Part IXB - Co-operative Societies • Article

Article 243ZL Simplified: Supersession and suspension of board and interim management

Article 243ZL limits the duration of the supersession or suspension of a cooperative board to a maximum of six months (extended to one year for cooperative banks). It specifies that boards can only be superseded under specific grounds (such as persistent default, negligence, actions prejudicial to the society, stalemate on the board, or failure to conduct elections). Crucially, a board cannot be superseded if there is no government shareholding, loan, or financial assistance.

Official Text

(1) Notwithstanding anything contained in any law for the time being in force, no board shall be superseded or kept under suspension for a period exceeding six months: Provided that the board may be superseded or kept under suspension in a case— (i) of its persistent default; or (ii) of negligence in the performance of its duties; or (iii) the board has committed any act prejudicial to the interests of the co-operative society or its members; or (iv) there is stalemate in the constitution or functions of the board; or (v) the authority or body as provided by the Legislature of a State, by law, under clause (2) of article 243ZK, has failed to conduct elections in accordance with the provisions of the State Act: Provided further that the board of any such co-operative society shall not be superseded or kept under suspension where there is no Government shareholding or loan or financial assistance or any guarantee by the Government: Provided also that in case of a co-operative society carrying on the business of banking, the provisions of the Banking Regulation Act, 1949 (10 of 1949) shall also apply: Provided also that in case of a co-operative society, other than a multi-State co-operative society, carrying on the business of banking, the provisions of this clause shall have the effect as if for the words “six months”, the words “one year” had been substituted. (2) In case of supersession of a board, the administrator appointed to manage the affairs of such co-operative society shall arrange for conduct of elections within the period specified in clause (1) and handover the management to the elected board. (3) The Legislature of a State may, by law, make provisions for the conditions of service of the administrator.

Simple Meaning

Explain Like Ten

If a cooperative board behaves very badly or breaks the rules, the government can temporarily replace them with an administrator. But this can only last for 6 months (or 1 year for cooperative banks), and if the government didn't put money or loans into the society, they cannot suspend them at all.

Student Mode

Article 243ZL limits the duration of board supersession or suspension to a maximum of six months (one year for cooperative banks). It specifies that boards can only be superseded under specific grounds (such as persistent default, negligence, or actions prejudicial to the society). Importantly, a board cannot be superseded if there is no government shareholding, loan, or financial assistance.

Example

If a housing cooperative board is in a complete deadlock and cannot function, the Registrar of Co-operative Societies can temporarily suspend the board and appoint an administrator. However, the administrator must conduct elections and hand over power to a new elected board within six months.

Key Takeaway

Article 243ZL protects cooperative societies from prolonged state bureaucratic control by strictly limiting board supersession periods and grounds.

FAQs

What is the maximum period for which a cooperative board can be suspended?

A board can be suspended for a maximum of six months. However, for a cooperative bank, this period is extended up to one year.

Can the government suspend a cooperative board if it has no financial stake in it?

No. A cooperative board cannot be superseded or suspended if there is no government shareholding, loan, financial assistance, or government guarantee.

Quiz

What is the maximum period of suspension for a non-banking cooperative society's board?

Answer: 6 months

In which of the following cases can a cooperative board be superseded?

Answer: Persistent default or negligence