The J&K Government Cooperative which went from Boom to Bust

Published On: June 16, 2019

In a major decision, the State Government is all set to shut down J&K Cooperative Supply and Marketing Federation (JAKFED) by August 31 this year and the proposal in this regard is also learnt to have been taken up by State Administrative Council.

J&K Cooperative Supply and Marketing Federation (JAKFED) is a J&K governments Cooperative which is registered under the Jammu and Kashmir Cooperative Societies Act, 1989 and is an apex level institution in the Cooperative Sector in state.According to official website of JAKFED, the J&K Cooperative Supply and Marketing Federation Ltd. (JAKFED) registered on Ist Oct. 1960 as an Apex Level Institution in Cooperative Sector of J&K State having its Head Office at B.C. Road Rehari, Jammu and Regional Office at Batwara Srinagar. Initially the major activity entrusted to the Federation was procurement and distribution of fertilizer.

At that time, the organization had been undertaking 100% business of fertilizer distribution in the State which continued as such up to 1995-96 when the State Govt. allowed J&K Agro Industries Development Corporation and some of the Cooperative Societies to deal directly with the Fertilizer Companies which has, in fact, adversely affected the resource position of JAKFED.

In order to overcome the financial crisis so precipitated, JAKFED had to diversify its business and presently the the major activities of the federation included procurement and distribution of Fertilizer, building material, domestic gas, Procurement & supply of nutrition items to Indenting Govt. Deptts, Procurement and supply of cement to Govt./Semi Govt. Departments, etc.

The Federation, which has strength of 224 employees, is suffering annual recurring loss of around Rs 2.75 crore and is having statutory liabilities of Rs 24 crore, including payment of CPF and Pensionary benefits besides liabilities on account of payments to suppliers of around Rs 25 crore. Outstanding against the goods supplied is Rs 19 crore and outstanding to be recovered from the officers/officials against whom impressed advance has already been paid is Rs 1.24 crore. The overall liabilities of JAKFED are to the tune of Rs 67 crore.

According to online reports that all the movable and immovable assets of JAKFED shall be taken over by the State Government and financial commitments, if any, shall be met by the Cooperative Department through sale of these assets and the State Government shall not bear any financial liability whatsoever on this account.

The report also suggest that the Cooperative Department will propose constitution of an appropriate Committee to the General Administration Department, which will coordinate the winding up of the Federation, sources said adding that the Department will also obtain prior concurrence of the Finance Department to the design and implementation of a VRS for the employees of JAKFED.

According to report of Daily Excelsior, JAKFED was a profit earning organization, however, it could not sustain the same on account of malpractices which were probed by a High Level Committee (Pillai Committee) and, thereafter, by the Joint House Committee of Legislative Council. The matter has been referred to CBI for further investigation.

The employees of JAKFED filed a Writ Petition before the High Court with the prayer to redress their grievances, including those related to release of gratuity, leave encashment, salary etc on eve of their retirement. The High Court in its order dated 20.02.2018 directed the State Government to suggest ways and means by which the employees of JAKFED can be paid their dues.

Pursuant to the Court directions, the matter was examined at various levels of the Government. The financial position of JAKFED, liabilities of the organization; future prospects of the organization and many other aspects were examined critically in order to arrive at a decision whether to go for revival or winding up, if necessary, of JAKFED, while protecting the interests of the employees on the rolls of the federation.

Online news reports suggest that after careful analyses of all the pros and cons and in view of the very limited scope for revival, the State Government has decided to wind up JAKFED and the process in this regard shall be concluded by August 31, 2019.