A Bill further to amend the Multi-State Co-operative Societies Act, 2002.

BE it enacted by Parliament in the Seventy-third Year of the Republic of India as

follows:––

1. (1) This Act may be called the Multi-State Co-operative Societies (Amendment)

Act, 2022.

(2) It shall come into force on such date as the Central Government may, by notification

in the Official Gazette, appoint; and different dates may be appointed for different provisions

of this Act and any reference in any such provision to the commencement of this Act shall

be construed as a reference to the coming into force of that provision.

2. In section 3 of the Multi-State Co-operative Societies Act, 2002 (hereinafter referred

to as the principal Act),––

(i) after clause (a), the following clause shall be inserted, namely:—

‘(aa) “Authority” means the Co-operative Election Authority established

under sub-section (1) of section 45;’;

Short title and

commencement.

39 of 2002.

Amendment of

section 3.

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EXTRAORDINARY

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PART II — Section 2

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PUBLISHED BY AUTHORITY

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No. 22] NEW DELHI, WEDNESDAY, DECEMBER 7, 2022/AGRAHAYANA 16, 1944 (SAKA)

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Separate paging is given to this Part in order that it may be filed as a separate compilation.

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jftLVªh lañ Mhñ ,yñ—(,u)04@0007@2003—22

REGISTERED NO. DL—(N)04/0007/2003—22

LOK SABHA

————

The following Bill was introduced in Lok Sabha on 7th December, 2022:—

BILL NO. 215 OF 2022

सी.जी.-डी.एल.-अ.-14122022-241072

CG-DL-E-14122022-241072

THE GAZETTE OF INDIA EXTRAORDINARY

[PART II—

(ii) in clause (d), for the words, brackets and figures “under sub-section (1) of

section 4”, the words, brackets, letters and figures “as per clause (f) of article 243ZH

of the Constitution read with sub-section (1) of section 4” shall be substituted;

(iii) after clause (f), the following clause shall be inserted, namely:—

‘(fa) “Co-operative Ombudsman” means the Ombudsman appointed by

the Central Government under section 85A;’;

(iv) in clause (i), for the words “co-operative year”, the words “co-operative

year or financial year” shall be substituted;

(v) in clause (s), after the words “Official Gazette”, the words ‘and the expression

“notified” with its cognate meanings and grammatical variations shall be construed

accordingly’ shall be inserted.

3. In section 7 of the principal Act, for sub-sections (2) and (3), the following

sub-sections shall be substituted, namely:—

“(2) Without prejudice to the provisions of sub-section (1), the Central Registrar

may register a multi-State co-operative society if the aggregate value of the paid-up

capital and provision of reserves along with liquidity, exposure and other prudential

norms specified in the bye-laws of the proposed multi-State co-operative society in

the business of thrift and credit are in accordance with such guidelines as may be

prescribed:

Provided that the multi-State co-operative societies registered before the

commencement of the Multi-State Co-operative Societies (Amendment) Act, 2022

shall meet such norms within a period of five years from the date of commencement of

the said Act:

Provided further that if the liquidity, exposure, prudential and other parameters

of the multi-State credit society do not meet such norms within the period mentioned

above, the Central Registrar shall have powers to issue such directions as it deems

appropriate to such society to take relevant action:

Provided also that in the case of multi-State co-operative bank, the aggregate

value of the paid-up capital and provision of reserves along with liquidity norms

provided in the bye-laws shall be such as may be laid down by the Reserve Bank from

time to time.

(3) The application for registration shall be disposed of by the Central Registrar

within a period of three months from the date of receipt of such application by him:

Provided that the Central Registrar may, for rectification of mistakes, if any, in

the application, extend the period of three months with such further period, for reasons

to be recorded in writing, not exceeding two months on the request of the applicant.

(4) Where the Central Registrar refuses to register a multi-State co-operative

society, he shall communicate the order of such refusal stating therein the reasons for

such refusal, to the applicant within the period specified in sub-section (3):

Provided that no order of refusal shall be made, unless the applicant has been

given an opportunity of being heard:

Provided further that if the application for registration is not disposed of within

the period specified in sub-section (3) or the Central Registrar fails to communicate

the order of refusal within the said period, the application shall be deemed to have

been accepted for registration and the Central Registrar shall issue the registration

certificate in accordance with the provisions of this Act and the rules made thereunder.”.

4. In section 10 of the principal Act, in sub-section (2), in clause (a), for the word

“address”, the words and brackets “address (including e-mail address)” shall be substituted.

Amendment

of section 7.

Amendment

of section 10.

S3/F/BILL 2022/GI/1667GI/1667GI1

SEC. 2]

THE GAZETTE OF INDIA EXTRAORDINARY

5. In section 14 of the principal Act—

(i) for the marginal heading “Change of address”, the marginal heading

“Address” shall be substituted;

(ii) for the word “address”, the words “address, including e-mail address,”

shall be substituted.

6. In section 17 of the principal Act, after sub-section (9), the following sub-section

shall be inserted, namely:––

“(10) Any co-operative society may, by a resolution passed by majority of not

less than two-thirds of the members present and voting at a general meeting of such

society, decide to merge into an existing multi-State co-operative society:

Provided that such resolution shall be subject to the provisions of the respective

State Co-operative Societies Act for the time being in force under which such

co-operative society is registered.”.

7. In section 19 of the principal Act, in the Explanation, in clause (a), —

(i) in sub-clause (ii), the word “or” occurring at the end shall be omitted;

(ii) sub-clause (iii) shall be omitted.

8. In section 22 of the principal Act, in sub-section (5), for clause (c), the following

clause shall be substituted, namely:––

“(c) the co-operative society shall be deemed to have been de-registered under

the law relating to such co-operative society for the time being in force in that State,

from the date of the certificate as issued by the Central Registrar and forwarded to

such co-operative society, along with a copy of the registered amendment under

sub-section (3).”.

9. In section 26 of the principal Act,—

(i) in the proviso, the words “be entitled to subscribe the shares of such society

or” shall be omitted;

(ii) after the proviso, the following provisos shall be inserted, namely:—

“Provided further that nominal or associate member can be issued to

non-voting shares which may not confer any interest in the management of the

multi-State co-operative society including right to vote, to be elected as a

director of the board or participate in the general body meetings:

Provided also that in case of multi-State co-operative bank, such shares

shall be issued in accordance with the instructions issued by the Reserve Bank

from time to time.”.

10. In section 28 of the principal Act, for the words “to the society in respect of

membership,”, the words “of all dues to the multi-State co-operative society including the

payment in respect of membership or has availed such minimum level of product or services

as specified in the bye-laws,” shall be substituted.

11. In section 29 of the principal Act, for clause (b), the following clause shall be

substituted, namely:—

“(b) he fails to use the minimum level of the products or services as specified in

the bye-laws for two consecutive years; or”.

12. In section 30 of the principal Act, in sub-section (2), for the words “one year”, the

words “three years” shall be substituted.

Amendment of

section 14.

Amendment of

section 17.

Amendment of

section 19.

Amendment of

section 22.

Amendment of

section 26.

Amendment of

section 28.

Amendment of

section 29.

Amendment of

section 30.

THE GAZETTE OF INDIA EXTRAORDINARY

[PART II—

13. For section 35 of the principal Act, the following section shall be substituted,

namely:––

“35. (1) The shares of the authorities referred to in clauses (c) and (d) of

sub-section (1) of section 25, held in multi-State co-operative societies,––

(a) shall not be redeemed without the prior approval of such

authorities; and

(b) may be redeemed in such manner as may be agreed upon between the

multi-State co-operative society and such authorities.

(2) The shares held in a multi-State co-operative society by any of the authorities

referred to in clauses (e) to (g) of sub-section (1) of section 25, shall be redeemed in

accordance with the bye-laws of such multi-State co-operative society and in case,

where the bye-laws do not contain any provision, in such manner as may be agreed

upon between the multi-State co-operative society and such authorities.

(3) The redemption of shares referred to in sub-sections (1) and (2), shall be on

the face value of shares.”.

14. In section 39 of the principal Act, in sub-section (1), after clause (o), the following

clause shall be inserted, namely:—

“(p) appointment of auditor.”.

15. In section 41 of the principal Act, for sub-section (3), the following sub-sections

shall be substituted, namely:––

‘(3) The board shall consist of such number of directors not exceeding

twenty-one, as may be specified by the bye-laws, out of which one Member shall be

Scheduled Caste or Scheduled Tribe and two shall be women in the board of

multi-State co-operative society consisting of individuals and having members from

such class or category of persons:

Provided that the board may co-opt as Members of the board having experience

in the field of banking, management, co-operative management and finance or

specialisation in any other field relating to the objects and activities undertaken by

such multi-State co-operative society:

Provided further that the number of such co-opted Members shall not exceed

two in addition to twenty-one directors specified in this sub-section.

