Supreme Court: In a batch of civil appeals raised an important question concerning the legal status of Sugarcane Growers Cooperative Societies at Bajpur and Gadarpur following the bifurcation of the State of Uttar Pradesh and creation of the State of Uttarakhand in terms of between the Uttar Pradesh Reorganisation Act, 2000 (UP Reorganisation Act) and the Multi-State Cooperative Societies Act, 2002 (Multi-State Cooperative Societies Act). The Division Bench of Pamidighantam Sri Narasimha and Alok Aradhe,* JJ., held that Sugarcane Growers Cooperative Societies at Bajpur and Gadarpur are not Multi-State Cooperative Societies under the Multi-State Cooperative Societies Act. The Court quashed the High Court judgment dated 14 March 2007 declaring Sugarcane Growers Cooperative Societies at Bajpur and Gadarpur multi-state societies.
Factual Matrix
The Sugarcane Growers Cooperative Society, Bajpur was originally registered under the U.P. Cooperative Societies Act, 1965 (UP Cooperative Societies Act), with its area of operation covering 96 villages in Bajpur and 34 villages in Suar, District Rampur in the erstwhile State of Uttar Pradesh. The Registrar of Cane Cooperative Societies superseded the managing committee of the society on 10 July 1998, after which the District Cane Officer assumed charge as administrator.
Subsequently, Parliament enacted the UP Reorganisation Act which created the State of Uttaranchal (now Uttarakhand) with effect from 9 November 2000. After bifurcation, the 34 villages including Suar fell within the territory of Uttar Pradesh, while the Bajpur villages fell within the newly created State of Uttaranchal. As a result, the society’s area of operation temporarily extended across two States.
In a meeting held on 8 February 2001 between officers of Uttar Pradesh and Uttaranchal, it was decided that societies which had acquired the status of multi-state cooperative societies due to bifurcation should hold general body meetings for reconstitution and submit proposals for reorganisation. Thereafter, the general body of the Bajpur society passed a resolution on 3 April 2001 for reorganisation of the society. Appropriate amendments were made to the bye-laws on 3 November 2001.
By order dated 14 May 2002, the Deputy Cane Commissioner directed the deletion of the 34 villages in Rampur district from the society’s area of operation, and those villages were included in another cooperative society in Uttar Pradesh. Consequently, the Bajpur society’s operations became restricted to the territory of Uttaranchal alone.
The dispute arose when respondent, a cane grower from village Suar, challenged the exclusion of his name from the membership list. The writ petition was dismissed by the High Court on the ground of availability of alternative remedy, after which he initiated arbitration before the Central Registrar under the Multi-State Cooperative Societies Act.
On 31 August 2004, the arbitrator held that by virtue of Section 103, Multi-State Cooperative Societies Act, the society had become a Multi-State Cooperative Society from 9 November 2000 and declared the reorganisation measures illegal.
Subsequently, election notifications issued by the Registrar of Cooperative Societies were challenged before the High Court. The High Court ultimately held that the society was a Multi-State Cooperative Society and directed that elections be conducted under the supervision of the Central Registrar of Multi-State Cooperative Societies.
Aggrieved by this judgment, the State authorities and members of the societies filed appeals before the Supreme Court.
Parties’ Contentions
The appellants contended that Section 103, Multi-State Cooperative Societies Act does not automatically confer the status of a Multi-State Cooperative Society merely because the parent State has undergone reorganisation. It was argued that the applicability of Section 103 requires a factual determination of the objects of the society, and that the societies in question had already been reorganised in accordance with the statutory framework of the Reorganisation Act. It was further submitted that both States had taken steps within the statutory transitional period to reorganise the societies, thereby confining their operations to a single State. It was therefore argued that once such reorganisation had taken place under the U.P. Reorganisation Act, the societies could not be treated as Multi-State Cooperative Societies under the 2002 Act.
On the other hand, the respondents contended that Section 103(1), Multi-State Cooperative Societies Act creates a legal fiction, under which a cooperative society whose operations extend across more than one State following reorganisation is deemed to be a Multi-State Cooperative Society. It was argued that since the societies’ areas of operation had extended across Uttar Pradesh and Uttarakhand after bifurcation, the societies automatically acquired multi-state status. it was contended that the subsequent amendments to the bye-laws and administrative actions reorganising the societies were illegal and contrary to the provisions of the Multi-State Cooperative Societies Act.
