligible to be elected as office-bearers of the Board.
Also there are provisions of penalty for consistent defaults, acting against the interest of the institution, deadlock in the board of directors, not ordering elections within specified time, corruption, irregularities in duty, deliberately giving false information, disobeying orders of authorities etc.
Before 1992, panchayats  and municipalities were also not bodies established by or under the Constitution. However, that did not mean that there were no panchayats or municipalities. These institutes as well as laws were very much in existence. But due to the autonomous status. their functioning was arbitrary. They did not acquire the status and dignity of viable and responsive people's bodies due to varied reasons including   absence of regular elections, prolonged supersession, insufficient representation of the weaker sections etc.
Hence, to give certainty, continuity, and strength to panchayat raj with 73rd amendment, Part IX was inserted in the Constitution. Later as Urban Local Bodies were not able to perform effectively as vibrant democratic units of self-government, with the 74th Amendment, Part IX B was inserted to give municipalities a status and dignity. Now with the 97th Amendment, Part IX B has been inserted to give cooperative societies a status of local self-government.
As per RTI Act section 2 (h) "public authority" means any authority or body or institution of self-government established or constituted—
(a) by or under the Constitution;
(b) by any other law made by Parliament;
(c) by any other law made by State Legislature;
(d) by notification issued or order made by the appropriate Government,
 and now as per section 2 (h) (a) of RTI act, Cooperative Societies have become an “authority” or “body” or “institution of self-government” established or constituted by or under the Constitution and hence are under the ambit of the RTI Act.