TAMIL NADU GOVERNMENT GAZETTE EXTRAORDINARY 83

Under Rule 130 of the Tamil Nadu Legislative Assembly

Rules, the following Bill which was introduced
in the Legislative Assembly of the State of
Tamil Nadu on 7th January, 2022 is published together with
Statement of Objects and Reasons for general information:—
L.A. Bill No. 11 of 2022

A Bill further to amend the Tamil Nadu

Co-operative Societies Act, 1983.

WHEREAS, the Parliament had enacted the Constitution

(Ninety-seventh Amendment) Act, 2011 by which Article 43B
and Part IXB were inserted in the Constitution and it came
into force on the 15th day of February 2012;
AND WHEREAS in order to bring the Tamil Nadu
Co-operative Societies Act, 1983 (Tamil Nadu Act 30 of 1983)
in line with the provisions of the Constitution, amendments
were made to certain sections of that Act, by the Tamil Nadu
Co-operative Societies (Amendment) Act, 2013 (Tamil Nadu
Act 4 of 2013);
AND WHEREAS in 2013, the Hon’ble High Court
of Gujarat had declared that Part IXB of the Constitution
inserted by the Constitution (Ninety-seventh Amendment)
Act, 2011 as ultra-vires the Constitution for want of ratification
by the State Legislatures, as required under the proviso to
Article 368 (2) of the Constitution;
AND WHEREAS in Union of India Vs Rajendra
N Shah and another (2021(8) SCALE 332), the
Hon’ble Supreme Court upheld the judgement of
the Hon’ble Gujarat High Court except to the extent
that it strikes down the entirety of Part IXB of the
Constitution and declared Part IXB of the Constitution
is operative only insofar as it concerns Multi-State
co-operative societies both within the various States and in
the Union territories of India;
AND WHEREAS the Government also considers that,
it is expedient to do away with many of the amendments
made to the Tamil Nadu Co-operative Societies Act, 1983
pursuant to the Constitution (Ninety-seventh Amendment)
Act, 2011, as these amendments have only impeded the
growth of the co-operative societies in the State;
NOW, THEREFORE, the Government have decided
to amend the said Tamil Nadu Act 30 of 1983 for the purpose.
BE it enacted by the Legislative Assembly of the
State of Tamil Nadu in the Seventy-second Year of the
Republic of India as follows:—
1. (1) This Act may be called the Tamil Nadu Short title and
Co-operative Societies (Second Amendment) Act, 2022. commencement.

(2) It shall come into force on such date as the State

Government may, by notification, appoint.
84 TAMIL NADU GOVERNMENT GAZETTE EXTRAORDINARY
Amendment of Section 2. 2. In section 2 of the Tamil Nadu Co-operative Societies Tamil Nadu Act 30 of
Act, 1983 (hereinafter referred to as the principal Act),— 1983.

(1) in clause (5), the expression “State level” shall

be omitted;
(2) for clause (18), the following clause shall be
substituted, namely:—
“(18) “office bearer” means a president or a
vice-president of the board;”
Amendment of 3. In section 13 of the principal Act,—
section 13.
(1) in sub-section (1), in clause (d), in sub-clause (ii),
for the expression “six months”, the expression “one year”
shall be substituted;
(2) in sub-section (2), in clause (d), in sub-clause (ii),
for the expression “six months”, the expression “one year”
shall be substituted.
Omission of 4. Section 20-A of the principal Act shall be omitted.
section 20-A.
Amendment of 5. In section 23 of the principal Act, in
section 23. sub-section (2), clauses (h) and (i) shall be omitted.

