Karnataka High Court | Photo credit:
Noting that “numerous irregularities pervade the Karnataka Co-operative Societies (KCS) Act, 1959 and the KCS Rules, 1960”, the Karnataka High Court said there was an immediate need to overhaul the Act, which over the decades had become “a jumble of partial amendments to the modern socio-economic environment and is no longer responsive”.
Pointing out that disputes relating to membership, disqualification, eligibility to vote, appointment of trustees and surcharge proceedings repeatedly require judicial intervention in a large number of lawsuits to harmonize the conflicting provisions of the KCS Act and the Rules, the court said that the repeated litigation indicates a systemic flaw in the legislative framework itself.
Justice Suraj Govindaraj made these observations while dealing with the electoral roll and other issues related to the holding of elections to the Idagundi Multipurpose Primary Rural Agricultural Cooperative Society in Yellapur taluk of Uttara Kannada district.
“Reconciliation Impossible”
“Courts have tried to apply the principle of harmonious construction in resolving problems under this Act, but where reconciliation itself becomes impossible, legislative reform is the only viable solution,” the court said.
“Therefore, I am of the view that there is an urgent need for a comprehensive revision of the law. Like the Income Tax Act, 1961, it is being replaced by the Income Tax Act, 2025… the IT Act, 1961, which has been amended more than 65 times in six decades, has become too complex,” Justice Govindaraj observed.
As the new IT Act, which largely preserves the existing tax principles, aims to simplify the text and remove redundant provisions to reduce litigation and facilitate compliance for taxpayers, a new, consolidated KCS Act for Karnataka is needed to replace the current legislation, the court pointed out.
“Just as the Companies Act was comprehensively revised to meet current requirements, a modernized Cooperative Act must be created to ensure efficiency, transparency and compliance with the constitutional principles of cooperative autonomy. Without such reform, cooperatives will remain embroiled in unproductive litigation that suppresses their true purpose of empowering members economically and socially,” the court said.
Many areas of conflict
The areas of conflict in the Act and KCS Rules are diverse, such as membership rights and disqualification, preparation of electoral rolls, conduct of elections, appointment of trustees, jurisdictional overlaps, surcharge proceedings and audit duties, the court said, pointing out that many provisions have been stripped of technological and socio-economic changes.
The court also asked the Karnataka State Law Commission to investigate the matter and take appropriate action.
Published – 24 Oct 2025 19:56 IST