(4) The co-opted directors referred to in sub-section (3) shall not have the right

to vote in any election of the office bearers or be eligible to be elected as office

bearers of the board.

(5) The functional directors in a multi-State co-operative society shall also be

the members of the board and such directors shall be excluded for the purpose of

counting the total number of directors specified in sub-section (3).

(6) No director of a multi-State co-operative society shall, as a director, be

present in the discussion of, or vote on, any contract or arrangement entered into, or

to be entered into, by or on behalf of such society, if he or his relative is directly or

indirectly concerned or interested in such contract or arrangement and no relative of

any of the sitting directors of the multi-State co-operative society shall be recruited

as employee including the Chief Executive of that society.

Explanation.––For the purposes of this sub-section, the term “relative” with

reference to an individual, includes—

(a) spouse;

(b) father (including step father);

Substitution of

new section for

section 35.

Redemption of

shares.

Amendment of

section 39.

Amendment of

section 41.

S3/F/BILL 2022/GI/1667GI/1667GI1

SEC. 2]

THE GAZETTE OF INDIA EXTRAORDINARY

(d) son (including step son);

(e) son’s wife;

(f) daughter (including step daughter);

(g) daughter’s husband;

(h) father’s father;

(i) father’s mother;

(j) mother’s father;

(k) mother’s mother;

(l) son’s son;

(m) son’s son’s wife;

(n) son’s daughter;

(o) son’s daughter’s husband;

(p) daughter’s son;

(q) daughter’s son’s wife;

(r) daughter’s daughter;

(s) daughter’s daughter’s husband;

(t) brother (including step brother);

(u) brother’s wife;

(v) sister (including step sister);

(w) sister’s husband; and

(x) Hindu undivided family.

(7) Any director of the board who violates the provision of sub-section (6),

shall be disqualified for being a member of the board and deemed to have vacated his

office from the date of such meeting of the board as is referred to in the said

sub-section and such proceedings shall be deemed to be void.’.

16. In section 43 of the principal Act,––

(i) in sub-section (1),––

(a) in clause (a), after the words “to be insolvent”, the words “or has

been a director of an insolvent company” shall be inserted;

(b) in clause (h), after the words “under this Act”, the words “or under

any other Act specified in the Third Schedule” shall be inserted;

“(o) has been disqualified under sub-section (7) of section 41.”;

(ii) after sub-section (1), the following sub-section shall be inserted, namely:—

“(1A) A member who has been a director of the board of any multi-State

co-operative society or co-operative bank, where such board has been

superseded, shall not be eligible to be elected as director of the board of another

multi-State co-operative society or co-operative bank for a period of five years,

from the date of such supersession:

Provided that no member shall be declared ineligible under this

sub-section unless an opportunity of being heard has been given to such

member by the Central Registrar and declaration for ineligibility shall be made

only after ascertaining that the member concerned has been responsible by

acts of omission or commission leading to such supersession.”;

Amendment

of section 43.

THE GAZETTE OF INDIA EXTRAORDINARY

[PART II—

(iii) in sub-section (2),––

(a) for clause (a), the following clause shall be substituted, namely:—

“(a) to provide information, documents, personnel, funds or

expenses or any other assistance as required by the Co-operative Election

Authority for conducting elections under this Act in such manner as may

be prescribed;”;

(b) in clause (c), for the words “general meeting” occurring at the end, the

words “general meeting; or” shall be substituted;

“(d) to make contribution to the co-operative education fund referred

to in clause (b) of sub-section (1) of section 63 or the Co-operative

Rehabilitation, Reconstruction and Development Fund established under

section 63A; or

(e) to file annual return specified in section 120 within the time

specified therein; or

(f) to get the audit of the society conducted within six months of the

close of the financial year to which such account relate:

Provided that before taking any action under this sub-section, he

shall be given an opportunity of being heard by the Central Registrar.”.

17. For section 45 of the principal Act, the following sections shall be substituted,

namely:––

‘45. (1) The Central Government shall, by notification, establish an Authority to

be known as the Co-operative Election Authority which shall consist of a Chairperson,

a Vice-Chairperson and Members not exceeding three to be appointed by the Central

Government on the recommendation of the Selection Committee consisting of such

persons as may be prescribed.

(2) The head office of the Authority shall be at such place as may be notified by

the Central Government.

(3) A person shall not be qualified for appointment as a,––

(i) Chairperson of the Authority unless he held the post of Additional

Secretary to the Government of India or equivalent rank;

(ii) Vice-Chairperson of the Authority unless he held the post of Joint

Secretary to the Government of India or equivalent rank; and

(iii) Member unless he fulfils such qualification and experience as may be

prescribed.

(4) The Chairperson, Vice-Chairperson or Member of the Authority shall hold

office for a period of three years from the date on which they enter upon their office

or until they attain the age of sixty-five years, whichever is earlier and they shall be

eligible for re-appointment:

Provided that in case of appointment of a Government servant as the

Chairperson, Vice-Chairperson or a Member, he shall be treated as an ex officio Member

and he shall continue so long as he holds the office by virtue of which he is a

Chairperson, Vice-Chairperson or Member.

(5) The salaries and allowances payable to, and the other terms and conditions

of service of the Chairperson, Vice-Chairperson and Members of the Authority, other

than the ex officio Member, shall be such as may be prescribed.

Substitution of

new sections

for section 45.

Establishment

of Co-

operative

Election

Authority.

S3/F/BILL 2022/GI/1667GI/1667GI1

SEC. 2]

THE GAZETTE OF INDIA EXTRAORDINARY

45A. The Chairperson of the Authority shall have powers of general

superintendence and directions in the conduct of the affairs of the Authority and he

shall, in addition to presiding over the meetings of the Authority, exercise and

discharge such other powers and functions as may be prescribed.

45B. (1) The Central Government may, by order, remove from office the

Chairperson, Vice-Chairperson or Member of the Authority, other than ex officio

Member, if the Chairperson, Vice-Chairperson or Member of the Authority, as the case

may be, if he—

(a) has been adjudged as an insolvent;

(b) has been convicted of an offence which, in the opinion of the Central

Government involves moral turpitude;

Vice-Chairperson or Member of the Authority;

(d) has acquired such financial or other interests, as is likely to affect

prejudicially his function as a Chairperson, Vice-Chairperson or Member of the

Authority;

(e) has so abused his position, as to render his continuance in office

prejudicial to the public interest; or

(f) has engaged at any time during his term of office in any other

employment.

(2) The Chairperson, Vice-Chairperson or Member of the Authority shall not be

removed from his office except by an order of the Central Government on the ground

of his proved misbehaviour or incapacity after the Central Government has, on an

inquiry, held in accordance with the procedure prescribed in this behalf by it, come to

the conclusion that the Chairperson, Vice-Chairperson or Member of the Authority

ought on any such ground to be removed.

(3) The Central Government may suspend the Chairperson, Vice-Chairperson

or Member of the Authority in respect of whom an inquiry under sub-section (2) is

being initiated or pending until the Central Government has passed an order on

receipt of the report of the inquiry.

45C. (1) Before appointing any person as Chairperson, Vice-Chairperson or

Member of the Authority, the Central Government shall satisfy itself that the person

does not have any such financial or other interest as is likely to affect prejudicially his

functions as such Chairperson, Vice-Chairperson or Member.

(2) The Chairperson, Vice-Chairperson or Members of the Authority shall

immediately after entering office and every year thereafter, make a declaration as to

the extent of their interest, whether direct or indirect and whether financial or otherwise,

in any co-operative society.

(3) The declaration so made under sub-section (2) shall be placed in the public

domain by the Authority.

45D. The Chairperson, Vice-Chairperson or Members of the Authority, other

than ex officio Members, may, by notice in writing of not less than thirty days under

their hand addressed to the Central Government, resign their office and on such

resignation being accepted by that Government, shall be deemed to have vacated

their office:

Provided that the Chairperson, Vice-Chairperson or Member shall, unless he is

permitted by the Central Government to relinquish his office sooner, continue to hold

office until the expiry of three months from the date of receipt of such notice or until

a person duly appointed as his successor enters upon his office or until the expiry of

his term of office, whichever is earlier.

Power of

Chairperson.

Removal and

suspension of

Chairperson,

Vice-

Chairperson

and Members.

Disclosure and

declaration of

interest.

Resignation of

Members.

THE GAZETTE OF INDIA EXTRAORDINARY

[PART II—

45E. If a casual vacancy occurs in the office of the Chairperson,

Vice-Chairperson or Member of the Authority, whether by reason of his death,

resignation or otherwise, such vacancy shall be filled within a period of ninety days

by making a fresh appointment in accordance with the provisions of section 45 and

the person so appointed shall hold office for the remainder of the term of office for

which the Chairperson, Vice-Chairperson or Member of the Authority, as the case

may be, in whose place he is so appointed.

