Division Of Cooperative Society Ends Delegates' Status; Retaining Old Name, Registration Number Don't Preserve Eligibility: Allahabad High Court
The Allahabad High Court has held that when a cooperative society is divided under Section 126 of the U.P. Cooperative Societies Act, 1965, the original society also becomes a new body corporate, even if it is allowed to keep its old name and registration number.
It held that upon such division, the delegates of the original society cease to be delegates under Rule 87(ix) of the U.P. Cooperative Societies Rules, 1968 and cannot continue as members of the Committee of Management of the District Cooperative Bank under Rule 453(1)(h).
Section 126 of the Act empowers the Registrar to direct division of a cooperative society into two or more societies, which is then carried out through the procedure under Section 16. Rule 87(ix) of the Rules provides that a delegate ceases to be one if the society he represents is divided, while Rule 453(1)(h) bars a person who is not a member of the general body from continuing on the Committee of Management.
The bench of Justice J.J. Munir and Justice Indrajeet Shukla held,
“Thus, the juristic entity of pre-existing Cooperative Societies would stand altered and the pre-existing societies in the new form would be altogether different bodies corporate by virtue of Section 9 of the Act, 1965. Thus, what assumes significance is not merely the label attached to the society, namely, its registration number or nomenclature, but the substantive character and legal identity resulting from the statutory process of division.”
Petitioner, a delegate and member of the General Body of the District Cooperative Bank, Muzaffarnagar, approached the High Court against three members of the Bank's Committee of Management, one of whom was its Chairman. The three had become members of the Bank's General Body as delegates of B-PACS, Kheda Mastan, B-PACS, Muzaffarnagar Paschimi and B-PACS, Penana, and were elected to the Committee of Management in the elections held in June 2023.
In 2025, Assistant Commissioner/District Assistant Registrar, Cooperative Societies, District Muzaffarnagar passed orders under Section 126 of the Act dividing the three societies, whereby several villages were taken out of their area of operation and placed in newly constituted societies. The new societies were allotted fresh registration numbers, while the original societies continued with their old names and registration numbers.
Approaching the High Court and seeking a writ of mandamus, petitioner pleaded that upon division, the original societies ceased to exist in their earlier form and the private respondents stood disqualified under Rule 87(ix) read with Rule 453(1)(h) of the Rules. It was submitted that despite being informed, neither the Bank nor the Registrar took any action against them.
Counsel for the State argued that moving a few villages to a new society did not change the identity of the original societies, which still existed with their original registration numbers. Counsel for the Bank argued that a division takes effect only on fresh registration under Section 7 of the Act and since the original societies had not been registered afresh, Rule 87 was not attracted.
The Court observed that under Section 9 of the Act, registration gives a cooperative society a distinct legal personality, identified by the name and number under which it is registered. It held that division necessarily results in new societies, and even the original society, whose area of operation, assets and liabilities have changed, becomes a new body. It held that keeping the old name and number was only a ministerial act.
The Court held that an order under Section 126 only sets the division in motion, and the division is completed through the procedure under Section 16 of the Act.
Noting the manner in which the divisions were carried out, the Court observed,
“the 3rd respondent while passing the order of division in exercise of the power conferred under Section 126 of the Act, 1965, devised a novel method of maintaining the name and registration number of the erstwhile Societies so as to overcome the inevitable legal consequences of division in a devious manner.”
Since the orders of division were not under challenge, the Court did not disturb the retention of the old names and registration numbers. It held that the old numbers would be treated as numbers allotted under Section 16 of the Act to the societies resulting from the division.
The Court held that once the societies were divided, respondent nos. 6 to 8 ceased to be delegates by operation of Rule 87(ix) and therefore, under Rule 453(1)(h), could not continue as members of the Committee of Management of the Bank. It further held that the Chairman, whose office depended on his status as a delegate, could not continue as Chairman.
Accordingly, the writ petition was allowed.
Case Title: Sachin Kumar Jain v. State of U.P. and 7 others 2026 LiveLaw (AB) 734
Case Citation: 2026 LiveLaw (AB) 734