Amendment of 6. In section 26 of the principal Act, for sub-section (4),

section 26. the following sub-section shall be substituted, namely:—
“(4) Notwithstanding anything contained in this section,
the nominee of the Government or of the Registrar or of
the prescribed authority, if he is a Government servant,
or the nominee of the financing bank or of the board of
another registered society or of other interests (such as the
Tamil Nadu State Agriculture Marketing Board), as the case
may be, or the ex-officio member of the board shall not be
entitled to vote at elections.”.
Amendment of 7. In section 27 of the principal Act, the expression “and
section 27. shall have access to the books, information and” shall be
omitted.
Amendment 8. In section 32 of the principal Act, in sub-section (2),
of section 32. for the expression “shall be held within a period of six
months from the close of the financial year”, the expression
“shall be held in a co-operative year” shall be substituted.
Amendment 9. In section 33 of the principal Act,—
of section 33.

(1) in sub-section (1), after clause (a), the following

clause shall be inserted, namely:—
TAMIL NADU GOVERNMENT GAZETTE EXTRAORDINARY 85
“(b) Notwithstanding anything contained in clause (a),
where the rules or the by-laws so provide, the Government
or the Registrar may nominate all or any of the members
of the board including the president and vice-president
from among the members of the registered society or from
among the Government servants or both:
Provided that no nomination shall be made in respect of
all the members of the board for more than three years from
the date of nomination.”;
(2) for sub-section (3), the following sub-section shall
be substituted, namely:—
“(3) The board shall consist of—
(a) in the case of an apex society, not less than eleven
and not more than twenty nine members as may be specified
in the rules or bye-laws;
(b) in the case of a central society, not less than eleven
and not more than twenty seven members, as may be
specified in the rules or bye-laws; and
(c) in the case of a primary society, not less than seven
and not more than seventeen members as may be specified
in the rules or bye-laws.”;
(3) after sub-section (4), the following sub-section shall
be inserted, namely:—
“(5) The Registrar may, by order, depute one or more
officers subordinate to him to attend any meeting of a board
and to take part in the proceedings of the board, but such
officer or officers shall not have the right to vote.”;
(4) in sub-section (7), for the expression, “managing
director or chief executive officer” in three places where
it occurs, the expression “managing director” shall be
substituted;
(5) in sub-section (8),—
(i) for the expression “functional director”, the expression
“member” shall be substituted;
(ii) for the expression “functional directors” in two
places where it occurs, the expression “members” shall be
substituted;
(6) for sub-section (9), the following sub-section shall
be substituted, namely:—
“(9) Every ex-officio member referred to in sub-section
(2) and every Government servant nominated to a board
of a registered society under clause (b) of sub-section (1)
or under sub-section (8) shall refer to the Government in
the case of an apex society, and to the Registrar in the
case of any other registered society, any resolution of the
board of such apex society or other registered society, as
the case may be, which is not in accordance with this Act,
the rules and the bye-laws or which is against the interests
of such apex society or such other registered society, as the
case may be.”;
86 TAMIL NADU GOVERNMENT GAZETTE EXTRAORDINARY
(7) in sub-section (10),—
(i) in clause (a), for the expression “five years”, the
expression “three years” shall be substituted;
(ii) after clause (a), the following clause shall be
substituted, namely:—
(aa) Every person holding the office of member
of any board constituted under this Act on the date of
commencement of the Tamil Nadu Co-operative Societies
(Second Amendment) Act, 2022, who has completed a
term of three years on that date shall cease to hold office
forthwith and who completes a term of office of three years
after that date shall cease to hold office on such completion;
(8) after sub-section (11), the following sub-section
shall be inserted, namely:—

“(12) Notwithstanding anything contained in this Act,

where the bye-laws of a registered society so provide,
the general body of such society may, with the approval
of the Registrar, entrust the management of the affairs of
the society for a period not exceeding three years at a time
to an administrator who shall be a Government servant
or an employee of the financing bank or an employee of
anybody corporate owned or controlled by the Government.
The administrator shall have power to exercise all or any of
the functions of the board or of any officer of the society and
to take such action as may be required in the interest of the
society.”;