45F. The Chairperson, Vice-Chairperson and Member of the Authority, on

ceasing to hold office shall not, for a period of two years, accept any employment

(including as consultant or otherwise) in any co-operative society:

Provided that nothing contained in this section shall apply to any employment

under the Central Government or in any State Government or any Corporation

established by or under any Central or State Act or a Government Company as defined

under clause (45) of section 2 of the Companies Act, 2013.

45G. No act or proceeding of the Authority shall be invalid merely by reason

of—

(a) any vacancy in, or any defect in the constitution of, the Authority;

(b) any defect in the appointment of a person as Chairperson or Member

of the Authority; or

merits of the case.

45H. (1) The Authority shall meet at such places and times and shall observe

such rules of procedure in regard to the transaction of business at its meetings

(including the quorum at its meetings), as may be prescribed.

(2) The Chairperson of the Authority shall preside at the meeting of the Authority

and if for any reason the Chairperson of the Authority is unable to attend a meeting of

the Authority, the Vice-Chairperson of the Authority shall preside at the meeting.

(3) All questions which come up before any meeting of the Authority shall be

decided by a majority of votes of the members present and voting and, in the event of

an equality of votes, the Chairperson or the Vice-Chairperson of the Authority presiding

shall have the right to exercise a second or casting vote.

(4) Save as otherwise provided in sub-section (3), every Member shall have

one vote.

45-I. The Authority shall discharge the following functions, namely:––

(i) conduct the elections of the multi-State co-operative society;

(ii) supervise, direct and control the matters relating to preparation of

electoral rolls; and

(iii) such other functions as may be prescribed.

45J. (1) No person shall be eligible to be elected as a member of the board or

office bearer of a multi-State co-operative society, unless he is an active member of

the general body of that society.

Explanation.—For the purposes of this sub-section, the term “active member”

means any member—

(i) availing minimum level of products or services of the society; or

(ii) attending not less than three consecutive general meetings,

as specified in section 29.

Filling of casual

vacancy.

Restriction of

re-

employment.

Vacancies,

etc., not to

invalidate

proceedings of

Authority.

Meetings of

Authority.

Functions of

Authority.

Elections of

Members of

board.

18 of 2013.

S3/F/BILL 2022/GI/1667GI/1667GI1

SEC. 2]

THE GAZETTE OF INDIA EXTRAORDINARY

(2) A member of the board or office bearer of a multi-State co-operative society

shall cease to be such member or office bearer, if he ceases to be a member of general

body of that society.

(3) The election of members of board shall be held by secret ballot in such

manner as may be prescribed.

(4) The election of the members of the board shall be held in the general meeting

of the members of the multi-State co-operative society and the elected members of the

board shall, if the bye-laws of such society permit, be eligible for re-election.

(5) The term of office of elected members of the board and its office bearers

shall be five years from the date of election and the term of office bearers shall be

co-terminus with the term of the board:

Provided that the board may fill casual vacancies upto one-third of number of

elected directors on the board by nomination out of the same class of members in

respect of which the casual vacancy has arisen, if the term of office of the board is

less than half of its original term:

Provided further that in case the number of such casual vacancies in the same

term of the board exceeds one-third of number of elected directors, such vacancies

shall be filled by elections.

(6) The expenses for holding elections by the Authority shall be borne by the

multi-State co-operative society in such manner as may be prescribed.

(7) The Central Government may make rules to provide for the powers and the

procedure to be followed by the Authority for conduct of election of members of the

board.

(8) The Chairperson and the Chief Executive of the multi-State co-operative

society shall inform the Authority, six months before the expiry of the term of the

existing board, to conduct the elections within time.

(9) The society in respect of which the election is being held shall provide such

infrastructure, personnel, information, documents or other assistance to the Authority

as it may require.

45K. (1) The Authority may appoint a Returning Officer to conduct the election

of the multi-State co-operative societies and discharge such functions, as directed by

the Authority, in such manner as may be prescribed.

(2) The Central Government shall provide such staff and officers to the Authority

as may be necessary for the efficient discharge of functions by the Authority under

the Act.

(3) The Authority may appoint,—

(a) such observers as it may consider necessary to supervise the elections

and discharge such other functions as may be prescribed; and

(b) such number of Assistant Returning Officers as it may consider

necessary to assist the Returning Officer.

45L. The Authority may, by general or special order, issue such directions to the

board, its members, Chief Executive and other staff of the society as may be necessary

for the conduct of free and fair elections and the board, its members, Chief Executive

and staff of the society shall comply with such directions.’.

18. In section 49 of the principal Act, in sub-section (2),––

(i) after clause (a), the following clause shall be inserted, namely:––

“(aa) to elect the Chairperson and Vice-Chairperson or President and

Vice-President of the multi-State co-operative society from amongst the elected

members of the board in accordance with the directions of the Authority:

Appointment

of Returning

Officer and

other officers.

Power to issue

directions.

Amendment

of section 49.

THE GAZETTE OF INDIA EXTRAORDINARY

[PART II—

Provided that the certificate of election shall be issued by the Chief

Executive of the multi-State co-operative society after conclusion of resolution

by the board;”;

(ii) in clause (e), the following proviso shall be inserted, namely:—

“Provided that the recruitment of such employees shall be subject to

such procedure as may be prescribed.”.

19. In section 50 of the principal Act,––

(a) in sub-section (1), the following provisos shall be inserted, namely:––

“Provided that where such Chairperson or President fails to direct the

Chief Executive to convene the meeting of the board within the quarter, such

Chief Executive shall convene the meeting on the basis of requisition of the

Vice-Chairperson or Vice-President or any other Member of the board:

Provided further that notwithstanding anything contained in the first

proviso, the Chief Executive may also convene the meeting on the basis of

requisition from at least fifty per cent. of Members of the board;

(b) for sub-section (3), the following sub-sections shall be substituted,

namely:—

“(3) The Chairperson or President, if for any reason, is unable to attend a

meeting of the board, the Vice-Chairperson or Vice-President and in the absence

of both, any other Member of the board chosen by the Members of the board

present from amongst themselves at the meeting, shall preside over the meeting.

(4) The quorum for a meeting of the board of directors of a multi-State

co-operative society shall be one-third of its total number of elected directors.”.

20. In section 51 of the principal Act, after sub-section (1), the following sub-section

shall be inserted, namely:––

‘(1A) No multi-State co-operative society shall appoint or continue the

employment of any person as the Chief Executive who—

(a) is below the age of twenty-one years or has attained the age of seventy

years:

Provided that any person above the age of seventy years may be appointed

by a special resolution passed by three-fourths of the board members, in which

case the explanatory statement annexed to the notice for such motion shall

indicate the justification for appointing such person;

(b) is an undischarged insolvent or has any time been adjudged as an

insolvent;

for a period of more than six months; or

(d) does not meet the criteria for “fit and proper”, as determined by the

Central Registrar in case of multi-State credit societies; or in case of non-credit

multi-State societies, does not meet the criteria as the Central Government may

prescribe in terms of educational qualifications and relevant experience.’.

21. In section 52 of the principal Act, in clause (j), for the words “thirty days”, the

words “forty-five days” shall be substituted.

22. In section 53 of the principal Act, for sub-section (1), the following sub-section

shall be substituted, namely:––

“(1) The board may constitute an Executive Committee, and such other

committees or sub-committees as may be specified in the bye-laws of the multi-State

co-operative society:

Amendment

of section 50.

Amendment

of section 51.

Amendment

of section 52.

Amendment

of section 53.

S3/F/BILL 2022/GI/1667GI/1667GI1

SEC. 2]

THE GAZETTE OF INDIA EXTRAORDINARY

Provided that the board shall constitute—

(a) an Audit and Ethics Committee;

(b) a Committee on prevention of sexual harassment at work place.”.

23. In section 63 of the principal Act, in sub-section (1), for clause (b), the following

clause shall be substituted, namely:––

“(b) credit annually one per cent. of net profit to co-operative education fund to

be maintained by the Central Government in such manner as may be prescribed and

the proceeds from such fund shall be used for Co-operative Education and Training

through the National Co-operative Union of India and any other agency in such

manner as may be determined by the Central Government;”.

24. After section 63 of the principal Act, the following sections shall be inserted,

namely:––

‘63A. (1) The Central Government shall establish a Fund, to be called the

Co-operative Rehabilitation, Reconstruction and Development Fund for revival of

sick multi-State co-operative societies as referred to in section 63B and for development

purposes in such manner as may be determined by it and there shall be credited to

such Fund annually by multi-State co-operative societies which are in profit for the

preceding three financial years one crore rupees or one per cent. of the net profits of

such multi-State co-operative society, whichever is less.

