Bar On Credit Society Members Contesting Beyond 3 Terms Valid: Kerala HC Upholds S.28 (2A) Of Co-operative Societies Amendment Act, 2023

The Kerala High Court has, in a recent judgment, upheld the constitutional validity of Section 28(2A) of the Kerala Co-operative Societies Act, 1969, which barred the members of Managing Committees of Credit Societies from contesting in elections after three terms. The Division Bench comprising of Justice Amit Rawal and Justice K.V. Jayakumar reversed the judgment of the Single Bench, which had struck down the provision in question. In appeal, the Court considered the question whether the right to contest an election would relate to the amendment caused in incorporation of Article 19(1)(c), i.e., 'whether right to contest an election is a fundamental right or a common right.' It was found that the right is not a fundamental right but a statutory right, which is subject to statutory limitations/disqualifications.Factual BackgroundS.28(2A) of the Act was inserted by the Kerala Co-Operative Societies (Amendment) Act, 2023. It sought to bring in restrictions on the eligibility for contesting in election of a member of the Committee of Credit Societies, which are indulging into extending loan facilities. As per the sub-section, no member of the Committee shall be eligible for election to the Committee for more than three consecutive terms, irrespective of whether the term is in full or in part.This, among other provisions of the Amendment Act, were challenged by the respondents by preferring 33 Writ Petitions before the High Court. The learned Single Judge struck down S. 28(2A) as unconstitutional but upheld the other provisions that were challenged. The finding of the Single Bench was challenged by the State of Kerala by preferring 33 Intra Court appeals (Writ Appeals).Finding The Division Bench looked in detail into the latest amendments to Part IX-B of the Constitution of India, which includes Article 243-ZH to ZT, and the amended Article 19. For context, Part IX-B of the Constitution deals exclusively with Co-operative Societies and includes provisions related to term, membership, election, incorporation, etc. of co-operative societies. As per the amended Article 19, the right to form associations/unions would also include Co-operative Societies. The Court looked into decisions of the Supreme Court and the various High Courts, including Union of India v. Rajendra Shah and others, and Pravinsinh Indrasinh Mahida v. State of Gujarat. In the former case, the Supreme Court found that Part IX B of the Constitution was validly incorporated and that it will not impact the amendment to Article 19(1)(c). In the latter case, the Gujarat High Court struck down the Gujarat Cooperative Societies (Amendment) Act, 2019.The Court stated that the position of law as it exists now is that right to be elected and the right to dispute elections are statutory rights, which are always subject to statutory limitations. It was reiterated that the right to elect and contest election with statutory disqualifications cannot be a violation of fundamental rights.Thereafter, the Court scrutinized the reasoning of the Single Judge in his judgment, the relevant portion of which is from paras 36 to 56. The Single Judge was of the opinion that prescribing arbitrary eligibility conditions for participating in election to the Managing Committee of Co-operative Societies would amount to the interference with its autonomous functioning, which is a constitutional mandate as per Article 243-ZI. It was also stated in the impugned judgment that there cannot be a blanket assumption that members being continuously and repeatedly elected would act to the detriment of the Societies.The Court then examined the intent behind the introduction of the provision in question, i.e., S. 28(2A) of the Act. It observed thus:“In order to prevent the misuse of the power the legislature in the wisdom caused an amendment by introduction of sub Section 2A of Section 28 Act barring a member of Society to contest the election if he or she had been the member of the Society for three terms with an aim to eliminate unhealthy practice which is resultant of abnormal long continuance of a particular person in the same office…On the basis of some enquiry, it is a matter of record that the same very managing committee members an[d] office bearers are continuing in the administration for a pretty long period in the committee and large scale irregularities have been committed.”The Court was of the considered opinion that the existence of Credit Societies is inevitable for the existence of our economy and therefore, steps must be taken to eliminate unhealthy practices through legislation.Reversing the finding of the Single Bench, the Court allowed the Writ Appeals. It then observed as below:“…It is not a fundamental right as observed by the Single Bench much less to be violative of directive principles as per Article 43B of the Constitution of India, PART IV, Directive Principles of State Policy…… In case, the findings in the said judgment under challenge is permitted to sustain,...

Bar On Credit Society Members Contesting Beyond 3 Terms Valid: Kerala HC Upholds S.28 (2A) Of Co-operative Societies Amendment Act, 2023

K. Salma Jennath

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