On October 18, 2022, the Supreme Court held that only multi-state cooperative societies as well as cooperative societies located in union territories would be subject to the Constitution (97th Amendment) Act, 2011, which was passed in 2011, whereas local cooperative societies are exempted from this act.

The Court was hearing the appeal in the case Bengal Secretariat Cooperative Land Mortgage Bank and Housing Society Ltd vs Aloke Kumar, where the appeal was filed against the Calcutta High Court's ruling that a member's request for the execution of an arbitral award against the cooperative society's decision to demolish and rebuild its administrative office building.

The Court allowed the society's appeal, inter alia, observing that the decisions of the General Body regarding the demolition of the building have not been challenged. Hence, respondent no. 1, being a member of society, is bound by the decisions.

The bench comprising Chief Justice of India UU Lalit, Justice S Ravindra Bhat and Justice JB Pardiwala further noted that "The General Body of the Appellant Society has approved the terms and conditions of the development agreement by an overwhelming majority. Relying on the fact that the terms and conditions of the development agreement are not acceptable to the Respondent No. 1, who could be said to be in the minuscule minority cannot be the basis of not to abide by the decision of the overwhelming majority of the General Body of the Appellant Society."

The Court also stated that the provisions relating to Part IXB in the light of the 2021 Supreme Court judgment that "Thus, the Constitution (97th Amendment) Act, 2011 would not be applicable to the local co-operative societies, whereas the same would be applicable to the multi-State co-operative societies and the societies within the Union territories."

 The judgment authored by Justice Pardiwala observed "By now it is well established position that once a person becomes a member of the Co-operative Society, he loses his individuality with the Society and he has no independent rights except those given to him by the statute and bye-laws. The member has to speak through the Society or rather the Society alone can act and speaks for him qua the rights and duties of the Society as a body."

Relying on numerous precedents, the Apex Court held that a society member has no autonomous right regarding the society and that the society alone is authorised to act as the corporate aggregate. The court ruled that "the stream cannot ascend higher than the source."

Case Details:

Bengal Secretariat Cooperative Land Mortgage Bank and Housing Society Ltd.

Vs

Aloke Kumar

S.L.P. (Civil) No. 506 of 2020

Read the complete judgment on the following link:-

https://main.sci.gov.in/supremecourt/2019/25060/25060_2019_1_302_39208_Judgement_18-Oct-2022.pdf