(2) The Central Government shall, by notification, constitute a Committee,

consisting of such members as it may deem fit, to administer the Fund, and maintain

separate accounts and other relevant records in relation to the Fund in such form as

may be specified by the Central Government in consultation with the Comptroller and

Auditor-General of India.

(3) The Committee shall spend the money out of the Fund for carrying out the

objects for which such Fund has been established.

63B. (1) If, at any time, the Central Registrar, is of the opinion that a multi-State

co-operative society has become sick, he may, by an order, declare such society as

sick co-operative society.

(2) Where a multi-State co-operative society is declared as a sick co-operative

society under sub-section (1), the Central Government or any person or agency

authorised by it, may prepare a scheme for rehabilitation and reconstruction of the

society and hand it over to the society for approval of the general body.

(3) The Central Government may, on the recommendation of the general body

and to give effect to the scheme for rehabilitation and reconstruction referred to in

sub-section (2), re-organise the board of such society with such persons, having

experience in the field of co-operation, management, finance, accountancy and any

other area relating to such societies as may be recommended by the general body:

Provided that in respect of a sick multi-State co-operative bank, any scheme for

rehabilitation or reconstruction shall be done with the prior approval of the Reserve

Bank.

Explanation.––For the purposes of this section, the expression “sick

co-operative society” means a multi-State co-operative society being a society

registered under the provisions of this Act which has at the end of any financial year

accumulated losses equal to or exceeding total of its paid-up capital, free reserves

and surpluses and has also suffered cash losses in such financial year and the financial

year immediately preceding such financial year.

Amendment

of section 63.

Insertion of

new sections

63A, 63B and

63C.

Establishment

of Co-operative

Rehabilitation,

Reconstruction

and

Development

Fund.

Rehabilitation

and

reconstruction

of sick

societies.

THE GAZETTE OF INDIA EXTRAORDINARY

[PART II—

63C. (1) The Central Government may, on an application made by a multi-State

co-operative society which has contributed to the Fund for continuous five preceding

financial years, grant such financial assistance as it may consider appropriate to the

society out of the Fund for infrastructural requirement:

Provided that at least fifty per cent. of the total requirement shall be borne by

the multi-State co-operative society and the financial assistance from the Fund shall

not exceed more than the fifty per cent. of such requirement.

(2) The Committee constituted under sub-section (2) of section 63A shall examine

and recommend to the Central Government for providing the financial assistance to

the multi-State co-operative society to such extent and on such terms and conditions

as it may consider necessary.’.

25. In section 64 of the principal Act,—

(i) for clause (b), the following clause shall be substituted, namely:—

“(b) in any of the securities issued by the Central Government, State

Government, Government Corporations, Government Companies, Authorities,

Public Sector Undertakings or any other securities ensured by Government

guarantees;”;

(ii) in clause (d), after the words “any other institution”, the words “in the same

line of business as the multi-State co-operative society” shall be inserted;

(iii) for clauses (e) and (f), the following clauses shall be substituted, namely:—

'(e) with any other scheduled or nationalised bank.

Explanation.––For the purposes of this clause, the expression,—

(i) “scheduled bank” shall have the same meaning as assigned to

it in clause (e) of section 2 of the Reserve Bank of India Act, 1934; and

(ii) “nationalised bank” means a corresponding new bank

constituted under sub-section (1) of section 3 of the Banking Companies

(Acquisition and Transfer of Undertakings) Act, 1970 and the Banking

Companies (Acquisition and Transfer of Undertakings) Act, 1980; or

(f) in such other manner as may be determined by the Central

Government.'.

26. In section 67 of the principal Act, in sub-section (1), in the first proviso, for the

words “ten times”, the words “such multiples as may be determined by the Central

Government” shall be substituted.

27. In section 70 of the principal Act,––

(a) in sub-section (2), for the proviso, the following provisos shall be substituted,

namely:—

“Provided that such auditors or auditing firm shall be appointed from a

panel approved by the Central Registrar:

Provided further that in case of multi-State co-operative banks,

multi-State credit societies with deposits of above five hundred crore rupees

and multi-State non-credit societies with turnover of above five hundred crore

rupees, the auditor shall be appointed from a panel of auditors approved for

audit of such societies by the Central Registrar.”;

(b) after sub-section (3), the following sub-section shall be inserted, namely:—

“(3A) An auditor appointed under sub-section (2) shall submit the

audit of accounts report to the multi-State co-operative society, within

Financial

assistance to

multi-State

co-operative

societies for

development.

Amendment

of section 64.

2 of 1934.

5 of 1970.

40 of 1980.

Amendment

of section 67.

Amendment

of section 70.

S3/F/BILL 2022/GI/1667GI/1667GI1

SEC. 2]

THE GAZETTE OF INDIA EXTRAORDINARY

six months from the date of closing of the financial year, to which such accounts

relate.”;

be substituted, namely:––

“Provided that where such vacancy is caused by the resignation or death

of an auditor, the vacancy shall be filled by the board from the panel of auditors

from which such auditor was appointed.”;

(d) after sub-section (9) and the Explanation thereunder, the following

sub-section shall be inserted, namely:—

“(10) The audit report of the accounts of the national co-operative

societies shall be laid before each House of Parliament.”.

28. After section 70 of the principal Act, the following section shall be inserted,

namely:—

“70A. In case of multi-State co-operative societies,––

(i) having an annual turnover more than the amount as determined by the

Central Government; or

(ii) having deposit of more than the amount as determined by the Central

Government,

the concurrent audit shall be carried out by an auditor appointed from a panel of

auditors approved by the Central Registrar.”.

29. In section 73 of the principal Act, after sub-section (5), the following sub-section

shall be inserted, namely:––

“(6) the multi-State co-operative society or class of multi-State co-operative

societies, as the case may be, shall adopt such standards of auditing and accounting

as may be determined by the Central Government:

Provided that until such standards of auditing and accounting are specified,

the auditing and accounting standards specified by the Institute of Chartered

Accountants of India constituted by sub-section (1) of section 3 of the Chartered

Accountants Act, 1949 shall be deemed to be the standards of auditing and accounting:

Provided further that the multi-State co-operative banks shall adopt the

standards of accounting and auditing, if any, laid down by the Reserve Bank.”.

30. In section 78 of the principal Act, after sub-section (1), the following sub-sections

shall be inserted, namely:––

“(1A) If the Central Registrar is satisfied on the basis of information available

with him or furnished to him by a Government agency, that the business of a

multi-State co-operative society is being carried on for a fraudulent or unlawful

purpose, he may, after informing the multi-State co-operative society of the allegations

made against it, by a written order, call on the multi-State co-operative society to

furnish in writing any information or explanation, with the endorsement of the board

of the society, on matters contained in such order within the time specified therein:

Provided that if the Central Registrar is not satisfied with the explanation of the

society, he shall either himself or through an office or agency authorised by him,

conduct inquiry into the constitution, working and financial condition of the society.

(1B) Notwithstanding anything contained in this Act, the Central Registrar

shall, either suo motu or through an officer or agency authorised by him, conduct

inquiry into the constitution, working and financial condition of any multi-State

co-operative society, once in such period as may be determined by the Central

Government.”.

Insertion of

new section

70A.

Concurrent

Audit.

38 of 1949.

Amendment

of section 73.

Amendment

of section 78.

THE GAZETTE OF INDIA EXTRAORDINARY

[PART II—

31. After Chapter IX of the principal Act, the following Chapter shall be inserted,

namely:––

“CHAPTER IXA

REDRESSAL OF COMPLAINTS

85A. (1) The Central Government shall appoint, one or more Co-operative

Ombudsman with territorial jurisdiction for inquiring into the complaints made by any

member of the multi-State co-operative societies regarding their deposits, equitable

benefits of society’s functioning or any other issue affecting the individual rights of

the concerned member, in such manner, as may be prescribed.

(2) The Co-operative Ombudsman shall, on receipt of a complaint, complete the

process of inquiry and adjudicate within a period of three months from the date of

receipt of the complaint and may issue necessary directions to the society during the

course of inquiry and the society shall be bound to comply with the same within a

period of one month from the date of issuance of such directions.

(3) The multi-State co-operative society aggrieved by any directions of the

Ombudsman may file an appeal in such manner as may be prescribed, within a period

of one month before the Central Registrar who shall decide the appeal within a period

of forty-five days and the decision of the Central Registrar shall be final and binding:

Provided that the Central Registrar may entertain the appeal after the expiry of

said period of one month, if he is satisfied that the society was prevented by sufficient

cause from preferring the appeal in time.

(4) The Ombudsman shall submit periodic reports to the Central Registrar of

Co-operative Societies.

(5) The Co-operative Ombudsman while conducting the inquiry under

sub-section (1), shall exercise the same powers as are vested in a civil court under the

Code of Civil Procedure, 1908,––

(a) for summoning and enforcing the attendance of persons;

(b) examining them on oath;

(d) any other matter which may be prescribed.”.

