सं Samvidhan

The Constitution of India

Article 243ZQ

Offences and Penalties

(1) The Legislature of a State may, by law, make provisions for the offences relating to the co-operative societies and penalties for such offences.

(2) A law made by the Legislature of a State under clause (1) shall include the commission of the following act or omission as offences, namely:-

(a) a co-operative society or an officer or member thereof wilfully makes a false return or furnishes false information, or any person wilfully not furnishes any information required from him by a person authorised in this behalf under the provisions of the State Act;

(b) any person wilfully or without any reasonable excuse disobeys any summons, requisition or lawful written order issued under the provisions of the State Act;

(c) any employer who, without sufficient cause, fails to pay to a co-operative society amount deducted by him from its employee within a period of fourteen days from the date on which such deduction is made;

(d) any officer or custodian who wilfully fails to handover custody of books, accounts, documents, records, cash, security and other property belonging to a co-operative society of which he is an officer or custodian, to an authorised person; and

(e) whoever, before, during or after the election of members of the board or office bearers, adopts any corrupt practice.

Why this exists

This provision was added by the 97th Constitutional Amendment Act, 2011, which inserted a new Part IXB into the Constitution to strengthen the autonomy, accountability, and proper functioning of cooperative societies across India. Cooperative societies often handle members' money and depend on honest record-keeping and fair internal elections; Article 243ZQ ensures that states, while retaining freedom to design their own offence-and-penalty laws, must at minimum criminalize certain core abuses — false records, defiance of lawful authority, misuse of deducted funds, withholding of society property, and election corruption — so that basic standards of honesty and governance are uniformly enforced nationwide.

How courts read it

In Rajendra N. Shah v. Union of India (Gujarat High Court, 2013, upheld with modification by the Supreme Court in 2021), the courts examined the constitutional validity of Part IXB, which includes Article 243ZQ. The Supreme Court held that Part IXB was unconstitutional to the extent it applied to state-registered cooperative societies, because the 97th Amendment had not been ratified by at least half the state legislatures as required under Article 368(2) for provisions touching state subjects like cooperatives. However, the Court preserved the Part's applicability to multi-state cooperative societies and Union Territories, since ratification was not required there. This means Article 243ZQ's binding force on purely state-level cooperatives remains constitutionally uncertain and depends on this ruling's continuing application.

Common misconceptions
  • Myth: Article 243ZQ itself directly punishes people for these offences.
    Fact: The Article doesn't create punishments by itself; it only requires state legislatures to pass their own laws that include these offences and set penalties.
  • Myth: This Article applies uniformly and fully to all cooperative societies in every state today.
    Fact: Following the Supreme Court's 2021 ruling in Rajendra N. Shah v. Union of India, this provision (as part of Part IXB) was held unconstitutional for state-registered cooperatives due to lack of required state ratification, and remains valid mainly for multi-state cooperatives and Union Territories.
Article 243ZQ — Offences and Penalties · Samvidhan