Kerala High Court strikes down restriction on consecutive re-election of Credit Society members

The Kerala High Court recently struck down as unconstitutional Section 28(2A) of the Kerala Cooperative Societies Act, 1969, which restricted members of credit cooperative societies from serving on the managing committee for more than three consecutive terms [Babu K Korah & anr v State of Kerala & ors and connected cases].

Justice N Nagaresh opined that the State cannot impose such arbitrary restrictions that affect the cooperative societies' autonomy.

The Court further noted that the managing committee of a cooperative society contributed to administrative decisions and was crucial for the society’s functioning. Therefore, restricting experienced members from re-election could hamper society’s operational efficiency, the Court said.

The judge also noted that these societies were rooted in democratic principles and based on the trustworthiness of its members. Thus, the State should not impose limitations on the electoral eligibility of the members and should let the general body retain the right to determine committee election procedures through their bye-laws, the Court said.

"When the Legislature makes arbitrary rules regulating the conditions and qualifications for being elected to the Managing Committee of a Co-operative Society, that would indeed be an affront to the right of the members of the Society to run the Society in a democratic manner. It is to be noted that the credentials of Co-operative Societies, which are mostly functioning in rural and semi urban areas in Kerala, depend on the trustworthiness of the Members of the Managing Committee of the Societies," the October 30 ruling said.

Further, the judge also pointed out that the restriction on contesting in elections after three consecutive terms applied only to members of credit societies as per Section 28(2A).

This, he observed, was clearly arbitrary and discriminatory under Article 14 of the Constitution. If serving four consecutive terms in other types of societies did not create any vested interests, then no distinction could be only for credit societies, the Court opined.

The Court ruling came in response to several petitions challenging multiple amendments in the Act made in 2024.

The petitioners argued that the new restrictions, including those in Sections 14AA, 28(2A), 32(4), 33, 34A, 56, 57E, and 64, were aimed at increasing government interference in cooperative societies.

They claimed that these provisions were part of State's effort to gain control over these societies, which are traditionally democratic, member-driven organisations operating at grassroot-levels.

They argued that amendments introduced by the State undermined the cooperative spirit by restricting election rights and management autonomy.

The petitioners further argued that similar restrictions are absent in democratic institutions like Parliament, State legislatures, and local government bodies.

Section 28 of the Kerala Cooperative Societies Act governs the election and constitution of the managing committee in cooperative societies. Under this Section, the general body of a society appoints a committee responsible for managing the society’s affairs for a fixed term, typically five years.

The Amendment Act 9 of 2024 added Subsection (2A), which barred members from serving on the managing committee for more than three consecutive terms.

This limitation applied exclusively to credit societies, which included institutions like the Kerala State Cooperative Bank, Primary Agricultural Credit Societies, and Urban Cooperative Banks, among others.

 The Court eventually struck down Section 28(2A) of the Act, but upheld the other challenged provisions, namely Sections 14AA, 32(4), 33, 34A, 56, 57E, and 64 of the Act.

While examining the matter, the Court highlighted the need to promote autonomy in cooperative societies as provided for in Part IX-B of the Constitution. It also noted that the freedom to form co-operative societies has been enshrined under Article 19(1)(c). Further, the State had a duty to encourage democratic and autonomous management under Article 43-B.

It observed that Section 28(2A) violated the intent of these provisions by infringing upon the members’ right to operate free from arbitrary state intervention.

The Court added that Article 243-ZI reaffirmed that while States have the power to regulate co-operative societies, it must be done in a way that respects the principles of voluntary formation, democratic member control, and economic participation.

"The powers granted under Article 243-ZI to make laws is confined to incorporation, regulation and winding up of Co-operative Societies. Prescribing arbitrary eligibility conditions for participating in election to the Managing Committee of Co-operative Societies would amount to interference with the autonomous functioning of Co-operative Societies.", the Court concluded.

It underscored further that the autonomy of co-operative societies depended on the ability of their members to elect representatives without excessive State-imposed restrictions.

[Read Order]