Sanchayita Lahkar

The High Court of Kerala, Division Bench of Justice Amit Rawal and Justice K. V. Jayakumar, in a significant judgment, upheld the constitutional validity of the amendment to the Kerala Co-operative Societies Act, 1969, which imposes a three-consecutive-term limit on the eligibility of members to be elected to the committees of credit societies. The Court, setting aside the order of a Single Bench that had struck down the provision, held that the right to contest an election is not a fundamental right but a statutory right, subject to limitations imposed by the legislature. The Division Bench stated that the amendment, introduced as Section 28(2A) of the Act, is neither arbitrary nor discriminatory and serves the public interest by preventing the development of vested interests and promoting healthy democratic practices within co-operative societies. The court found that the restriction is a reasonable measure to curb financial irregularities and ensure the sound functioning of credit societies, which handle significant public funds. Consequently, the court allowed all thirty-three intra-court appeals filed by the State of Kerala, thereby reinstating the three-term limit for committee members in specified credit co-operative societies across the state.

The legal challenge arose from a batch of writ petitions filed before the High Court of Kerala, questioning the constitutional validity of various amendments introduced to the Kerala Co-operative Societies Act, 1969, through the Kerala Co-operative Societies (Amendment) Act, 2024 (Act 9 of 2024). The petitioners, representing various co-operative societies and their members, contested the amendments made to several sections, including 14AA, 28(2A), 32, 33, 34A, 56, and 57E. The Single Bench of the High Court, in its judgment dated October 30, 2024, upheld most of the amendments but struck down Section 28(2A) as unconstitutional. This specific provision introduced a disqualification, stating that “no member of the Committee of a society 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.” The explanation to the sub-section clarified that this restriction was applicable only to “credit societies,” a term defined to include a wide range of institutions such as the Kerala State Co-operative Bank, Primary Agricultural Credit Societies, Service Co-operative Banks, Urban Co-operative Banks, and others involved in financial activities.

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The State of Kerala, aggrieved by the Single Bench's decision to strike down Section 28(2A), filed thirty-three intra-court appeals before a Division Bench of the High Court. The primary contention of the State, represented by the Advocate General, was that the term limit was a necessary legislative measure to curb the development of vested interests within the management of credit societies, which had, in numerous instances, led to financial mismanagement, corruption, and large-scale irregularities. The State argued that the amendment was a reasonable restriction enacted in the public interest, aimed at promoting transparency and accountability in institutions that handle substantial public funds. It was submitted that the right to contest an election is a statutory right, not a fundamental right, and can therefore be regulated by the legislature. The State further contended that the classification of “credit societies” for the purpose of this restriction was based on an intelligible differentia, as these societies are primarily engaged in financial transactions and are more susceptible to risks of misappropriation and fraud.

On the other hand, the respondents (original writ petitioners), represented by senior counsel, defended the Single Bench's judgment. They argued that the amendment was arbitrary, discriminatory, and violated the constitutional principles of democratic control and autonomous functioning of co-operative societies, as enshrined in Articles 19(1)(c), 43B, and Part IX-B of the Constitution of India, introduced by the 97th Amendment. The respondents asserted that the restriction on the number of terms a member could serve interfered with the fundamental right of the members of a society to elect their own representatives. They contended that there was no rational basis for singling out credit societies for such a restriction while leaving other types of co-operative societies untouched. It was also argued that experienced members of the managing committee were an asset to the society and that imposing a term limit would deprive the institutions of their valuable expertise. The respondents relied on the principle that the general body of a society is the supreme authority and should be free to decide whom to elect without any legislative interference.

The core of the dispute before the Division Bench was whether the legislature had the power to impose such a restriction on the right to contest elections in co-operative societies and whether the said restriction was reasonable and in consonance with the constitutional framework governing co-operatives. The case involved a detailed examination of the scope of legislative power in regulating co-operative societies, the nature of the right to contest elections, and the balance between ensuring the autonomous functioning of these institutions and the State's duty to protect public interest and prevent financial malpractices. The Division Bench was tasked with adjudicating upon the delicate interplay between the principles of democratic governance in co-operatives and the regulatory oversight of the State.

The Division Bench of the High Court of Kerala made several critical observations while analysing the constitutional validity of Section 28(2A) of the Kerala Co-operative Societies Act. The court began by addressing the nature of the right to contest an election, stating that it is not a fundamental right but a statutory one. The bench recorded, "Right to contest an election is neither a fundamental right nor a common law right. It is a right conferred by a Statute. At the most, in view of Part IX having been added in the Constitution, a right to contest election for an office in Panchayat may be said to be a constitutional right — a right originating in Constitution and given shape by statute. But even so it cannot be equated with a fundamental right." The court further elaborated on this point by citing established legal precedent: "A right to elect, fundamental though it is to democracy, is, anomalously enough, neither a fundamental right nor a Common Law Right. It is pure and simple, a statutory right. So is the right to be elected. So is the right to dispute an election. Outside of statute, there is no right to elect, no right to be elected and no right to dispute an election. Statutory creations they are, and therefore, subject to statutory limitation."

