Co-Operative Society's Multi-State Status Depends On Objectives, Not Spread Of Members Across States: Supreme Court

The Supreme Court has held that the character of a multi-state cooperative society is determined by the nature of its objectives, and not merely by the fact that its members are spread across different states. A bench of Justices PS Narasimha and Alok Aradhe set aside the Uttarakhand High Court's judgment which held a state co-operative to be a multi-state co-operative society merely because its members are spread across different states. Rejecting the contention that spread of co-operative society members to different states qualifies it to be a multi-state co-operative society, the Court said that to qualify as multi-state co-operative society, the objective of the co-operative society intends to serve the members across different states. “…residence of the members or the geographical spread of activity cannot substitute the statutory requirement that principal objects must themselves be Multi States in character.”, the court said. The dispute arose after the bifurcation of Uttar Pradesh and the creation of Uttarakhand under the Uttar Pradesh Reorganisation Act, 2000. Two sugarcane grower cooperative societies based in Bajpur and Gadarpur, originally registered under the U.P. Cooperative Societies Act, 1965, had members residing in villages located in both the newly created state of Uttarakhand and the remaining territory of Uttar Pradesh. A cane grower from a village that remained in Uttar Pradesh challenged his exclusion from the Bajpur society after its operational area was reorganised to confine it to Uttarakhand. An arbitrator held that the society had automatically become a “deemed” multi-state cooperative society under Section 103 of the Multi-State Cooperative Societies Act, 2002 because its area of operation extended across two states after bifurcation. The Uttarakhand High Court upheld this reasoning, prompting the Registrar Co-operative Society to appeal to the Supreme Court. Allowing the appeal, the judgment authored by Justice Aradhe emphasised that the mere fact that members of a cooperative society reside in different states does not automatically make it a multi-state cooperative society. Relying on its earlier ruling in State of U.P. v. Milkiyat Singh, the Court held that the decisive factor is whether the principal objects of the society inherently require operations across state boundaries.Examining the bye-laws of the Bajpur and Gadarpur societies, the Court found that their objectives were limited to safeguarding and promoting the interests of local sugarcane growers and coordinating with nearby sugar mills. These functions were essentially local in nature and did not require the societies to function across multiple states. “…it is evident that the object of the society are confined to safeguarding and promoting the interests of local cane growers and their objects do not evince any intention to serve the members across the State boundaries.”, the Court observed. Accordingly, the appeal was allowed, holding that the Bajpur and Gadarpur sugarcane cooperative societies were not multi-state cooperative societies, and their reorganisation under the Uttar Pradesh Reorganisation Act, 2000 remained valid. Cause Title: REGISTRAR CANE COOPERATIVE SOCIETIES & ORS. VERSUS GURDEEP SINGH NARVAL (DEAD) THROUGH LRS. & ORS.Citation : 2026 LiveLaw (SC) 224Click here to download judgmentAppearances: For Appellant(s) : Mr. Abhishek Atrey, AOR Dr. Abhishek Atrey, Adv. Mr. Vikas Negi, Adv. Ms. Vidyottma Jha, Adv. Mr. Jagdeep Sharma, Adv. Mr. Navneet Gupta, Adv. Dr. Riju Raj S Jamwal, Adv. Mr. Balaji Srinivasan, AOR Mr. Manoj Sagar, Adv. Mr. Dinesh Dwivedi, Sr. Adv. Mr. P.N. Gupta, AOR Mrs. Bharti Gupta, Adv. Mr. Pushp Raj Gupta, Adv. For Respondent(s) :Mr. T. N. Singh, AOR Mr. Kumar Gaurav, Adv. Ms. Rajshree Singh, Adv. Mr. Umang Tripathi, Adv. Mr. Akshat Kumar, AOR Mr. Abhishek Atrey, AOR Mr. K.M.Nataraj, A.S.G. Mr. Vatsal Joshi, Adv. Mr. Amit Sharma-v, Adv. Mr. Uday Bhan Singh, Adv. Mr. Bhuvan Kapoor, Adv. Mr. Prashant Singh-ii, Adv. Mr. Yogesh Vats, Adv. Dr. N. Visakamurthy, AOR Mr. K.M.Nataraj, A.S.G. Mr. Vatsal Joshi, Adv. Mr. Chitransh Sharma, Adv. Mr. Sharath Nambiar, Adv. Ms. Aashna Gill, Adv. Mr. Santosh Ramdurg, Adv. Mr. Yogesh Vats, Adv. Mr. Shreekant Neelappa Terdal, AOR

Co-Operative Society's Multi-State Status Depends On Objectives, Not Spread Of Members Across States: Supreme Court

Yash Mittal

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