(9) for sub-section (13), the following sub-section shall

be substituted, namely:—

“(13) The ordinary meetings of a board shall be held at

least once in every three months for which a notice of not
less than three clear days shall be given. The managing
director, in consultation with the president or in his absence,
the vice-president of such board, or where there is no
managing director, the president shall convene the meeting
of such board.”;

(10) in sub-section (14), —

(a) the expression “or the Chief Executive

Officer” in two places where it occurs shall be omitted;

(b) the expression “or the Chairperson” in two

places where it occurs shall be omitted;

(c) the expression “or the vice-chairperson”

shall be omitted;

(11) in sub-section (15), the expressions, “or the chief

executive officer” and “or the chairperson” shall be omitted;
TAMIL NADU GOVERNMENT GAZETTE EXTRAORDINARY 87

(12) after sub-section (15), the following sub-section

shall be substituted, namely:—

“(16) Notwithstanding anything contained in this Act,

the nominee of the Government or of the Registrar or of the
prescribed authority, if he is a Government servant or the
nominee of the financing bank to a board of a registered
society or the nominee of the board of another registered
society or other interests (such as the Tamil Nadu State
Agricultural Marketing Board), or the ex-officio member of
the board shall not be eligible to contest for any election in
any registered society in his capacity as such member of
that board.”.

10. In section 33-A of the principal Act,— Amendment

of section
33-A.

(1) in sub-section (4), for the expression “five years”,

the expression “three years” shall be substituted;
(2) in sub-section (4), after the proviso, the following
proviso shall be added, namely:—
“Provided further that, if the holder of the post of
the Tamil Nadu State Co-operative Societies Election
Commissioner on the date of commencement of the
Tamil Nadu Co-operative Societies (Second Amendment)
Act, 2022 has already completed three years of term, he
shall cease to hold office on the said date;”.
11. In section 48 of the principal Act,— Amendment
of section 48.

(1) in sub-section (2), in clause (a), for the expression

“within a period of fourteen days from the date on which
such deduction is made”, the expression “within such time
as may be prescribed” shall be substituted;
(2) in sub-section (8), for the expression “within a period
of fourteen days on which such deduction is made”, the
expression “within the prescribed time” shall be substituted.
12. In section 80 of the principal Act,— Amendment
of section 80.

(1) for sub-section (1), the following sub-sections shall

be substituted, namely:—
“(1) The Registrar shall audit or cause to be audited by
a person authorised by him by general or special order in
writing in this behalf, the accounts of every registered society
once at least in every cooperative year. The Registrar shall
communicate the result of the audit to the registered society
concerned.
(1A) Where the audit referred to in sub-section (1) is
caused to be made once in every cooperative year—
88 TAMIL NADU GOVERNMENT GAZETTE EXTRAORDINARY
(i) the registered society shall prepare the financial
statements and other details required for the completion of
audit within three months from the close of its co-operative
year or such further period or periods as the Registrar may
permit provided that such extended period or periods shall
not exceed six months in the aggregate; and
(ii) the audit shall be completed within a period of six
months from the close of the co-operative year of the registered
society concerned or such further period or periods as the
Registrar may permit for reasons to be recorded in writing
provided that such extended period or periods shall not exceed
six months in the aggregate.”.
(2) in sub-section (3), for the expression, “The auditor
of the Government or the auditing firms appointed”, the
expression “The Registrar or the persons authorised by
him” shall be substituted;
(3) in sub-section (4), for the expression “as the auditors
of the Government or auditing firms appointed under
sub-section (1)”, the expression “as the Registrar or the
person authorised by him” shall be substituted;
(4) sub-section (9) shall be omitted.
13. Section 84-A of the principal Act shall be omitted. Omission of
section 84–A.

14. In section 88 of the principal Act,— Amendment of

section 88.

