Amendments to Gujarat Cooperative Societies act upheld
by Gujarat High Court
The Gujarat High Court has upheld the constitutional validity of certain amendments to
the Gujarat Co-operative Societies Act.
The Gujarat Cooperative Societies Act, 1961 was amended through Gujarat Cooperative
Societies (Amendment) Act, 2008, to give effect to the reforms envisaged under the
Package in respect of all entities which are part of the CCS. The amendments, among
others, provided for autonomy to CCS in all financial and internal administrative matters,
allowed freedom to any cooperative in the CCS to affiliate or disaffiliate with a federal
structure of its choice and provided for appointment of the CEOs of the CCBs/SCB as
per ‘Fit & Proper’ Criteria and co-option of professionals on the Board of the SCB or a
CCB with full voting rights as stipulated by the RBI.
The constitutional validity of the amendments, especially those relating to freedom of
affiliation/disaffiliation and implementation of Fit & Proper criteria in the boards of
SCB/CCBs were challenged at the HC by certain co-operative banks.
Dismissing the petitions, a division bench comprising Chief Justice S J Mukhopadhaya
and Justice A S Dave observed that with the new amendments, “...the monopoly of the
federal society, namely the Gujarat State Co-operative Bank, now stands curtailed and
the member — cooperative societies — has wide choice to avail benefit without any
restriction like payment of higher interest for taking loan and will now not be deprived of
loan on the ground that the federal society has no money”.
The court also held that the amendments were based on the recommendations of a task
force, which was based on the report of the Vaidyanathan Committee. And such
amendments cannot be called bad on mere presumptions that it would violate the rights
of the petitioners, it added.
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