BENGALURU: In a major setback to the state government, the High Court of Karnataka has struck down Section 128-A of the Karnataka Cooperative Societies Act 1959, which empowers the registrar of cooperative societies to take away the rights of a cooperative society to recruit, transfer and initiate disciplinary action against its employees.
Terming Section 128-A ultra vires, Justice Anant Ramanath Hegde passed the order while allowing a batch of petitions filed by several cooperative institutions against the provision introduced by the state government on July 27, 2023.
The court said though the state is competent to impose reasonable restrictions on the fundamental right to form a cooperative society, including recruitment, transfer, and disciplinary action, it cannot prohibit or take away the rights of the cooperative society through the provision.
Advocate general K Shashikiran Shetty contended that the registrar framed rules only to regulate the recruitment of CEOs of co-operative societies and not the rest of the employees. Thus, the registrar made applicable Section 128-A, concerning recruitment, transfer and disciplinary action against CEOs. Hence, the restrictions are reasonable and there is no violation of the fundamental right and interference in the autonomous functioning of the cooperative society.
The court, however, did not consider his argument. It said the contention of the state government that money from its welfare schemes to beneficiaries are routed through primary cooperative societies is not a ground to take away the power of the cooperative society to recruit employees. At the end of the day, the cooperative society is nothing but a self-help group, which has protection under Article 19(1)(c). The provision in question runs directly contrary to Article 43-B. Hence, it cannot be said to be proportional, reasonable, or rational, the court said.