(1) for sub-section (1), the following sub -section

shall be substituted, namely:—
“(1) The Registrar,—
(i) may, if he is of the opinion that the board of any
registered society is not functioning properly or willfully
disobeys or willfully fails to comply with any order or direction
issued by the Registrar under this Act or the rules;
(ii) shall, where for two consecutive co-operative
years—
(a) in the case of a financing bank, more than sixty per
cent of the total dues of the financing bank from its members
remain unpaid or the number of defaulting members of such
financing bank exceeds sixty per cent of the total number of
members indebted to such bank, and
(b) in the case of other registered societies, more than
seventy per cent of the total dues to the registered society
from its members remain unpaid or the number of defaulting
members of such registered society exceeds seventy per
cent of the total number of members indebted to such
society, after giving the board of the registered society or
the financing bank, as the case may be, an opportunity of
making its representations,
TAMIL NADU GOVERNMENT GAZETTE EXTRAORDINARY 89
by order in writing, supersede the board and appoint a
Government servant or an employee of anybody corporate
owned or controlled by the Government (hereinafter referred
to as ‘the special officer’) to manage the affairs of the society
for a specified period not exceeding one year:
Provided that an order under this sub-section shall
be passed within a period of three months from the date
of issue of notice of supersession or such further period or
periods as the next higher authority may permit, but such
extended period or periods shall not exceed six months in
the aggregate:
Provided further that in computing the total dues
remaining unpaid for the purpose of item (ii), any instalment
or sum which is not recoverable by reason of any remission
or suspension or order of stay passed by the appropriate
authority due to adverse seasonal conditions or any other
reason shall be excluded in respect of that instalment or
sum:
Provided also that for the purpose of computing the
number of defaulting members referred to in item (ii), any
member who is not liable to pay any instalment or sum by
reason of any remission or suspension or order of stay
passed by the appropriate authority due to adverse seasonal
conditions or any other reason shall be excluded in respect
of that instalment or sum.
(1A) The period specified in the order referred to in
sub-section (1) may, at the discretion of the Registrar, be
extended, from time to time, provided that such order shall
not remain in force for more than two years in the aggregate.”
(2) in sub-section (2),—
(a) for the expression “an administrator”, the expression
“a special officer” shall be substituted;
(b) for the expression “administrator”, the expression
“special officer” shall be substituted;
(3) in sub-section (3), for the expression “administrator”,
the expression “special officer” shall be substituted;
(4) in sub-section (4), for the expression “administrator”,
the expression “special officer” shall be substituted;
(5) in sub-section (5), for the expression “administrator”,
the expression “special officer” shall be substituted;
(6) in sub-section (8), for the expression “administrator”,
the expression “special officer” shall be substituted;
15. In section 89 of the principal Act,— Amendment of
section 89.

(1) in the marginal heading, for the expression

“administrator” the expression “special officer” shall be
substituted;
90 TAMIL NADU GOVERNMENT GAZETTE EXTRAORDINARY
(2) for sub-section (1), the following sub-section shall
be substituted, namely:—
“(1) Where,—
(i) the term of office of the board of any registered
society has expired and a new board cannot be constituted
in accordance with the provisions of this Act, the rules and
bye-laws; or
(ii) the new board constituted fails to enter, or is
prevented from entering upon office on the expiration of the
term of office of the earlier board; or

(iii) the existing board has tendered resignation

en-bloc; or

(iv) (a) vacancies have arisen for any reason, or

(b) one or more members of the board have tendered

resignation and the number of remaining members cannot
form the quorum for the meeting of the board,

the Registrar may, of his own motion or on application

of any member of the registered society, and in the case of
a new board which has failed to enter, or prevented from
entering, upon office, after giving the members of the said
board an opportunity of making their representations, by
order, appoint a Government servant or an employee of
any body corporate owned or controlled by the Government
(hereinafter referred to as the special officer) for a specified
period not exceeding six months to manage the affairs of
the registered society pending the constitution of a new
board, or as the case may be, the entering upon office by
the new board:

Provided that the period specified in such order may, for

special reasons to be recorded in writing by the Registrar,
be extended from time to time, but such period as extended,
shall not exceed one year in the aggregate.”;

(3) in sub-section (2), for the expression “an

administrator”, in two places where it occurs, the expression
“a special officer” shall be substituted.

