State can't take away right of co-operative society to initiate disciplinary action against employees: High Court

Bengaluru: The Karnataka High Court has held that the state cannot completely take away the right of a co-operative society to recruit, transfer, and to initiate disciplinary action against its employees. The court said this while striking down as unconstitutional the amendment to section 128-A of the Karnataka Co-operative Societies Act, 1959, introduced in 2023.

Uppinangadi Co-operative Agricultural Society, Dakshina Kannada district and other primary Co-operative societies and its office bearers had challenged the amendment. The petitioners contended that the provision has conferred unguided power on the Registrar to frame Regulations, curtailing the right of a co-operative society to recruit, transfer and disciplinary action of any class of employees.

Justice Anant Ramanath Hegde said that fundamental right under Article 19(1)(c) of the constitution to form a co-operative society within its fold includes the right to recruit, transfer the employees of a co-operative society and to initiate disciplinary action against its employees. The court further said the state is competent to impose reasonable restrictions. “However, the State cannot completely prohibit or take away the right of a co-operative society to recruit, transfer, and to initiate disciplinary action on its employees,” the court said.

The state had argued that the autonomous functioning cannot be construed to hold that the state has no control over matters like recruitment, transfer, or a matter concerning disciplinary action. The counsel for the Federal Societies, who were interveners in the petition, argued that the right to form a co-operative society is very much intact and the restrictions sought to be imposed will not come in the way of the co-operative society carrying out its business.

However, the court noted that Article 43-B, which was simultaneously introduced by way of the 97th constitutional amendment, is a pointer to the nature of fundamental right guaranteed in Article 19(1)(c). “Article 43-B of the Constitution of India imposes an obligation on the State to endeavor to promote voluntary formation, autonomous functioning, democratic control, and professional management of co-operative societies. It also goes without saying that the four components envisaged in Article 43-B are supplemental to each other and aim at promoting and strengthening the Co-operative Sector. And one of the ways to achieve it is to ensure less Government control,” Justice Anant Ramanath Hegde said.

The court further said that vast unguided powers conferred on the Registrar of co-operative societies by way of amendment encroach upon the rights of the members of the co-operative society. “This Court is of the view that the power to recruit, transfer, and disciplinary action is fundamental in character in running the cooperative society cannot be taken away by the State and such power cannot be conferred on a third party (Federal Society) which has no role in the formation of a co-operative society.”