Amendment to Gujarat act struck down


The Gujarat High Court, on 27 August 2021, in the case of Pravinsinh Indrasinh Mahida v State of Gujarat, struck down the Gujarat Co-operatives Societies (Amendment) Act, 2019, by ruling that the legislation was “unconstitutional, absurd, manifestly arbitrary and not in the public interest”, and was in violation of article 14 of the constitution.

The act revoked section 74C(1)(v) of the Gujarat Co-operative Societies Act, 1961, thereby removing sugar factories from the list of specified co-operative societies in the 1961 act.

As a result, no elections were required to be conducted by the state for the sugar factories. The amendment implied that elections would be conducted by the co-operative sugar factories themselves, and that no independent government officer would be appointed to oversee such elections.

A large number of writ petitions were filed with the Gujarat High Court against this exclusion of sugar factories, claiming that since the independent government officer (collector) would no longer be conducting the elections, they would thus be held in accordance with the whims of the respective co-operative societies.

The state defended the amendment, saying that it was necessary to reduce its expenses and administrative burdens. It also contended that the state government’s share capital in the sugar co-operative societies had been reduced to nil, and thus a public interest no longer existed. According to the state, sugar co-operative societies had therefore become federal co-operative societies.

Rejecting the contention of the state that the act did not violate article 14 of the constitution, the court held that:

“The argument canvassed on behalf of the state as well as the federation about the federal societies or primary societies or finance or administrative convenience has no nexus to the object, which is sought to be achieved. In fact, the argument of the state leads to a conflict between the object and differentia. The same is not permissible. The object cannot be their distinction between the federal societies or primary societies. The object and the differential are two different things and should [not] be compared. We are not at all impressed by the stance of the state, that as the sugar factories are not federal they have been now kept out of the purview of section 74C of the act.”

Further dismissing the argument that the sugar co-operative societies could be treated differently since they are not federal, the court observed:

“The voters are now being told by the state that they would be left with what the society decides. Why? Because yours is not a federal society. Even at the relevant point of time, the sugar societies were not federal. So, how would that be relevant for the purpose of exclusion? In other words, if the sugar societies were included despite the fact of not being federal, then how is it relevant for the purpose of exclusion?”

The court therefore proceeded to hold that the act failed to disclose an object that could be termed as reasonable or in the public interest, and that it had no nexus with the object sought to be achieved. It added that the classification in the case between the federal and primary societies on the grounds of administrative exigency and saving money was absurd. Although the court was not permitted to look into the motives of the legislature, the object of the legislation could certainly be examined.

The court concluded that all the specified societies form one class and one homogeneous group from the point of view of its members, so as to ensure the holding of free and fair elections in accordance with chapter XI of the 1961 act and its rules.

The dispute digest is compiled by Numen Law Offices, a multidisciplinary law firm based in New Delhi & Mumbai.

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