The Gujarat Cooperative Societies (Amendment) Act, 2019 held Unconstitutional


It is illegal, discriminatory, ridiculous, obviously arbitrary, and not in the public interest, the Gujarat High Court declared on 27th August, 2021 (Pravinsinh Indrasinh Mahida v. State of Gujarat).

Subsequently, sugar factories were removed from the Gujarat Cooperative Societies Act, 1961, Section 74C(1)(v) (1961 Act). With this change, the State was no longer obliged to conduct elections as per the Gujarat Specified Cooperative Societies Elections to Committee Rules 1982.

As a result, the cooperative sugar mills themselves would conduct the elections, with no need for an impartial government official.

In 1961, sugar mills were excluded from the list of cooperative organisations, and several writ petitions were filed in the High Court protesting this decision. The change may allow cooperative organisations to hold elections at their whims and caprices.

Govt. and GSFCCSL backed the change. To minimise costs and administrative difficulties, the State said. Out of a total of 343 sugar cooperative societies, Gujarat has 13 as of today. That the government’s share capital has been decreased to zero over time is likewise stated by the State. It was claimed that sugar cooperative factories no longer serve the public interest. As non-federal cooperative organisations, sugar cooperative factories were also intended to be distinguished.

But Chief Justice Vikram Nath and Justice JB Pardiwala of the Gujarat High Court were not persuaded either. “What is the aim of the amendment? Does saving money or reducing administrative burden justify sacrificing free and fair elections? Financial and administrative savings are neither in the public interest or justified… As sugar factories are not federal, they are not covered by Section 74C of the Act, which the State claims. Abolishing Section 74C will save the Government money and administrative time. The Sugar factories are a good place to save time and money. Do these 13 Sugar societies cost more money and time than the other 74C Sugar societies? As a result, the Government’s position is completely fabricated “said the Court.

This issue did not involve classification but rather de-classification, thus Article 14 of the Constitution (right to equality) had no relevance. As a result of these factors, the Court ruled that the challenged amendment was discriminatory.

“The purpose of the challenged law is to save money and administrative burden, as stated by the defendants. In any case, none of these goals is in the public interest or rational… Our view, shared by all learned counsel for the writ petitioners, is that the legislation’s purpose is not merely trivial, but also unreasonable “the Court stated

The Court responded to the argument that sugar cooperative societies are exempt from federal taxation since they are not federal.

“They will be left with what society chooses, ” the State tells the voters today. Because you don’t live in a federation. The Sugar societies were not federal even at the time of the event. So, how does it affect exclusion? If the Sugar societies were included while not being federal, how does this affect exclusion?”

The Court went on to say that the modification was arbitrary. The Court summed up its findings:

  • A reasonable or in the public interest goal is not disclosed in the amendment. Moreover, the change is arbitrary.
  • The State’s distinction has no bearing on the goal. As a result of administrative need and cost-cutting, the federal and primary societies were separated in this instance. Thus, categorization has ceased to exist;

However, the Court may inquire at the purpose of the law.

Chapter XI-A of the Act and the Rules, 1982 requires all designated societies to constitute one class/one homogenous group. So the writ petitions were accepted.

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