Cooperative Societies: Part IXB and the 97th Amendment – Notes with PYQs

A cooperative society is a group of people who join hands for a common economic goal. Farmers, milk producers, weavers and small borrowers use them. Amul is the best-known example. In 2011, the Constitution was amended to give cooperatives their own place. A new Part IXB was added. Exams ask about the 97th Amendment, the Articles, the board rules and a 2021 Supreme Court case. This post explains them in simple words. It ends with 15 previous year questions.

1. What is a cooperative society?

A cooperative is owned and run by its members. Each member usually has one vote, whatever the size of the share. The aim is to serve the members, not to make the most profit.

Common types in India are:

• Credit cooperatives - such as Primary Agricultural Credit Societies (PACS) and cooperative banks.
• Dairy cooperatives - such as Amul in Gujarat.
• Marketing and consumer cooperatives - for selling crops or buying goods at fair prices.
• Housing, weaver and fisheries cooperatives.

2. History of cooperatives in India

• 1904 - the Co-operative Credit Societies Act was passed under Lord Curzon. It allowed only credit societies.
• 1912 - a new Co-operative Societies Act allowed non-credit societies too.
• 1919 - under the Government of India Act, cooperation became a provincial subject.
• 1946 - the Kaira District Co-operative Milk Producers' Union was set up at Anand, Gujarat. It later became famous as Amul.
• 1970 - Operation Flood began. It built a national milk grid on the Amul model, led by Verghese Kurien.
• 2002 - the Multi-State Co-operative Societies Act was passed. It was amended in 2023.
• 2021 - a separate Ministry of Cooperation was created at the Centre.

3. The 97th Amendment Act, 2011

The 97th Constitutional Amendment Act, 2011 came into force on 15 February 2012. It made three changes.

Note that "cooperative societies" is a subject in the State List (Entry 32 of List II). So the States make most cooperative laws.

4. Main provisions of Part IXB

Article 243ZI - Incorporation. The State legislature may make laws on the formation and working of cooperatives, based on voluntary membership and democratic control.

Article 243ZJ - Board and its term.

• A board can have at most 21 directors.
• In a society with such members, one seat is reserved for SC or ST and two seats for women.
• The term of the elected board and its office-bearers is 5 years.
• The board may co-opt two experts in fields like banking or management. They cannot vote in board elections.

Article 243ZK - Elections. Elections must be held before the term ends. They are conducted by a body set up under State law.

Article 243ZL - Supersession. A board cannot be superseded or kept under suspension for more than six months. A society with no government share, loan or guarantee cannot be superseded at all.

Article 243ZM - Audit. Accounts must be audited within six months of the close of each financial year.

Article 243ZN - General body meeting. The annual general body meeting must be held within six months of the close of the financial year.

Article 243ZO - Right to information. A member has the right to see the books, information and accounts of the society.

Articles 243ZP and 243ZQ deal with returns and with offences and penalties.

Article 243ZR applies Part IXB to multi-State cooperative societies, and Article 243ZS applies it to Union Territories.

5. The Supreme Court case of 2021

Part IXB was soon challenged. The case was Union of India v. Rajendra N. Shah, decided in July 2021.

The question was simple. Cooperatives are a State List subject. Under Article 368(2), an amendment that affects State List matters must be ratified by at least half the State legislatures. The 97th Amendment was not ratified in this way.

The Supreme Court held:

• Part IXB is not valid for cooperatives working within one State.
• Part IXB remains valid for multi-State cooperative societies, since that subject is with the Union.

The changes to Article 19(1)(c) and Article 43B were not the main issue in the case.

6. Important cooperative bodies

• NABARD (1982) - supervises and refinances rural cooperative banks.
• NAFED (1958) - a national federation for marketing farm produce.
• IFFCO (1967) - a large fertiliser cooperative.
• NCDC (1963) - the National Cooperative Development Corporation, which funds cooperatives.
• NDDB (1965) - the National Dairy Development Board at Anand, which ran Operation Flood.

The International Day of Cooperatives is observed on the first Saturday of July. The United Nations declared 2025 the International Year of Cooperatives.

7. Previous year questions

1. Which Constitutional Amendment gave constitutional status to cooperative societies? – 97th Amendment Act, 2011
2. Which Part of the Constitution deals with cooperative societies? – Part IXB
3. Part IXB contains which Articles? – Articles 243ZH to 243ZT
4. Which Directive Principle deals with the promotion of cooperative societies? – Article 43B
5. The right to form cooperative societies was added to which Article? – Article 19(1)(c)
6. What is the maximum number of directors on the board of a cooperative society? – 21
7. What is the term of the board of a cooperative society? – 5 years
8. For how long can the board of a cooperative society be superseded at most? – Six months
9. Within how long must the accounts of a cooperative be audited after the financial year closes? – Six months
10. Cooperative societies are a subject in which list? – State List
11. When did the 97th Amendment come into force? – 15 February 2012
12. Which 2021 case limited Part IXB to multi-State cooperative societies? – Union of India v. Rajendra N. Shah
13. Under which Viceroy was the Co-operative Credit Societies Act, 1904 passed? – Lord Curzon
14. Where was the Kaira District Co-operative Milk Producers' Union set up in 1946? – Anand, Gujarat
15. In which year was the Ministry of Cooperation created at the Centre? – 2021

8. How to revise this topic

Start with the three changes of the 97th Amendment: Article 19(1)(c), Article 43B and Part IXB.

Next, learn the numbers: 21 directors, 1 SC/ST seat, 2 women seats, 5-year term, six months for supersession, audit and general meeting.

Then fix the 2021 case: Part IXB struck down for State cooperatives, kept for multi-State cooperatives.

Finally, revise the timeline: 1904, 1912, 1946 Amul, 1970 Operation Flood, 2002 Multi-State Act, 2011 amendment, 2021 ministry.

9. Frequently Asked Questions

What is Part IXB of the Indian Constitution?

Part IXB deals with cooperative societies. It was added by the 97th Constitutional Amendment Act, 2011 and contains Articles 243ZH to 243ZT, covering the board, elections, audit, supersession and members' rights.

What did the 97th Amendment change?

It added cooperative societies to Article 19(1)(c), inserted a new Directive Principle in Article 43B, and added Part IXB on cooperative societies. It came into force on 15 February 2012.

Is forming a cooperative society a Fundamental Right?

Yes. After the 97th Amendment, Article 19(1)(c) protects the right to form associations, unions and cooperative societies, subject to reasonable restrictions.

What did the Supreme Court decide on Part IXB in 2021?

In Union of India v. Rajendra N. Shah, the Court held that Part IXB needed ratification by half the States because cooperatives are a State subject. It struck Part IXB down for State cooperatives but kept it for multi-State cooperative societies.

How many directors can a cooperative board have?

At most 21 directors. One seat is reserved for SC or ST members and two for women, where the society has such members. The board's term is 5 years.

For more Polity topics in simple language, see our Directive Principles of State Policy, Panchayati Raj System and Important Constitutional Amendments posts, or browse the Polity section. Preparing for a state PSC? Start with the TNPSC Group 1 guide or join the 100 Hour GS Course.