The court then delved into the rationale behind the legislative amendment, noting the significant public interest involved in the functioning of credit societies. It was observed that these institutions handle large sums of public money, and there had been numerous instances of financial irregularities linked to long-serving committee members. The court stated, "The credit Societies in the State of Kerala as mentioned above are dealing with collecting the money from the depositors and also extending the facility of loan to the needy persons... There has been a spate of litigation at the instance of the depositors seeking return of their money on maturity of the fixed deposits... various criminal cases have been registered against the erstwhile members who had been holding the coveted positions in the Society for numerous years having been elected in each and every election and indulging into disbursement of the loan without complying with the statutory provisions or violating the bye-laws of the Society resulting into initiation of surcharge proceedings."

The court found the legislative intent behind the term limit to be sound and aimed at preventing the development of vested interests. The judgment recorded, "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." The court dismissed the argument that the amendment was an arbitrary interference with the autonomous functioning of co-operative societies. It observed that the power of the legislature to regulate elections is well-established and that the provision was a reasonable restriction. The court noted that Article 243-ZK of the Constitution itself empowers the state legislature to provide for the procedure and guidelines for the conduct of elections.

Addressing the argument of discrimination, the court found the classification of "credit societies" to be reasonable and based on an intelligible differentia. The court stated, "We cannot remain unmindful of the fact that the credit Societies are dealing with the money matters with the members... The practice of the person holding the same post in the managing committee for a longer period has in the past adversely affected the working of the Society. It is in that background, a reasonable restriction disqualifying the members from contesting the election who have been elected member of Society for more than three years." The court also distinguished the present case from precedents where legislative actions were struck down for being discriminatory, noting that the amendment in question was a measure to ensure purity in the administration of financial institutions.

The court explicitly rejected the Single Bench's reasoning that the amendment violated the autonomous character of the societies. The Division Bench recorded, "The whole focus had been only on the autonomy of the Society. Meaning thereby, the Society, in view of the autonomy granted will be like a plant ‘touch me not’ which is not the main purpose and object of the introduction of amendment of the constitution of India." The court concluded that the restriction was a matter of legislative policy aimed at achieving a laudable objective, and it was not for the courts to sit in judgment over the wisdom of that policy.

The High Court of Kerala, in its final judgment, set aside the findings of the learned Single Judge concerning the constitutional validity of Section 28(2A) of the Kerala Co-operative Societies Act, 1969. The court found the amendment, which restricts a member from being elected to the committee of a credit society for more than three consecutive terms, to be constitutionally valid and a reasonable exercise of legislative power.

The court directed that the restriction imposed by Section 28(2A) is not arbitrary, discriminatory, or violative of the constitutional principles of democratic control and autonomous functioning of co-operative societies.

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The court further directed that the classification of "credit societies" for the application of this term limit is based on an intelligible differentia and has a rational nexus with the objective sought to be achieved, which is to ensure the financial integrity and sound management of these institutions.

The final directive of the court was to allow all thirty-three writ appeals preferred by the State of Kerala. The court concluded its judgment by stating, "As an upshot of findings, we set aside the findings of the learned Single Judge from paragraphs 36 to 56 viz-a-viz striking down the provisions of Section 28(2A) of the Act. Consequently, all Writ appeals are allowed."

Advocates Representing the Parties:

For the Appellants (State of Kerala): Sri. K. Gopalakrishna Kurup (Advocate General), Sri. T.K. Vipindas (Senior Government Pleader), Sri. P.P. Thajudeen (Special Government Pleader), Sri. N. Manoj Kumar (State Attorney), Sri. Imam Grigorious Karat (Government Pleader)

For the Respondents (Original Petitioners): Sri. George Poonthottam (Senior Advocate), Sri. C.M. Nazar, Sri. S.P. Aravindakshan Pillay, Smt. N. Santha, Sri. V. Varghese, Shri. Peter Jose Christo, Sri. S.A. Anand, Smt. Nisha George, Shri. Anshin K.K., Shri. Siby Chenappady, Smt. Anu George, Shri. Aibel Mathew Siby, Smt. Elana Rose Siby, Shri. George Varghese (Perumpallikuttiyil), Sri. Manu Srinath, Shri. Lijo John Thampy.

Case Title: State of Kerala v. Thomas Joe and connected cases

Neutral Citation: 2025: KER:38198

Case Number: WA NO. 12 OF 2025 and connected cases

Bench: Justice Amit Rawal, Justice K. V. Jayakumar

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