Part IXB Of Constitution Not Applicable To Local Co-operative Societies, Applies Only To Multi-State Societies & Societies In UTs : Supreme Court

The Supreme Court on Tuesday held that Part IX B inserted by the Constitution (97th Amendment) Act, 2011 would not be applicable to the local co-operative societies and the same would be applicable to the multi-State co-operative societies and the societies within the Union territories.The 97th Amendment granted a Constitutional status to cooperative societies and inserted Part IXB in the Constitution which specified several conditions for state laws relating to cooperative societies. In 2021, the Supreme Court( in the case Union of India vs Rajendra Shah and others) had upheld a judgment of the Gujarat High Court which struck down Part IXB on the ground that the amendment was passed without the requisite ratification by the States. However, the majority of the bench saved Part IXB to the extent it applied to multi-state co-operative societies.In the judgment delivered on Tuesday(October 18) in the case Bengal Secretariat Cooperative Land Mortgage Bank and Housing Society Ltd vs Aloke Kumar, the Court explained the provisions relating to Part IXB in the light of the 2021 Supreme Court judgment.The bench noted that 97th amendment, to the extent it inserted Part IXB, was struck down."Thus, the Constitution (97th Amendment) Act, 2011 would not be applicable to the local co-operative societies, whereas the same would be applicable to the multi-State co-operative societies and the societies within the Union territories", a bench comprising Chief Justice of India UU Lalit, Justice S Ravindra Bhat and Justice JB Pardiwala observed.The Court was deciding an appeal filed by a cooperative society challenging an order of the Calcutta High Court which held as maintainable a plea for the execution of an arbitral award secured by a member against the decision of the society to demolish and redevelop its administrative office building.The Court allowed the society's appeal, inter-alia, noting that the decisions of the General Body regarding the demolition of the building have not been challenged. Hence, the respondent no.1, being a member of the society, are bound by the decisions."The General Body of the Appellant Society has approved the terms and conditions of the development agreement by overwhelming majority. Merely because the terms and conditions of the development agreement are not acceptable to the Respondent No. 1, who could be said to be in minuscule minority cannot be the basis of not to abide by the decision of the overwhelming majority of the General Body of the Appellant Society", the bench observed.Once a person becomes a member of the co-operative society, he loses his individualityThe judgment authored by Justice Pardiwala observed :"By now it is well established position that once a person becomes a member of the Co-operative Society, he loses his individuality with the Society and he has no independent rights except those given to him by the statute and bye-laws. The member has to speak through the Society or rather the Society alone can act and speaks for him qua the rights and duties of the Society as a body".Referring to various precedents, the judgment stated that the member of a Society has no independent right qua the Society and it is the Society that is entitled to represent as the corporate aggregate. "The stream cannot rise higher than the source", the Court said.members join as human beings and not as capitalists"The basic principles of co-operation are that the members join as human beings and not as capitalists. The Co-operative Society is a form of organization wherein persons associate together as human beings on the basis of equality for promotion of economic interest of its members. This movement is a method of doing the business or other activities with ethical base. "Each for all and all for each" is the motto of the co-operative movement. This movement not only develops latent business capacities of its members but produces leaders; encourages economic and social virtues, honesty and loyalty, becomes imperative, prospects of better life, obtainable by concerted effort is opened up; the individual realises that there is something more to be sought than mere material gains for himself. So, in fact, it being a business cum moral movement, and the success of the Co-operative Society depends upon the reality with which one of the members work for the achievement of its objects and purpose."Co-operative Movement is both a theory of life and a system of business.The entire legislative scheme goes to show that the Co-operative Society is to function democratically and the internal democracy of a society, including resolutions passed in accordance with the Act, the Rules, and the bye-laws have to be respected and implemented. The Co-operative Movement is both a theory of life and a system of business. It is a form of voluntary association where individuals unite for mutual aid in the production and distribution of wealth upon principles of equity, reason and common good. It stands for...

Part IXB Of Constitution Not Applicable To Local Co-operative Societies, Applies Only To Multi-State Societies & Societies In UTs : Supreme Court

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