32. In section 86 of the principal Act,—

(a) in sub-section (1), after the words and figures “under section 79”, the words

and figures “or section 108” shall be inserted;

(b) in sub-section (2),—

(i) for clause (a), the following clause shall be substituted, namely:––

“(a) where the number of members or the number of societies or

the number of persons, as the case may be, has at any time reduced

below the number of members or societies or persons as specified in

sub-section (2) of section 6:

Provided that the multi-State co-operative society shall be given

six months time to restore the number of members or societies or persons

to the requisite number;”;

(ii) in clause (b), for the words “co-operative principles.”, the words

“co-operative principles; or” shall be substituted;

Insertion of

new Chapter

IXA.

Co-operative

Ombudsman.

5 of 1908.

Amendment

of section 86.

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SEC. 2]

THE GAZETTE OF INDIA EXTRAORDINARY

(iii) after clause (b), the following clause shall be inserted, namely:––

“(c) where the Central Registrar has reasons to believe that the

registration was obtained by misrepresentation of facts, submission of

false or misleading information, suppression of material facts or fraud

thereby compromising the spirit of co-operation.”.

“(5) Notwithstanding anything contained in this section, in case of

winding up of multi-State co-operative banks, the provisions of the Banking

Regulation Act, 1949 shall also apply.”.

(d) in sub-section (6), the following shall be inserted, namely:––

‘Provided that prior to winding up, “no objection” from the institutional

lenders, who have outstanding loans from the society, shall be required in

writing.

Explanation.—For the purposes of this proviso, the expression

"institutional lenders" includes banks, savings and loan association, trust

company, insurance company, real estate investment trust, pension fund and

the like.’.

33. In section 94 of the principal Act, in the opening paragraph, after the words and

figures "section 83 or", the words and figures "section 84 or" shall be inserted.

34. In section 98 of the principal Act, after sub-section (2), the following sub-section

shall be inserted, namely:—

"(3) The Central Registrar shall also have the power to recover the following

dues by attaching bank accounts of defaulting multi-State co-operative societies—

(a) the co-operative education fund referred to in clause (b) of

sub-section (1) of section 63;

(b) the Co-operative Rehabilitation, Reconstruction and Development

Fund established under section 63A; and

conduct of elections.”.

35. After section 98 of the principal Act, the following section shall be inserted,

namely:—

"98A. The Central Registrar may, on an application received from any party,

review his decision under clause (a) or clause (b) or clause (c) of sub-section (1) of

section 94:

Provided that no application for review shall be entertained against the recovery

certificate issued by the Central Registrar or by any person authorised by him in

writing in this behalf, unless the applicant deposits with the concerned society, fifty

per cent. of the amount of the recoverable dues:

Provided further that no application for review shall be entertained, if made

after sixty days of the date of receipt of the decision or order:

Provided also that the Central Registrar may entertain any such application

made after such period, if the applicant satisfies that he had sufficient cause for not

making the application within such period.".

36. In section 103 of the principal Act, in sub-section (1), the following provisos

shall be inserted, namely:—

"Provided that where all the successor States take necessary steps to divide or

reorganise such deemed multi-State co-operative society into State co-operative

10 of 1949.

Amendment of

section 94.

Amendment of

section 98.

Amendment of

section 103.

Review of

decision.

Insertion of

new section

98A.

THE GAZETTE OF INDIA EXTRAORDINARY

[PART II—

societies in order to confine their objects, services and the members to respective

States within a period of three years, such deemed multi-State co-operative society

shall cease to be a multi-State co-operative society:

Provided further that the deemed multi-State co-operative society other than

those mentioned in the first proviso shall submit an application for registration and

obtain the certificate of registration from the Central Registrar.".

37. In section 104 of the principal Act,—

(a) in sub-section (1),—

(i) after the words "furnishing false information", the words "or failing to

file any return or information" shall be inserted;

(ii) for the words "two thousand rupees", the words "five thousand

rupees" shall be substituted;

(iii) for the words "ten thousand rupees", the words "one lakh rupees"

shall be substituted;

(b) in sub-section (2), for the words "five thousand rupees", the words "ten

thousand rupees" shall be substituted;

(i) after the word and figures "section 89", the words and figures "or to a

person required to file return under section 120" shall be inserted;

(ii) for the words "two thousand rupees", the words "five thousand

rupees" shall be substituted;

(iii) for the words "five thousand rupees", the words "ten thousand

rupees" shall be substituted;

(d) in sub-section (4),—

(i) in clause (h), after the words "to any person", the words "or receives

such gift, promise or gratification" shall be inserted;

(ii) in the long line, occurring after sub-clause (iii) of clause (h), after the

words "or with both", the words "and shall also be debarred from contesting

elections for a period of three years" shall be inserted;

(e) after sub-section (4), the following sub-sections shall be inserted, namely:—

"(5) Where a multi-State co-operative society,—

(a) which is required to provide an explanation or make a statement

during the course of inspection, inquiry or investigation, destroys,

mutilates or falsifies, or conceals or tampers or unauthorisedly removes,

or causes the destruction, mutilation or falsification or concealment or

tampering or unauthorised removal of, any document relating to the

property, assets or affairs of the society or makes or causes to make a

false entry in any document concerning the society;

(b) makes any investment in contravention of the provision of

section 64 or the bye-laws made under this Act;

(d) causes unlawful loss to the depositor,

the board of directors or the responsible officers of the multi-State co-operative

society shall be punishable with imprisonment for a term which shall not be less

Amendment of

section 104.

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SEC. 2]

THE GAZETTE OF INDIA EXTRAORDINARY

than one month but which may extend to one year or with fine which shall not

be less than five thousand rupees but may extend to one lakh rupees or with

both.

(6) Where the board of directors or officers of the multi-State co-operative

society receive any unlawful gains while transacting matters related to such

society or utilise any assets of the society for personal unlawful gains, such

directors or officers concerned shall be punishable with imprisonment for a

term which shall not be less than one month but which may extend to one year

or with fine which shall not be less than five thousand rupees but may extend to

one lakh rupees or with both and the proceeds of such unlawful gains shall be

recovered from them and deposited in such manner as may be prescribed.".

38. After section 105 of the principal Act, the following section shall be inserted,

namely:—

"105A. The provisions of this Act shall be in addition to, and not in derogation

of, any other law for the time being in force.".

39. For section 106 of the principal Act, the following sections shall be substituted,

namely:—

"106. (1) Every multi-State co-operative society shall appoint a Co-operative

Information Officer to provide the information relating to affairs and management of

the society to the members of the society and such information shall be confined to

the information falling under the disclosure norms specified by the society in its

bye-laws.

(2) Any member of multi-State co-operative society shall make an application,

accompanying such fee as may be prescribed, to get information specified in

sub-section (1).

(3) The Co-operative Information Officer shall, within thirty days from the date

of receipt of application, either provide the information or reject the application

specifying the reason to do so.

(4) Any member of the multi-State co-operative society whose application has

been rejected may prefer an appeal to the Co-operative Ombudsman within a period of

one month from the date of such rejection and his decision shall be final and binding.

106A. Every Chief Executive of multi-State co-operative society shall keep a

copy of the rules and its bye-laws and also a list of its members, open to inspection

free of charge at all reasonable times, at the registered address of the multi-State

co-operative society.".

40. In section 108 of the principal Act, in sub-section (1), in clause (i), after the words

"Central Registrar" the words "or any person authorised by him in this behalf, not below

the rank of Assistant Commissioner or equivalent" shall be inserted.

41. In section 116 of the principal Act,—

(i) for the marginal heading, the following marginal heading shall be substituted,

namely:—

"Power to amend Schedules.";

(ii) after sub-section (1), the following sub-section shall be inserted, namely:—

"(1A) If the Central Government is satisfied that it is necessary or expedient

so to do, it may, by notification, amend the First Schedule and the Third Schedule

Insertion

new

section

105A.

Provisions of

this Act not in

derogation of

any other law.

Substitution of

new sections

for

section

106.

Appointment

of Co-operative

Information

Officer.

Copy of rules

and bye-laws,

etc., for

inspection.

Amendment

of section 108.

Amendment

of section 116.

THE GAZETTE OF INDIA EXTRAORDINARY

[PART II—

and thereupon such Schedules shall be deemed to have been amended

accordingly:

Provided that in case of the First Schedule, such notification shall be

used only for adding to the co-operative principles in the list.";

(iii) in sub-section (2), for the word, brackets and figure "sub-section (1)”, the

words, brackets, figures and letter "sub-sections (1) and (1A)” shall be substituted.