Moot Point
Whether Sugarcane Growers Cooperative Societies, Bajpur and Gadarpur, situated in Udham Singh Nagar, District of Uttarakhand could be treated as Multi-State Cooperative Societies by operation of Section 103, Multi-State Cooperative Societies Act, despite their prior reorganisation and confinement of their area of operations to a single State, under the statutory framework governing State reorganisation?
Court’s Analysis
At the outset, the Court examined the statutory scheme of the UP Reorganisation Act, particularly Section 87, which permits the adaptation and continuation of existing laws for a transitional period of two years after the creation of a new State. It observed that this provision embodies the doctrine of legislative continuity, ensuring that statutory regimes governing institutions remain operational until new arrangements are made.
The Court further emphasised that Section 93 of the UP Reorganisation Act contains a non-obstante clause, giving the Act overriding effect over inconsistent provisions contained in other laws.
With regards to the Multi-State Cooperative Societies Act, the Court observed the Act was enacted “to consolidate and amend the law relating to cooperative societies, with objects not confined to one State and serving the interests of members in more than one State, to facilitate the voluntary formation and democratic functioning of cooperatives as people’s institutions based on self-help and mutual aid and to enable them to promote their economic and social betterment and to provide functional autonomy.”
The Court analysed Section 103, Multi-State Cooperative Societies Act, which introduces a legal fiction whereby certain societies affected by State reorganisation may be treated as Multi-State Cooperative Societies. However, the Court emphasised on the established principle of statutory interpretation that a legal fiction must be strictly confined to the purpose for which it is created and cannot be extended beyond its legitimate field.
Accordingly, the Court held that the deeming provision cannot be interpreted in isolation so as to override the statutory scheme of the UP Reorganisation Act, which specifically governs the consequences of state bifurcation.
The Court relied on State of U.P. v. Milkiyat Singh, 2025 SCC OnLine SC 2802, which clarified that the deeming fiction under Section 103 is “neither automatic nor universal” and requires a determination of whether the objects of the society themselves extend to more than one State. A crucial distinction was drawn between the “objects” of the society and its “area of operation.” It was further stated that a mere geographical spread of activity or residence of members in different States does not satisfy this statutory requirement.
On examining the bye-laws of the societies, the Court found that their objects were confined to safeguarding and promoting the interests of local cane growers, and there was no intention to serve members across State boundaries. The Court therefore held that the statutory pre-conditions for invoking Section 103, Multi-State Cooperative Societies Act were absent. The societies had already been reorganised under the transitional mechanism of the Reorganisation Act, and such completed actions could not be invalidated retrospectively.
The Court further emphasised that provisions of two statutes must be harmoniously interpreted, and therefore the deeming fiction under the Multi-State Cooperative Societies cannot be used to invalidate completed actions undertaken under the UP Reorganisation Act.
“Section 103 of 2002 Act neither operates automatically nor could it retrospectively invalidate the completed actions undertaken under the Reorganisation Act.”
Court’s Decision
The Court held that the Sugarcane Growers Cooperative Societies at Bajpur and Gadarpur are not Multi-State Cooperative Societies under the Multi-State Cooperative Societies Act. The Court further held that:
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The reorganisation of the societies undertaken under the UP Reorganisation Act was valid.
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The deeming fiction in Section 103, Multi-State Co-operative Societies does not operate automatically and cannot override actions taken under the UP Reorganisation Act.
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Since the objects and area of operation of the societies are confined to a single State, they cannot be treated as Multi-State Cooperative Societies.
Accordingly, the Court quashed and set aside the High Court judgment dated 14 March 2007 and upheld the order dated 5 September 2006. It directed the authorities under the State cooperative law to conduct elections of the societies expeditiously.
[Registrar Cane Cooperative Societies v. Gurdeep Singh Narval, Civil Appeal Nos. 8743—8746 of 2013, decided on 10-3-2026]
*Judgment by Justice Alok Aradhe