Gujarat High Court holds Gujarat Cooperative Societies (Amendment) Act, 2019 unconstitutional

The Gujarat High Court on 27th August, 2021 in the case of Pravinsinh Indrasinh Mahida v. State of Gujarat, struck down the Gujarat Cooperatives Societies (Amendment Act), 2019 by ruling that the legislation is 'unconstitutional, absurd, and manifestly arbitrary and not in the public interest', and is violative of Article 14 of the Constitution.

The amendment deleted Section 74C (1)(v) of the Gujarat Cooperative Societies Act, 1961 (1961 Act) thereby, removing sugar factories from the list of specified cooperative societies under the Act.

As a result, no elections were required to be conducted by the State for the sugar factories. The Amendment implied that the elections would be conducted by the cooperative sugar factories themselves and that no independent government officer would be appointed to oversee such elections.

A large number of writ petitions were filed before the Gujarat High Court against the said exclusion of sugar factories stating that, since now the independent government officer (Collector) would no longer be conducting the election, the elections would thus be held as per the whims of the respective cooperative societies.

The State, defended the amendment saying that it was necessary to reduce the expenses and administrative burdens of the State. It was also contended that , the State government's share capital in such sugar cooperative societies has been reduced to nil and thus there no longer existed a public interest. Sugar cooperative societies were thus now 'federal cooperative societies' as per the State.

Rejecting the contention of the State that the impugned legislation does not violate Article 14 of the Constitution, the Bench opined that,

"The argument canvassed on behalf of the State as well as the Federation about the federal societies or primary societies or finance or administrative convenience has no nexus to the object which is sought to be achieved. In fact, the argument of the State leads to a conflict between the object and differentia. The same is not permissible. The object cannot be their distinction between the federal societies or primary societies. The object and the differential are two different things and should be compared. We are not at all impressed by the stance of the State that as the Sugar factories are not federal, they have been now kept out of the purview of Section 74C of the Act."

Further dismissing the contention that the sugar cooperative societies can be treated differently since they are not federal, the Court observed:

"The voters are now being told by the State that they would be left with what the society decides. Why because yours is not a federal society. Even at the relevant point of time, the Sugar societies were not federal. So, how would that be relevant for the purpose of exclusion? In other words, if the Sugar societies were included despite the fact of not being federal, then how is it relevant for the purpose of exclusion?"

Therefore Court proceeded to hold the impugned legislation fails to disclose the object which could be termed as reasonable or in public interest and it has no nexus with the object sought to be achieved. It added that the classification in the present case between the federal and primary societies on the ground of administrative exigency and saving money is absurd and though the Court may not look into the motive of the legislature, but, definitely, the object of the legislation can be looked into.

It concluded that all the specified societies form one class / one homogeneous group for the purpose of its members to ensure free and fair elections under Chapter XI-A of the Act and the Rules.

By - C. George Thomas