State Regulation Does Not Render Co-Operative Societies "State" Under Article 12 Of Constitution: Supreme Court Upholds Election Eligibility Bye-Laws

On the scope of judicial review, the Court clarified that internal electoral disputes of co-operative societies, in the absence of a public law element, are not amenable to writ jurisdiction under Article 226 of the Constitution of India, particularly where a comprehensive statutory dispute resolution mechanism exists. It further emphasised that eligibility criteria regulating candidature must be distinguished from statutory disqualifications, and that courts should refrain from interfering in such matters at the threshold.

Justice B.V. Nagarathna and Justice R. Mahadevan observed, “…the District Milk Unions are autonomous, member driven bodies governed by the provisions of the Act, 2001, the Rules framed 25 thereunder, and their bye-laws. They are neither departments of the State nor owned, financially controlled, or administratively dominated by the State in a manner that would render them instrumentalities of the State within the meaning of Article 12. The fact that such societies are subject to statutory regulation, oversight by the Registrar or supervision by the State Co-operative Election Authority does not detract from their essential character as independent co-operative institutions. Furthermore, the disputes raised pertain essentially to the internal governance and electoral framework of co-operative societies and do not disclose any breach of a statutory or public duty of a public law character”.

Senior Advocate Kapil Sibal appeared for the appellant and Shiv Mangal Sharma, A.A.G. appeared for the respondent.

The dispute originated from amendments to the bye-laws of various District Milk Producers' Co-operative Unions in Rajasthan, which introduced new eligibility hurdles for Primary Milk Union representatives.

Specifically, Bye-laws 20.1 and 20.2 required that a society must have a certain audit classification, must not have been closed for more than 90 days, and its representative must have supplied milk for at least 270 days to the Union to be eligible for election to the Board.

These conditions were aimed at ensuring that only productive and compliant societies participated in the governance of the three-tier dairy co-operative structure. Several Primary Milk Societies challenged these bye-laws through writ petitions in the Rajasthan High Court.

A Single Judge-Bench declared the bye-laws ultra vires the Rajasthan Co-operative Societies Act, 2001, viewing them as impermissible disqualifications beyond the statute. This view was subsequently affirmed by a Division Bench of the High Court.

The present appellants, who are Chairpersons of affected District Unions but were not parties to the original writ proceedings, sought leave to appeal to the Supreme Court, claiming the judgment prejudicially affected their governance.

The Court reasoned that there is a settled distinction between "disqualifications", which are punitive or disabling bars under Section 28 of the Act, and "eligibility conditions", which are positive qualifications for participation.

“…it is evident that the impugned bye-laws operate within the statutory scheme of the Act, 2001. They are traceable to the enabling power under Section 8 read with Schedule B and regulate eligibility and representation in a manner consistent with the object and scheme of the Act. The said bye-laws neither curtail any fundamental or statutory right nor do they introduce any disqualification dehors the statute. However, the High Court fell into manifest error in striking down the impugned bye-laws. The impugned judgment proceeds on a misapprehension of the statutory framework, an erroneous conflation of the right to vote with the distinct right to contest, and a failure to appreciate the settled distinction between eligibility conditions and disqualifications”, the Bench noted.

It held that Section 8 read with Schedule B of the Act, 2001, expressly empowers societies to frame bye-laws regarding the "representation" and "minimum utilisation of services". Since the impugned bye-laws applied uniformly and were linked to the functional objects of the dairy movement, promoting milk production, they could not be termed arbitrary.

“…the impugned judgment suffers from a clear jurisdictional and procedural infirmity. By invalidating bye-laws of societies that were not before the Court, the High Court effectively deprived them of an opportunity of hearing and unsettled their internal governance structures and affected their legal rights without due process…In entertaining the writ petitions and adjudicating upon the validity of the bye-laws, the High Court effectively bypassed the statutory dispute resolution mechanism and rendered the remedies under Sections 58 and 104-105 nugatory. Such an approach is contrary to the legislative scheme and undermines the discipline of exhausting statutory remedies”, the Bench further noted.

The Court further clarified the doctrinal distinction between the right to vote and the right to contest elections, holding that the latter is subject to eligibility conditions. It observed that the impugned bye-laws merely prescribe threshold criteria for candidature and do not impose disqualifications within the meaning of the statute.

“The High Court, however, proceeded on the erroneous premise that any condition affecting participation in elections must necessarily amount to a disqualification, and consequently tested the validity of the impugned bye-laws solely with reference to Section 28 of the Act. This approach overlooks the fundamental conceptual and statutory distinction between eligibility and disqualification. Section 28 cannot be read as exhaustively occupying the field of eligibility, nor can the absence of a particular condition therein render invalid an eligibility criterion prescribed elsewhere within the statutory framework”, it thus noted.

Accordingly, the Court allowed the appeal and set aside the judgments of both the Single Judge and the Division Bench of the Rajasthan High Court. The validity of the impugned bye-laws was upheld as being within the statutory competence of the co-operative societies. All pending applications were disposed of with no order as to costs.

Cause Title: Ram Chandra Choudhary & Ors. v. Roop Nagar Dugdh Utpadak Sahakari Samiti Limited and Others [Neutral Citation: 2026 INSC 347]

Appearances:

Appellant: Kapil Sibal, Sr. Adv., Purushottam Sharma Tripathi, AOR, Ravi Chandra Prakash, Amit, Vani Vyas, Prakhar Singh, Advocates.

Respondents: Shiv Mangal Sharma, A.A.G., Arushi Rathore, Nidhi Jaswal, AOR, Namit Saxena, AOR.

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