42. In section 120 of the principal Act,—

(i) for clause (a), the following clause shall be substituted, namely:—

"(a) annual report of the activities including details of board decisions

which were not unanimous;";

(ii) for clause (f), the following clauses shall be substituted, namely:—

"(f) disclosure regarding employees who are relatives of Members of

board;

(g) declaration of any related party transactions by the board of

directors; and

(h) any other information required by the Central Registrar in pursuance

of any of the provisions of this Act or the rules made thereunder.".

43. After section 120 of the principal Act, the following sections shall be inserted,

namely:—

"120A. (1) Notwithstanding anything to the contrary contained in this Act, and

without prejudice to the provisions of the Information Technology Act, 2000, the

Central Government may, from such date as may be notified, require that—

(a) such applications, returns, reports, statement of accounts, or any

other particulars or document as may be required to be filed or delivered under

this Act or the rules made thereunder, shall be filed in the electronic form and

authenticated;

(b) such document, notice, any communication or intimation, as may be

required to be served or delivered under this Act, shall be served or delivered in

the electronic form and authenticated;

bye-laws or any other particulars or documents and returns filed under this Act

or the rules made thereunder shall be maintained by the Central Registrar in the

electronic form and registered or authenticated, as the case may be;

(d) such inspection of bye-laws, returns, reports, statement of accounts

or any other particulars or documents maintained in the electronic form, as is

otherwise available for inspection under this Act or the rules made thereunder,

may be made by any person through the electronic form; and

(e) such fees, charges or other sums payable under this Act or the rules

made thereunder shall be paid through the electronic form,

in such manner as may be prescribed.

(2) The Central Registrar shall—

(a) issue certificate of registration;

(b) register the amendment of bye-laws;

Amendment of

section 120.

Insertion of

new sections

120A and

120B.

Filing of

applications,

documents,

inspections,

etc., in

electronic

form.

21 of 2000.

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SEC. 2]

THE GAZETTE OF INDIA EXTRAORDINARY

(d) register any document;

(e) issue any certificate;

(f) issue notice; and

(g) receive such communication as may be required to be registered or

issued or recorded or received, as the case may be,

under this Act or the rules made thereunder or perform duties or discharge functions

or exercise powers under this Act or the rules made thereunder or do any act which is

by this Act directed to be performed or discharged or exercised or done by the Central

Registrar, in the electronic form in such manner as may be prescribed.

120B. The provisions of this Act shall apply to a multi-State co-operative society

in respect of matters relating to incorporation, regulation and winding up:

Provided that in case of a multi-State co-operative society carrying on the

business of banking, the provisions of the Banking Regulation Act, 1949 shall also

apply.”.

44. In section 121 of the principal Act,—

(i) in sub-section (1), for the words and figures "the Companies Act, 1956" and

"the Monopoly and Restrictive Trade Practices Act, 1969", the words and figures

"the Companies Act, 2013" and "the Competition Act, 2002" shall respectively be

substituted;

(ii) in sub-section (2), for the words and figures “monopolistic and restrictive

trade practices as defined in the Monopolies and Restrictive Trade Practices Act, 1969”,

the words and figures “monopoly activities as referred to in the Competition Act,

2002” shall be substituted.

45. In section 123 of the principal Act,—

(i) in sub-section (1),—

(a) for the portion beginning with "or has committed any act" and ending

with "the aggregate period does not exceed one year", the following shall be

substituted, namely:—

"or has committed any act including fraud, misappropriation and

the like which is prejudicial to the interests of the society or its members,

or has omitted or failed to comply with any directions given to it under

section 122 in public interest or that there is a stalemate in the constitution

or functions of the board or the Co-operative Election Authority has

failed to conduct elections in accordance with the provisions of this Act,

the Central Government may, after giving the board an opportunity to

state its objections, if any, and considering the objections, if received, by

order in writing, supersede or suspend the board and appoint one or more

administrators, who need not be members of the society, to manage the

affairs of the society for such period not exceeding six months, as may be

specified in the order:";

(b) for the proviso, the following proviso shall be substituted, namely:—

"Provided that while taking a decision for supersession or

suspension on grounds of failure to conduct election, such action shall

only be taken if the Board had not given requisition to hold election to

the Co-operative Election Authority within the time limit or not extended

necessary assistance as per the provisions of section 45.”;

(ii) for the Explanation, the following Explanation shall be substituted, namely:—

‘Explanation.—For the purposes of section 122 and this section, the

expression “specified multi-State co-operative society” means any multi-State

co-operative society where there is Government shareholding or loan or financial

assistance or any guarantee by the Government.’.

Application of

Banking

Regulation

Act, 1949.

10 of 1949.

1 of 1956.

54 of 1969.

18 of 2013.

12 of 2003.

Amendment of

section 123.

Amendment of

section 121.

54 of 1969.

12 of 2003.

THE GAZETTE OF INDIA EXTRAORDINARY

[PART II—

46. In section 124 of the principal Act,—

(a) in sub-section (2),—

(i) after clause (a), the following clause shall be inserted, namely:—

"(aa) the guidelines under sub-section (2) of section 7;";

(ii) after clause (j), the following clause shall be inserted, namely:—

"(ja) the manner in which the board of a multi-State co-operative

society shall provide information, documents, personnel, funds or

expenses or any other assistance as sought by the Co-operative Election

Authority for conducting elections under clause (a) of sub-section (2) of

section 43;";

(iii) for clause (k), the following clauses shall be substituted, namely:—

"(k) the composition of the Selection Committee for appointment of

Chairperson, Vice-Chairperson and Members of the Co-operative Election

Authority under sub-section (1) of section 45;

(ka) the qualification and experience for appointment of Member of

the Authority under clause (iii) of sub-section (3) of section 45;

(kb) the salaries and allowances payable to, and other terms and

conditions of service of the Chairperson, Vice-Chairperson and Members

of the Authority under sub-section (5) of section 45;

(kc) the other powers and functions of Chairperson under

section 45A;

(kd) the procedure of inquiry under sub-section (2) of section 45B;

(ke) time, places and the procedure to be observed by the Authority

in regard to transaction of business at its meetings under sub-section (1)

of section 45H;

(kf) other functions of the Authority under clause (iii) of

section 45-I;

(kg) the manner of election of members of board by secret ballot

under sub-section (3) of section 45J;

(kh) the manner of bearing the expenses for holding elections by

the Authority under sub-section (6) of section 45J;

(ki) the manner of discharge of functions by the Returning Officers

and observers under sub-section (1) and clause (a) of sub-section (3) of

section 45K;

(kj) other functions of the observers under clause (a) of

sub-section (3) of section 45K;”;

(iv) after clause (m), the following clause shall be inserted, namely:—

"(ma) the procedure for recruitment of employees under proviso to

clause (e) of sub-section (2) of section 49;";

(v) clause (o) shall be omitted;

(vi) after clause (q), the following clause shall be inserted, namely:—

"(qa) the manner of maintenance of fund under clause (b) of

sub-section (1) of section 63;";

(vii) after clause (s), the following clauses shall be inserted, namely:—

"(sa) the manner of appointment of Co-operative Ombudsman and

submission of complaints to such Ombudsman under sub-section (1) of

section 85A;

Amendment of

section 124.

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(sb) the manner of filing an appeal by society against directions of

Ombudsman under sub-section (3) of section 85A;

(sc) other matters under clause (d) of sub-section (5) of

section 85A;";

(viii) after clause (w), the following clauses shall be inserted, namely:—

"(wa) the manner of recovery and deposit of proceeds of unlawful

gains under sub-section (6) of section 104;

(wb) the manner to make an application with such fee for the purpose

of getting information under sub-section (2) of section 106;";

(ix) after clause (x), the following clauses shall be inserted, namely:—

"(xa) the manner of powers being exercised by the Central

Government in respect of matters relating to filing of applications,

documents, inspections and the like in electronic form and fee payable to

under sub-section (1) of section 120A;

(xb) the manner of discharging the functions or exercising powers

with respect to matters mentioned therein by the Central Registrar in

electronic form under sub-section (2) of section 120A;";

(b) for sub-section (3), the following sub-section shall be substituted, namely:—

"(3) Every rule made under this section and any notification issued under

section 116 shall be laid, as soon as may be after it is made, before each House

of Parliament, while it is in session, for a total period of thirty days which may be

comprised in one session or in two or more successive sessions, and if, before

the expiry of the session immediately following the session or the successive

sessions aforesaid, both Houses agree that the rules and any notification issued

under section 116 should not be made, the rule and any notification issued

under section 116 shall thereafter have effect only in such modified form or be

of no effect, as the case may be; so, however, that any such modification or

annulment shall be without prejudice to the validity of anything previously

done under that rule and any notification issued under section 116.".

