Karnataka High Court strikes down law that took away power of cooperative societies to recruit, transfer or hold disciplinary inquiry against their employees

The High Court of Karnataka has struck down Section 128-A of the Karnataka Cooperative Societies (KCS) Act of 1959, which was inserted through an amendment in 2023 empowering the registrar of cooperative societies to completely take away the right of a society to recruit, transfer or hold disciplinary inquiry against their employees.

The High Court of Karnataka has struck down Section 128-A of the Karnataka Cooperative Societies (KCS) Act of 1959, which was inserted through an amendment in 2023 empowering the registrar of cooperative societies to completely take away the right of a society to recruit, transfer or hold disciplinary inquiry against their employees.

Declaring the amended Section 128-A as unconstitutional, the court said, “The right to form a cooperative society, which is a fundamental right under Article 19(1)(c) [right to form associations or unions or cooperative societies] of the Constitution, within its fold includes right to recruit, transfer the employees of a cooperative society and to initiate disciplinary action against its employees.”

Justice Anant Ramanath Hegde delivered the verdict on August 8 while allowing the petitions filed by Uppinangadi Cooperative Agricultural Society Ltd. in Dakshina Kannada district and 45 other similar societies. The petitioners had questioned the constitutional validity of the amended Section 128-A.

Meanwhile, the court said the State is competent to impose reasonable restrictions on the fundamental right to form a cooperative society and even on matters relating to recruitment, transfer, and disciplinary action against the employees of a cooperative society. However, the court made it clear, the State cannot completely prohibit or take away the right of a cooperative society to recruit, transfer, and to initiate disciplinary action on its employees.

“The interpretation that the right to form a cooperative society is only confined to the formation and registration of a cooperative society and not beyond, will defeat the purpose of 97th amendment of the Constitution of India. Thus, the expression ‘democratic control’ [used in Article 43-B of the Constitution inserted through the 97th amendment] would also mean control over recruitment, transfer and disciplinary action,” the court said.