16. After section 89 of the principal Act, the following Insertion of new
section shall be inserted, namely:— section 89-A.

“89-A.Exclusion of time in certain cases.— In

computing the period referred to in sub-section (1A) of
section 80, sub-section (4) of section 81, sub-section (4) of
section 82, the second proviso to sub-section (1) of section
87, the first proviso to sub-section (1) of section 88 or
sub-section (1) of section 89, any period or periods during
which any proceeding was held up on account of any stay or
injunction by an order of any court shall be excluded.”
TAMIL NADU GOVERNMENT GAZETTE EXTRAORDINARY 91

17. In section 91 of the principal Act, in clause (iii), for Amendment of

the expression “one year” the expression “five years” shall section 91.
be substituted.

18. In section 161 of the principal Act,— Amendment of

section 161.

(1) for sub-section (1), the following sub-section shall

be substituted namely:—

“(1) Any officer of a registered society or an employee

or paid servant or any member of such society, who uses
or allows the use of the properties, other than funds of any
society otherwise than in accordance with the provisions of
this Act, the rules or the bye-laws of the society, shall be
punishable with imprisonment for a term which may extend
to one year or with fine which may extend to ten thousand
rupees or with both.”.
(2) in sub-section (2), for the expression “administrator”,
the expression “special officer” shall be substituted.
19. In section 165 of the principal Act,— Amendment of
section 165.
(1) for the expression “an administrator”, the expression
“a special officer” shall be substituted;
(2) for the expression” administrator” in three places
where it occurs, the expression “special officer” shall be
substituted.
20. In section 169 of the principal Act, for the expression Amendment of
“sub-section (8) of section 33”, the expression “clause (b) section 169.
of sub-section (1) of section 33 or sub-section (8) thereof”
shall be substituted.
21. In section 170 of the principal Act, in clause (a), for Amendment of
the expression “sub-section (1) of section 88”, the expression section 170.
“sub-section (1A) of section 88” shall be substituted.
92 TAMIL NADU GOVERNMENT GAZETTE EXTRAORDINARY

STATEMENT OF OBJECTS AND REASONS

Article 43-B and Part IX-B were inserted in the Constitution by the Constitution (Ninety-seventh
Amendment) Act, 2011 and came into force on the 15 day of February 2012. The Tamil Nadu Co-operative
Societies Act, 1983 (Tamil Nadu Act 30 of 1983) was amended on the lines of the constitutional provisions
as amended by the Constitution (Ninety-seventh Amendment) Act 2011 vide Tamil Nadu Act 4 of 2013. The
Supreme Court in Union of India Vs. Rajendra N Shah and another [2021 (8) SCALE 332] has upheld the
Gujarat High Court’s decision in W.P.(PIL)No.166 of 2012, dated the 22nd April 2013, declaring the said Part
IX-B as ultra vires of the Constitution of India, in so far as it concerns the Co-operative societies.

2. Several complaints have been received from the public and members of co-operative societies alleging
financial irregularities and frauds in co-operative societies. A review of the functioning of co-operative societies
has revealed large scale misappropriation of funds, issue of loans on fake jewels and issue of bogus loans of
several crores of rupees, etc.

3. The Government, therefore, with a view to protect the interests of the Co-operative Societies, to
streamline their administration, ensure proper governance and to increase the efficacy of the functioning of
Co-operative Societies have decided to reduce the term of office of the Board of directors of the societies
from five years to three years and to restore some of the provisions that existed in the said Tamil Nadu
Co-operative Societies Act, 1983 prior to the amendments made in consonance with the provisions in Part
IX-B of the Constitution by undertaking legislation.

4. The Bill seeks to give effect to the above decision.

I. PERIYASAMY,
Minister for Co-operation.

Secretariat, K. SRINIVASAN,
Chennai-600 009, Secretary.
7th January 2022.