January 5, 2010

Evolution of Cooperative Legislation In India : With Special Reference to Andhra Pradesh

Evolution of Cooperative Legislation In India :

Although Cooperation existed in India since the days of Mauryan Rulers as integral part of Indian Cultural ethos characterized by the instinct and tradition of mutual assistance, joint action, joint possession and joint management of the assets endowed, successive foreign invasions caused the destruction of self reliant rural economy. Because of the usurious practices of the moneylenders and illiteracy of the peasants, these debts went on increasing and became a crushing burden on them. Their misery unleashed Deccan Riots in 1874.


The Deccan RiotsCommission of 1875 and the Famine Commission of 1880testified to the unjust character of the debt. Justice Ranadeand Sir William Wedderburn formulated a scheme in 1883 for the establishment of a bank in Pune to finance agriculturists of Purandar Taluq raising a capital of Rs. 10.00 Lakhs to redeem the outstanding debts of Ryots. Madras Government was the first to depute Sir Federick Nicholson "to study the theory and practice of Agricultural and Land Banks in Europe and to suggest means by which a similar movement may be popularized in India". His reports issued in 1895 and 1897 and Mr. Dupernex's book on "Peoples Banks in Northern India" in 1900, stimulated the then Government of India to appoint Sir Edward Law Committee to suggest special legislation for Cooperative Societies. The result was the enactment of Cooperative Credit Societies Act, 1904 on 25.03.1904, which forms the basic structure for Cooperative Legislation in India.


 It was modelled on the English Friendly Societies Act. Soon Registrars were appointed in Presidencies and major Provinces to organize, register, supervise, audit, inspect and liquidate Societies when not functioning well. In the preamble the scope of Cooperatives was stated to benefit "Agriculturists, Artisans and other persons of limited means". This law gave no legislative protection to Societies for purposes other than Credit or to the Central Agencies, Banks and Unions which were coming into existence. These deficiencies were remedied in the Cooperative Societies ACT II of 1912.


With the authority conferred by Montague-Chelmsford reforms in 1919, Provincial Governments of Bombay, Madras, Bengal enacted their own laws to govern Cooperative Societies. These acts widened the scope of the movement substituting in their preamble "for agriculturists, artisans and persons of limited means" as intended beneficiaries, by the words "agriculturists and other persons with common economic needs" and Better Living, Better Business and Better Methods of Production, which opened the door to advantage being taken even by men of better means. They also conferred enormous powers on the Registrar, such as compulsory amalgamation and division of Societies, Supersession of erring committees, surcharge of persons responsible for malfeasance and misfeasance, adjudication of disputes arising in Societies, execution of awards and decisions or orders given by him. In Bombay Act of 1925, a provision for constitution of Tribunal to entertain appeals against the orders of Registrar was made.


After independence, the nation adopted the approach of planned economic development for establishment of a mixed economy consisting of three sectors namely Public, Private and Cooperative Sectors. Cooperatives were visualized to play the role of a balancing factor between public and private sectors. Pandit Nehru considered Cooperatives as one of the three pillars of Democracy, the other two being the Panchayat and the School.


When Rural Credit Survey Committee in 1954recommended for state participation in Cooperatives at all levels, S.T.Raja Committee was appointed by the Government of India to suggest amendments to the Cooperative law, the committee prepared a Model Act enabling state participation and appointment of Government nominees on the management of assisted Cooperative Societies. National Development Council in1958 reviewed Cooperative legislation and advised State Governments to remove restrictive provisions in the Cooperative Law and liberalize it by curtailing certain powers of the Registrar.


In Andhra Pradesh, the above pioneering legislative efforts were followed by the Andhra Pradesh (Andhra Area)Cooperative Societies Act (Act VI) of 1932, The A.P. (Andhra Area) Cooperative Land Mortgage Act of 1934, The A.P.(Telangana Area) Cooperative Societies Act (XVI) of 1952,the Hyderabad Land Mortgage Act, 1349 fasli.Amalgamation of these acts resulted in Andhra PradeshCooperative Societies Act 7 of 1964.


In response to the recommendations of the Ardhanareeswaran Committee (1987) to democratize and professionalize the Cooperatives and to make the role of the Registrar more positive as a development agent and of the Choudhary Brahm Perkash Committee (1991) to change the role of State as a facilitator instead of a regulator and the Model Law set out by the latter, the role of the Government and the Registrar are curtailed in the functioning of the Cooperatives. To facilitate their autonomous and democratic functioning, the A.P. Mutually Aided Cooperative Societies Act 1995 (AP MACS Act) is legislated in Andhra Pradesh on the pattern of the Model Act of Choudhary Brahm Perkash. This is a pioneering step and is a trend setter to other States in the country to liberalize their Cooperative laws. The crisis faced by the Cooperative Credit System in the Country at present demanded its restructuring and capital infusion.



Prof. A.Vaidyanathan's Committee submitted its recommendations on revitalizing the Cooperative Credit System in December 2004. Andhra Pradesh Government was the first to accept the recommendation and to enter into a Memorandum of Understanding (MOU) with the Government of India and NABARD on 29.08.2006. APCS Act 1964 was also amended by an Amendment Act 16 of 2007 whereby the Cooperative Credit Societies identified under the Revival Package will be governed by Special Provisions incorporated under Chapter XIII B and Sections 115 C and 115 D.


These provisions facilitate autonomous and democratic functioning of Credit Cooperatives to a great extent subject to the guidelines of RBI and NABARD on different aspects of their functioning. With the capital infusion of about Rs.2,000 Crores expected to be received under the Revival Package of Credit Cooperatives, the Credit Cooperatives will be in a position to cleanse their balance sheets by wiping out losses and improve their financial position.


No comments: