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Constitution of India · Section Article 243Z

Audit of accounts of Municipalities

Article 243Z — Audit of accounts of Municipalities

may, by law, make provisions with respect to the maintenance of accounts by the Municipalities and the auditing of such accounts.

243ZA. Elections to the Municipalities.—(1) The superintendence, direction and control of the preparation of electoral rolls for, and the conduct of, all elections to the Municipalities shall be vested in the State Election Commission referred to in article 243K. (2) Subject to the provisions of this Constitution, the Legislature of a State may, by law, make provision with respect to all matters relating to, or in connection with, elections to the Municipalities. 243ZB. Application to Union territories.—The provisions of this Part shall apply to the Union territories and shall, in their application to a Union territory, have effect as if the references to the Governor of a State were references to the Administrator of the Union territory appointed under article 239 and references to the Legislature or the Legislative Assembly of a State were references in relation to a Union territory having a Legislative Assembly, to that Legislative Assembly: Provided that the President may, by public notification, direct that the provisions of this Part shall apply to any Union territory or part thereof subject to such exceptions and modifications as he may specify in the notification. 243ZC. Part not to apply to certain areas.—(1) Nothing in this Part shall apply to the Scheduled Areas referred to in clause (1), and the tribal areas referred to in clause (2) of article 244. (2) Nothing in this Part shall be construed to affect the functions and powers of the Darjeeling Gorkha Hill Council constituted under any law for the time being in force for the hill areas of the district of Darjeeling in the State of West Bengal. (3) Notwithstanding anything in this Constitution, Parliament may, by law, extend the provisions of this Part to the Scheduled Areas and the tribal areas referred to in clause (1) subject to such exceptions and modifications as may be specified in such law, and no such law shall be deemed to be an amendment of this Constitution for the purposes of article 368. 243ZD. Committee for district planning.—(1) There shall be constituted in every State at the district level a District Planning Committee to consolidate the plans prepared by the Panchayats and the Municipalities in the district and to prepare a draft development plan for the district as a whole. (2) The Legislature of a State may, by law, make provision with respect to—

  • (a) the composition of the District Planning Committees;
  • (b) the manner in which the seats in such Committees shall be filled: Provided that not less than four-fifths of the total number of members of such Committee shall be elected by, and from amongst, the elected members of the Panchayat at the district level and of the Municipalities in the district in proportion to the ratio between the population of the rural areas and of the urban areas in the district;
  • (c) the functions relating to district planning which may be assigned to such Committees;
  • (d) the manner in which the Chairpersons of such Committees shall be chosen. (3) Every District Planning Committee shall, in preparing the draft development plan,—
  • (a) have regard to—
  • (i) matters of common interest between the Panchayats and the Municipalities including spatial planning, sharing of water and other physical and natural resources, the integrated development of infrastructure and environmental conservation;
    • (ii) the extent and type of available resources whether financial or otherwise;
  • (b) consult such institutions and organisations as the Governor may, by order, specify. (4) The Chairperson of every District Planning Committee shall forward the development plan, as recommended by such Committee, to the Government of the State. 243ZE. Committee for Metropolitan planning.—(1) There shall be constituted in every Metropolitan area a Metropolitan Planning Committee to prepare a draft development plan for the Metropolitan area as a whole. (2) The Legislature of a State may, by law, make provision with respect to—
  • (a) the composition of the Metropolitan Planning Committees;
  • (b) the manner in which the seats in such Committees shall be filled:

Provided that not less than two-thirds of the members of such Committee shall be elected by, and from amongst, the elected members of the Municipalities and Chairpersons of the Panchayats in the Metropolitan area in proportion to the ratio between the population of the Municipalities and of the Panchayats in that area;

  • (c) the representation in such Committees of the Government of India and the Government of the State and of such organisations and institutions as may be deemed necessary for carrying out the functions assigned to such Committees;
  • (d) the functions relating to planning and coordination for the Metropolitan area which may be assigned to such Committees;
  • (e) the manner in which the Chairpersons of such Committees shall be chosen. (3) Every Metropolitan Planning Committee shall, in preparing the draft development plan,—
  • (a) have regard to—
  • (i) the plans prepared by the Municipalities and the Panchayats in the Metropolitan area;
    • (ii) matters of common interest between the Municipalities and the Panchayats, including coordinated spatial planning of the area, sharing of water and other physical and natural resources, the integrated development of infrastructure and environmental conservation;
    • (iii) the overall objectives and priorities set by the Government of India and the Government of the State;
    • (iv) the extent and nature of investments likely to be made in the Metropolitan area by agencies of the Government of India and of the Government of the State and other available resources whether financial or otherwise;
  • (b) consult such institutions and organisations as the Governor may, by order, specify. (4) The Chairperson of every Metropolitan Planning Committee shall forward the development plan, as recommended by such Committee, to the Government of the State.

