Rehan Khan
On 3rd November, the Kerala High Court recently struck down Section 28(2A) of the Kerala Cooperative Societies Act, 1969, deeming it unconstitutional. This provision restricted members of credit cooperative societies from serving more than three consecutive terms on their managing committees, a restriction the court viewed as arbitrary and infringing on cooperative autonomy. The judgment, delivered by Justice N Nagaresh in Babu K Korah & Anr v. State of Kerala & Ors, emphasized the need to protect the independence and democratic functioning of cooperative societies in Kerala.
Justice Nagaresh ruled that the State cannot impose arbitrary limitations on members’ rights to participate in the governance of cooperative societies, as such restrictions undermine the essence of cooperatives, which are rooted in principles of democratic participation and trust among members. Cooperative societies rely on the continuity of experienced members who have a deep understanding of the society’s needs and operations. Restricting re-elections, the court observed, would weaken the effectiveness of these societies by preventing seasoned leaders from serving consecutive terms, thus disrupting the society’s functional stability and growth.
The petitioners who challenged the amendments argued that Section 28(2A) was discriminatory and contrary to Article 14 of the Constitution, which guarantees equality before the law. This provision specifically targeted credit cooperative societies, such as the Kerala State Cooperative Bank and Primary Agricultural Credit Societies, while similar restrictions were absent in other types of cooperatives and even democratic institutions like Parliament and state legislatures. The petitioners contended that the amendment was a targeted attempt by the State to increase control over cooperative societies, which are designed to be member-driven, autonomous entities operating at the grassroots level.
Justice Nagaresh found merit in the petitioners’ arguments, concluding that Section 28(2A) indeed violated Article 14 by selectively applying restrictions to credit societies alone. He pointed out that if continuous service in other types of cooperative societies does not raise issues of vested interests, then singling out credit societies is unreasonable and lacks any legitimate basis. In further support of his ruling, Justice Nagaresh highlighted the constitutional protections offered to cooperative societies under Part IX-B, specifically Articles 19(1)(c), 43-B, and 243-ZI, which emphasize the freedom of citizens to form cooperative societies, encourage democratic management, and regulate societies in a manner that respects their voluntary, member-controlled nature. The court emphasized that cooperative societies, especially those in rural and semi-urban areas, depend on the trust and credibility of their managing committee members. By imposing arbitrary eligibility restrictions, the State undermines the principles of democratic control and economic participation central to the functioning of cooperatives.
The court acknowledged that while the State has regulatory authority over cooperative societies, as specified under Article 243-ZI, this power is intended for overseeing their incorporation, regulation, and winding-up. Justice Nagaresh stressed that imposing arbitrary restrictions on members’ eligibility to participate in elections interferes with the core democratic functioning of cooperative societies, which should be allowed to decide their own electoral processes without undue state intervention. Such autonomy, the court held, is essential for cooperatives to operate effectively and maintain the trust of their members.