47. In section 125 of the principal Act, after sub-section (1), the following

sub-section shall be inserted, namely:—

"(1A) Notwithstanding anything contained in sub-section (1), if any difficulty

arises in giving effect to the provisions of this Act as amended by the Multi-State

Co-operative Societies (Amendment) Act, 2022, the Central Government may, by order

published in the Official Gazette, make such provisions not inconsistent with the

provisions of this Act as may appear to it to be necessary for removing the difficulty:

Provided that no such order shall be made under this section after the expiry of

a period of two years from the date of commencement of the Multi-State Co-operative

Societies (Amendment) Act, 2022.".

48. After the Second Schedule to the principal Act, the following Schedule shall be

inserted, namely:—

“THE THIRD SCHEDULE

[See sections 43 (1)(h) and 116 (1A)]

Sl. No. Name of the Act

Act Number

The Indian Stamp Act, 1899.

2 of 1899.

The Reserve Bank of India Act, 1934.

2 of 1934.

The Central Excise Act, 1944.

1 of 1944.

Amendment

of section

125.

Insertion of

Third

Schedule.

THE GAZETTE OF INDIA EXTRAORDINARY

[PART II—

The Industries (Development and Regulation) Act, 1951.

65 of 1951.

The Prevention of Food Adulteration Act, 1954.

37 of 1954.

The Essential Commodities Act, 1955.

10 of 1955.

The Securities Contracts (Regulation) Act, 1956.

42 of 1956.

The Wealth-Tax Act,1957.

27 of 1957.

The Customs Act, 1962.

52 of 1962.

10.

The Prize Chits and Money Circulation Schemes (Banning) Act, 1978.

43 of 1978.

11.

The Sick Industrial Companies (Special Provisions) Act, 1985.

1 of 1986.

12.

The Securities and Exchange Board of India Act, 1992.

15 of 1992.

13.

The Foreign Trade (Development and Regulation) Act, 1992.

22 of 1992.

14.

The Foreign Exchange Management Act, 1999.

42 of 1999.

15.

The Competition Act, 2002.

12 of 2003.

16.

The Prevention of Money-Laundering Act, 2002.

15 of 2003.

17.

The Companies Act, 2013.

18 of 2013.”.

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STATEMENT OF OBJECTS AND REASONS

The Multi-State Co-operative Societies Act, 2002 (the Act) was enacted to

consolidate and amend the law relating to co-operative societies, with objects not confined

to one State and serving the interests of members in more than one State, to facilitate the

voluntary formation and democratic functioning of co-operatives as people's institutions

based on self-help and mutual aid and to enable them to promote their economic and social

betterment and to provide functional autonomy and for matters connected therewith or

incidental thereto.

2. Part IXB was inserted in the Constitution, vide the Constitution (Ninety-seventh

Amendment) Act, 2011. In view of insertion of the said Part, it has become imperative to

amend the Act. Further, developments over the years also necessitated required changes in

the Act so as to strengthen the co-operative movement in the multi-State co-operative

societies. Therefore, it is proposed to amend the Act.

3. The Multi-State Co-operative Societies (Amendment) Bill, 2022, inter alia, provides

for the following, namely:—

(i) to amend section 41 of the Act so as to reform the composition of board of a

multi-State co-operative society;

(ii) to substitute section 45 of the Act so as to establish an Authority to be known

as the "Co-operative Election Authority" which shall consist of a Chairperson, a

Vice-Chairperson and members not exceeding three to be appointed by the Central

Government. The said Authority is proposed to be established with a view to

bring electoral reforms in co-operative sector;

(iii) to insert a new section 63A relating to "establishment of the Co-operative

Rehabilitation, Reconstruction and Development Fund" for revival of "sick

multi-State co-operative societies";

(iv) to insert a new section 70A relating to "concurrent audit" for multi-State

co-operative societies having an annual turnover or deposit of more than the

amount as determined by the Central Government;

(v) to insert a new Chapter IXA relating to "redressal of complaints" and for this

purpose, the Central Government may appoint one or more "Co-operative

Ombudsman" with a territorial jurisdiction for inquiring into the complaints made

by the members;

(vi) to amend section 104 of the Act so as to increase the monetary penalties on

multi-State co-operative societies for contravention of the provisions of the Act

and the rules made thereunder;

(vii) to substitute section 106 of the Act relating to "appointment of Co-operative

Information Officer" to provide information relating to affairs and management

of the multi-State co-operative society to the members of such society; and

(viii) to insert a new section 120A relating to "Filing of applications, documents,

returns, statements, statement of accounts in electronic form".

4. The Bill seeks to achieve the above objectives.

AMIT SHAH.

NEW DELHI;

The 24th November, 2022.

THE GAZETTE OF INDIA EXTRAORDINARY

[PART II—

Notes on Clauses

Clause 1.—This clause relates to "Short title and commencement" of the proposed

legislation.

Clause 2.—This clause seeks to amend section 3 of the Multi-State Co-operative

Societies Act, 2002 (the Act) to define the expressions "Authority", "Co-operative

Ombudsman" and to amend the definition of "Co-operative Registrar".

Clause 3.—This clause seeks to amend section 7 of the Act to provide for registration

of multi-State co-operative society in the business of thrift and credit with such modifications

and prescribed guidelines as may be necessary to bring them in conformity with the provisions

of the Act.

Clause 4.—This clause seeks to amend section 10 of the Act to include electronic mail

address in the address of the society.

Clause 5.—This clause seeks to amend section 14 of the Act to include electronic mail

address to bring them in conformity with section 10 of the Act.

Clause 6.—This clause seeks to amend section 17 of the Act to make provisions for

voluntary merger of State level co-operative societies with multi-State co-operative societies

with a resolution by not less than two-thirds of majority of members.

Clause 7.—This clause seeks to amend section 19 of the Act to omit clause (iii) of the

Explanation to sub-section (2) of the said section.

Clause 8.— This clause seeks to amend section 22 of the Act relating to Conversion of

a co-operative society into a multi-State co-operative society.

Clause 9.—This clause seeks to amend section 26 of the Act to provide for non-voting

shares to be issued to nominal or associate members for allowing multi-State co-operative

societies to raise capital and in case of multi-State co-operative bank, such shares shall be

issued in accordance with the instructions issued by the Reserve Bank from time to time.

Clause 10.—This clause seeks to amend section 28 of the Act to provide that the

members shall not exercise his rights unless he has made payment in respect of all dues to the

society including the payment in respect of membership or availed minimum level of products

or services as may be specified in the bye-laws.

Clause 11.—This clause seeks to amend section 29 of the Act to provide that failure to

avail the minimum level of products or services made available by the society as specified in

its bye-laws may render a person ineligible for being a member of the society.

Clause 12.—This clause seeks to amend section 30 of the Act to extend the time period

from one to three years as may be specified in the bye-laws from the date of expulsion of the

member for being eligible for re-admission as member.

Clause 13.—This clause seeks to amend section 35 of the Act to provide that the

Government shareholding wouldn't be redeemed without prior approval of the Government.

However, such redemption shall be on the face value of shares.

Clause 14.—This clause seeks to amend section 39 to insert a new clause therein

relating to "appointment of auditor".

Clause 15.—This clause seeks to amend section 41 of the Act to specify the field of

expertise for the co-opted directors and to provide reservation of seat for the Scheduled

Castes and the Scheduled Tribes and women in the board of the society. The proposed

amendment is to bring them in conformity with article 243ZJ of the Constitution.

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SEC. 2]

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Clause 16.—This clause seeks to amend section 43 of the Act to provide grounds for

disqualification of Members of the board of multi-State co-operative society.

Clause 17.—This clause seeks to substitute section 45 of the Act to establish an

Authority to be known as the "Co-operative Election Authority" which shall consist of a

Chairperson, a Vice-Chairperson and members not exceeding three to be appointed by the

Central Government. The main function of the Authority is to conduct elections of the

multi-State co-operative societies. Vide this clause, it is also proposed to insert new

sections 45A to 45L.

Clause 18.—This clause seeks to amend section 49 of the Act to empower the board to

elect the President and Vice-President of the society from amongst the elected or nominated

members of the board and a Certificate of election shall be issued by the Chief Executive of

the multi-State co-operative society after the conclusion of resolution of the Board. It is also

proposed that the recruitment of employees of the multi-State co-operative society shall be

subject to the rules to be made in this behalf.

Clause 19.—This clause seeks to amend section 50 of the Act to provide for convening

of meeting of the board by the Chief Executive on the basis of requisition of the

Vice-Chairperson or Vice-President or any other Member of the board.

Clause 20.—This clause seeks to amend section 51 of the Act to provide the criteria for

appointment of Chief Executive in multi-State co-operative societies.

Clause 21.—This clause seeks to amend section 52 of the Act to extend the period for

presentation of the draft Annual Report and Financial Statement for the approval of Board

from "thirty" to "forty-five" days.

