Sunday, May 12, 2013

Cooperative societies are created, governed, and controlled by statute.

Even before the enactment of Right to Information act or 97th amendment to the constitution of India, long back in 1985, constitutional bench of Supreme Court in a judgement in "Daman Singh vs. state of Punjab"has said that, the cooperative societies are governed by statute from their inception. They are created by statute and they are controlled by statute .This has become known due to Bombay high courts recent judgement.

Though not directly related to Right to information, but Bombay high courts recent judgement on co-operative societies has brought some points forward, those explain very essence of the recent 97th ammendment to the constitution. The Bombay high court has opined, "The cooperative movement is a socio economic and moral movement. In that, General Public has a definite place and its participation is but natural"

Bombay High Court recently rejected a revision plea by the manager of a cooperative bank facing liquidation for discharge in a case under Prevention of Corruption Act .In this case justice S.C .Dharmadhikari held that the manager was discharging public duty and hence, would have to face trial under PCA.

While delivering this judgement justice Dharmadhikari has dealt with various aspects of the co-operative societies and public interest .And these aspects, show how cooperative societies come under the ambit of RTI. Reproducing here just two related paragraphs of the judgement.

51. The directive principles of State Policy have an important role in the Constitutional Scheme. Part IV of the Constitution of India enumerates directive principles of State Policy. Article 37 clarifies that the provisions contained in this part shall not be enforceable by any Courts, but the principles laid down therein are nevertheless fundamental in the governance of the country and it shall be the duty of the State to apply these principles in making laws. Articles 38 and 39 cast a duty on the State to secure a social order for the promotion of the welfare of the people. Article 39 sets out the principles of policy to be followed by the State. Article 40 provides for organization of Village Panchayats and Article 43 under which the State shall endeavour to promote cottage industries on an individual or cooperative basis in rural areas is the foundation for the Cooperative movement and particularly now by Article 43B of the Constitution of India, everything gets clarified. These Articles read as under: “

43. Living wage, etc., for workers – The State shall endeavour to secure, by suitable legislation or economic organization or in any other way, to all workers, agricultural, industrial or otherwise, work, a living wage, conditions of work ensuring a decent standard of life and full enjoyment of leisure and social and cultural opportunities and, in particular, the State shall endeavour to promote cottage industries on an individual or cooperativeBasis in rural areas.

[43B. Promotion of cooperative societies.
The State shall endeavour to promote voluntary formation, autonomous functioning, democratic control, and professional management of cooperative societies.]” [Ins. by the Constitution (Ninety-seventh Amendment) Act, 2011, s. 3 (w.e.f. 1522012).

52. Therefore, the cooperative movement is a socio economic and moral movement. In that, General Public has a definite place and its participation is but natural. There are not just members' interests involved in the Cooperative Societies. The Hon'ble Supreme Court holds that the very philosophy and concept of the cooperative movement is impregnated with the public interest. (See Para 10 at page 979 of the Judgment of the Hon'ble Supreme Court in the case of Daman Singh Vs. State of Punjab, reported in AIR 1985 SC 973). Cooperation is a substitute for self-interest of individual or group of individuals for the benefit of the whole community. The Cooperative Societies undertake agricultural and non-agricultural operations and functions including financial. Therefore, it is futile to urge that only members or depositors are interested in the working and functioning of a Cooperative Bank or its liquidation and winding up. There are persons like the Complainant, who deal with the Cooperative Banks or Societies and whose funds and properties are utilized by such Entities. When they complain that persons who are appointed as officers during the course of winding up and liquidation proceedings of the Societies’, commit acts which is a criminal misconduct and indulge in bribery and corruption, then, the P.C. Act, 1988 and its mechanism must be made available for dealing with the grievances and complaints of such persons. Once the constitutional perspective is borne in mind, then, the position of a Cooperative Society is not confined to local limits, nor its functioning and working restricted to few persons. There is a definite stake of the Society and the community at large in the working and functioning of such societies. Therefore, the Applicant was discharging a public duty. The conclusion of the learned Judge cannot be said to be vitiated in any manner and particularly as suggested by Mr. Warunjikar.

I guess this will start new and healthy discussion on , whether cooperative societies come under the ambit of RTI act or not ?.If we go through both the above judgements it seems that RTI act was applicable to co-operative societies even before 97th amendment to the constitution.

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  1. Cooperative Societies are created governed and controlled by Statute and so is the case with every Company which is incorporated under the Companies Act, 1956.

    All the attributes of Cooperatives enshrined under Article 43B does exist in every Company, and therefore, every Company should also come within the ambit of RTI.

    1. Company is not included specifically in the 97th amendment but Cooperative society is specifically included in the amendment. RTI will be applicable to mcompany only on the case to case basis.

  2. Hon'ble S.Cstayed kerala H.C's judgment in Thalapalam service co-operative society vs.union of India.whether heard finally?