243ZF. Continuance of existing laws and Municipalities.— Notwithstanding anything in this Part, any provision of any law relating to Municipalities in force in a State immediately before the commencement of the Constitution (Seventy-fourth Amendment) Act, 1992, which is inconsistent with the provisions of this Part, shall continue to be in force until amended or repealed by a competent Legislature or other competent authority or until the expiration of one year from such commencement, whichever is earlier: Provided that all the Municipalities existing immediately before such commencement shall continue till the expiration of their duration, unless sooner dissolved by a resolution passed to that effect by the Legislative Assembly of that State or, in the case of a State having a Legislative Council, by each House of the Legislature of that State. 243ZG. Bar to interference by courts in electoral matters.— Notwithstanding anything in this Constitution,—

  • (a) the validity of any law relating to the delimitation of constituencies or the allotment of seats to such constituencies, made or purporting to be made under article 243ZA shall not be called in question in any court;
  • (b) no election to any Municipality shall be called in question except by an election petition presented to such authority and in such manner as is provided for by or under any law made by the Legislature of a State.]

PART IXB THE CO-OPERATIVE SOCIETIES 243ZH. Definitions.—In this Part, unless the context otherwise requires,—

  • (a) “authorised person” means a person referred to as such in article 243ZQ;
  • (b) “board” means the board of directors or the governing body of a co-operative society, by whatever name called, to which the direction and control of the management of the affairs of a society is entrusted to;
  • (c) “co-operative society” means a society registered or deemed to be registered under any law relating to co-operative societies for the time being in force in any State;
  • (d) “multi-State co-operative society” means a society with objects not confined to one State and registered or deemed to be registered under any law for the time being in force relating to such co-operatives;
  • (e) “office bearer” means a President, Vice-President, Chairperson, Vice-Chairperson, Secretary or Treasurer, of a co-operative society and includes any other person to be elected by the board of any co-operative society;
  • (f) “Registrar” means the Central Registrar appointed by the Central Government in relation to the multi-State co-operative societies and the Registrar for co-operative societies appointed by the State Government under the law made by the Legislature of a State in relation to co-operative societies;
  • (g) “State Act” means any law made by the Legislature of a State;
  • (h) “State level co-operative society” means a co-operative society having its area of operation extending to the whole of a State and defined as such in any law made by the Legislature of a State. 2 4 3 ZI . Incorporation of co-operative societies.—Subject to the provisions of this Part, the Legislature of a State may, by law, make provisions with respect to the incorporation, regulation and winding up of co-operative societies based on the principles of voluntary formation, democratic member-control, member-economic participation and autonomous functioning.

243ZJ. Number and term of members of board and its office bearers.—(1) The board shall consist of such number of directors as may be provided by the Legislature of a State, by law: Provided that the maximum number of directors of a co-operative society shall not exceed twenty-one: Provided further that the Legislature of a State shall, by law, provide for the reservation of one seat for the Scheduled Castes or the Scheduled Tribes and two seats for women on board of every co-operative society consisting of individuals as members and having members from such class of category of persons. (2) The term of office of elected members of the board and its office bearers shall be five years from the date of election and the term of office bearers shall be conterminous with the term of the board: Provided that the board may fill a casual vacancy on the board by nomination out of the same class of members in respect of which the casual vacancy has arisen, if the term of office of the board is less than half of its original term. (3) The Legislature of a State shall, by law, make provisions for co-option of persons to be members of the board having experience in the field of banking, management, finance or specialisation in any other field relating to the objects and activities undertaken by the co-operative society, as members of the board of such society: Provided that the number of such co-opted members shall not exceed two in addition to twenty-one directors specified in the first proviso to clause (1): Provided further that such co-opted members shall not have the right to vote in any election of the co-operative society in their capacity as such member or to be eligible to be elected as office bearers of the board: Provided also that the functional directors of a co-operative society shall also be the members of the board and such members shall be excluded for the purpose of counting the total number of directors specified in the first proviso to clause (1).