Clause 22.—This clause seeks to amend section 53 of the Act to empower the board to

constitute executive committee and other committees or sub-committees.

Clause 23.—This clause seeks to amend section 63 of the Act to provide that

Co-operative Education Fund be maintained by the Central Government and proceeds be

used for Co-operative Education and Training through National Co-operative Union of India

and any other agency as determined by the Central Government.

Clause 24.—This clause seeks to insert new section 63A to provide for establishment

of Co-operative Rehabilitation and Reconstruction Fund.

Clause 25.—This clause seeks to amend section 64 of the Act to include other avenues

of investment where a multi-State co-operative society can invest.

Clause 26.—This clause seeks to amend section 67 of the Act to provide that the limit

on any multi-State co-operative society during any financial year be changed from "ten

times" to "such multiples as determined" of the sum of subscribed share capital and

accumulated reserves minus losses.

Clause 27.—This clause seeks to amend section 70 of the Act to provide for panel of

auditors from multi-State co-operative banks, multi-State credit co-operative societies and

other multi-State co-operative societies.

Clause 28.—This clause seeks to insert a new section 70A to have concurrent audit for

multi-State co-operative societies having an annual turnover or deposit of more than the

amount as determined by the Central Government and from a panel of auditors approved by

the Central Registrar.

Clause 29.—This clause seeks to amend section 73 of the Act to provide for laying

down of auditing and accounting standards as determined by the Central Government.

Clause 30.—This clause seeks to amend section 78 of the Act to empower the Central

Registrar to call from the society any information or explanation and documents.

THE GAZETTE OF INDIA EXTRAORDINARY

[PART II—

Clause 31.—This clause seeks to insert a new Chapter IXA to deal with the redressal

of complaints of the members of multi-State co-operative societies made in the Co-operative

Ombudsmen.

Clause 32.—This clause seeks to amend section 86 of the Act to provide for winding

up of multi-State co-operative societies, after giving an opportunity of being heard, if

registration is obtained by misrepresentation, fraud and the like or if the number of members

falls short of the specified number, multi-State co-operative societies to be given six

months' time to restore the number.

Clause 33.—This clause seeks to amend section 94 of the Act to provide orders or

decisions issued under section 84 of the Act to be included.

Clause 34.—This clause seeks to amend 98 of the Act to provide that in case of

default, the contribution to the Co-operative Education Fund, contribution to Co-operative

Rehabilitation and Reconstruction Fund and expenses incurred by the Co-operative Election

Authority for conduct of elections, shall be recovered by attaching bank accounts of defaulting

multi-State co-operative societies.

Clause 35.—This clause seeks to insert a new section 98A to review the decision made

under clause (a) or clause (b) or clause (c) of sub-section (1) of section 94 by the Central

Registrar on an application received from any party.

Clause 36.—This clause seeks to amend section 103 of the Act to provide for cessation

of the deemed multi-State co-operative society, if all the successor States take necessary

steps to divide or reorganise the said multi-State co-operative society into State co-operative

society.

Clause 37.—This clause seeks to amend section 104 of the Act to increase the amount

of penalty for certain offences.

Clause 38.—This clause seeks to insert a new section 105A to provide that the

provisions of this Act shall be in addition to, and not in derogation of, any other law for the

time being in force.

Clause 39.—This clause seeks to amend section 106 of the Act to provide for

appointment of Co-operative Information Officer for providing information to the members

about the affairs and management of the society.

Clause 40.—This clause seeks to amend section 108 of the Act to authorise certain

persons by the Central Registrar to inspect the books of account of multi-State co-operative

societies.

Clause 41.—This clause seeks to amend section 116 of the Act to widen the power of

the Central Government to amend Schedules.

Clause 42.—This clause seeks to amend section 120 of the Act to provide for inclusion

of related party transactions, decisions passed by board which were not unanimous,

employees who are relative of member of board, etc.

Clause 43.—This clause seeks to insert a new section 120A to provide for filing of

applications or documents in electronic form and to insert a new section 120B to provide that

the provisions of this Act shall apply to a multi-State co-operative society in respect of

matters relating to incorporation, regulation and winding up. Provided that in case of a

multi-State co-operative society carrying on the business of banking, the provisions of the

Banking Regulation Act, 1949 shall also apply.

Clause 44.—This clause seeks to amend section 121 of the Act relating to certain Acts

not to apply.

Clause 45.—This clause seeks to amend section 123 of the Act to specify the criteria

for supersession of board and give Explanation to the expression "specified multi-State

co-operative societies".

THE GAZETTE OF INDIA EXTRAORDINARY

[PART II—

FINANCIAL MEMORANDUM

Clause 17 of the Bill provides for establishment of the Co-operative Election Authority

which shall conduct elections in Multi-State Co-operative Societies. Sub-clause (5) of

clause 17 of the Bill provides for salary and allowances payable to and other terms and

conditions of the Chairperson, Vice-Chairperson and Members of the Authority.

2. Clause 31 of the Bill seeks to insert section 85A for appointment of Co-operative

Ombudsmen for Multi-State Co-operative Societies by the Central Government to inquire

into the grievances of Members. Sub-clause (1) of clause 31 of the Bill provides for the

manner of appointment of Co-operative Ombudsman which shall include salary and allowances

payable to and other terms and conditions of the functioning of the Co-operative Ombudsman.

3. The Bill, if enacted, would involve an approximate expenditure of five crore

ninety-four lakh rupees per annum from the Consolidated Fund of India.

MEMORANDUM REGARDING DELEGATED LEGISLATION

Clause 46 of the Bill proposes to amend sub-section (2) of section 124 of the

Multi-State Co-operative Societies Act, 2002. The proposed amendments to sub-section (2)

of the said section, inter alia, are—(a) the guidelines for registration of a multi-State

co-operative society under sub-section (2) of section 7; (b) the manner in which the board of

a multi-State co-operative society shall provide information, documents, personnel, funds or

expenses or any other assistance as sought by the Co-operative Election Authority for

conducting elections under clause (a) of sub-section (2) of section 43; (c) the composition of

the Selection Committee and the manner of appointment of Chairperson, Vice-Chairperson

and Members of the Co-operative Election Authority under sub-section (1) of section 45;

(d) the qualifications and experience for appointment of Member of the Authority under

clause (iii) of sub-section (3) of section 45; (e) the salaries and allowances payable to and

other terms and conditions of service of the Chairperson, Vice-Chairperson and Members of

the Authority under sub-section (5) of section 45; (f) the other powers and functions

of Chairperson under section 45A; (g) the procedure of inquiry under sub-section (2) of

section 45B; (h) the time, places and the procedure to be observed by the Authority in regard

to transaction of business at its meetings under sub-section (1) of section 45H; (i) the other

functions of Authority under clause (iii) of section 45-I; (j) the manner of election of members

of board by secret ballot under sub-section (3) of section 45J; (k) the manner of bearing the

expenses for holding elections by the Authority under sub-section (6) of section 45J; (l) the

manner of discharge of functions by the Returning Officers and observers under

sub-section (1) and clause (a) of sub-section (3) of section 45K; (m) the procedure for

recruitment of employees under clause (e) of sub-section (2) of section 49; (n) the manner of

maintenance of co-operative education fund under clause (b) of sub-section (1) of

section 63; (o) the manner of appointment of Co-operative Ombudsman and submission of

complaints to such Ombudsman under sub-section (1) of section 85A; (p) the manner of

filing an appeal by society against directions of Ombudsman under sub-section (3) of section

85A; (q) the other matters under clause (d) of sub-section (5) of section 85A; (r) the manner

of recovery and deposit of proceeds of unlawful gains under sub-section (6) of section 104;

(s) the manner to make an application with such fee for the purpose of getting information

under sub-section (2) of section 106; (t) the manner of powers being exercised by the Central

Government in respect of matters relating to filing of applications, documents, inspections

and the like in electronic form under sub-section (1) of section 120A; and (u) the manner of

discharging the functions or exercising powers with respect to matters mentioned therein by

the Central Registrar in electronic form under sub-section (2) of section 120A.

2. The matters in respect of which the rules may be made are matters of procedure and

administrative detail and it is not practicable to provide for them in the Bill itself. The delegation

of legislative power is, therefore, of a normal character.

——————

UTPAL KUMAR SINGH

Secretary-General

MGIPMRND—1667GI—14.12.2022.

UPLOADED BY THE MANAGER, GOVERNMENT OF INDIA PRESS, MINTO ROAD, NEW DELHI–110002

AND PUBLISHED BY THE CONTROLLER OF PUBLICATIONS, DELHI–110054.

SEC. 2]

THE GAZETTE OF INDIA EXTRAORDINARY

JAGANATHA

N ANANTHA

KUMAR

Digitally signed by

JAGANATHAN

ANANTHA KUMAR

Date: 2022.12.14

15:40:21 +05'30'