243ZK. Election of members of board.—(1) Notwithstanding anything contained in any law made by the Legislature of a State, the election of a board shall be conducted before the expiry of the term of the board so as to ensure that the newly elected members of the board assume office immediately on the expiry of the office of members of the outgoing board. (2) The superintendence, direction and control of the preparation of electoral rolls for, and the conduct of, all elections to a co-operative society shall vest in such an authority or body, as may be provided by the Legislature of a State, by law: Provided that the Legislature of a State may, by law, provide for the procedure and guidelines for the conduct of such elections. 243ZL. Supersession and suspension of board and interim management.—(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. 243ZM. Audit of accounts of co-operative societies.—(1) The Legislature of a State may, by law, make provisions with respect to the maintenance of accounts by the co-operative societies and the auditing of such accounts at least once in each financial year. (2) The Legislature of a State shall, by law, lay down the minimum qualifications and experience of auditors and auditing firms that shall be eligible for auditing accounts of the co-operative societies. (3) Every co-operative society shall cause to be audited by an auditor or auditing firms referred to in clause (2) appointed by the general body of the co-operative society: Provided that such auditors or auditing firms shall be appointed from a panel approved by a State Government or an authority authorised by the State Government in this behalf. (4) The accounts of every co-operative society shall be audited within six months of the close of the financial year to which such accounts relate. (5) The audit report of the accounts of an apex co-operative society, as may be defined by the State Act, shall be laid before the State Legislature in the manner, as may be provided by the State Legislature, by law. 243ZN. Convening of general body meetings.—The Legislature of a State may, by law, make provisions that the annual general body meeting of every co-operative society shall be convened within a period of six months of close of the financial year to transact the business as may be provided in such law.

243ZO. Right of a member to get information.—(1) The Legislature of a State may, by law, provide for access to every member of a co-operative society to the books, information and accounts of the co-operative society kept in regular transaction of its business with such member. (2) The Legislature of a State may, by law, make provisions to ensure the participation of members in the management of the co-operative society providing minimum requirement of attending meetings by the members and utilising the minimum level of services as may be provided in such law. (3) The Legislature of a State may, by law, provide for co-operative education and training for its members. 243ZP. Returns.—Every co-operative society shall file returns, within six months of the close of every financial year, to the authority designated by the State Government including the following matters, namely:—

  • (a) annual report of its activities;

  • (b) its audited statement of accounts;

  • (c) plan for surplus disposal as approved by the general body of the co-operative society;

  • (d) list of amendments to the bye-laws of the co-operative society, if any;

  • (e) declaration regarding date of holding of its general body meeting and conduct of elections when due; and

  • (f) any other information required by the Registrar in pursuance of any of the provisions of the State Act. 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. 243ZR. Application to multi-State co-operative societies.—The provisions of this Part shall apply to the multi-State co-operative societies subject to the modification that any reference to “Legislature of a State”, “State Act” or “State Government” shall be construed as a reference to “Parliament”, “Central Act” or “the Central Government” respectively. 243ZS. Application to Union territories.—The provisions of this Part shall apply to the Union territories and shall, in their application to a Union territory, having no Legislative Assembly as if the references to the Legislature of a State were a reference to the administrator thereof appointed under article 239 and, in relation to a Union territory having a Legislative Assembly, to that Legislative Assembly: Provided that the President may, by notification in the Official Gazette, direct that the provisions of this Part shall not apply to any Union territory or part thereof as he may specify in the notification. 243ZT. Continuance of existing laws.— Notwithstanding anything in this Part, any provision of any law relating to co-operative societies in force in a State immediately before the commencement of the Constitution (Ninety-seventh Amendment) Act, 2011, which is inconsistent with the provisions of this Part, shall continue to be in force until amended or repealed by a competent Legislature or other competent authority or until the expiration of one year from such commencement, whichever is less.]

THE SCHEDULED AND TRIBAL ARE AS

Plain English Summary

This article gives the power to make laws about how municipal bodies (like city councils) must keep their financial records and have those records audited. It also deals with who is in charge of organizing elections for these local bodies and sets up district committees to plan for development.

Key Points

  • Audit of Accounts: Laws can be made to ensure that Municipalities maintain proper accounts and these accounts are regularly audited.
  • Elections: The State Election Commission is responsible for managing the preparation of voter lists and conducting all elections for Municipalities.
  • Union Territories: These rules apply to Union Territories, with specific provisions regarding their local legislative bodies.
  • District Planning: Every state must establish a District Planning Committee at the district level to combine local plans into a larger district development plan.

Why It Matters

This ensures that local civic bodies are financially accountable and that regional development is planned systematically by bringing together municipal and local planning efforts.

Landmark Judgements

No major landmark judgements.

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