The Karnataka High Court has strongly recommended a comprehensive revamp of the Karnataka Cooperative Societies (KCS) Act, 1959, and the KCS Rules, 1960, describing them as outdated, inconsistent, and ill-suited to the needs of a modern cooperative sector.
Justice Suraj Govindaraj, while dealing with a case involving voter lists and election disputes in the Idagundi multipurpose rural agricultural cooperative society in Uttara Kannada district, observed that “numerous incongruities pervade the law.”
He said the existing Act has become a “patchwork of piecemeal amendments introduced over the decades, leading to widespread confusion and litigation.
The court highlighted that issues such as membership eligibility, disqualification, voter rights, appointment of administrators, and surcharge proceedings have repeatedly required judicial interpretation, exposing a systemic defect in the legislative framework.
Despite courts’ efforts to reconcile contradictions through “harmonious construction,” Justice Govindaraj said reconciliation itself has now become “impossible,” leaving legislative reform as the only viable solution.
Drawing a comparison with the replacement of the Income Tax Act, 1961, by the forthcoming Income Tax Act, 2025, the judge noted that similar simplification and consolidation were needed for the cooperative law.
“Just as the new Income-Tax Act aims to reduce litigation, remove redundancy, and make compliance easier, the KCS Act too requires restructuring to ensure clarity and consistency,” he stated.
Justice Govindaraj further said that the cooperative sector plays a vital role in empowering rural communities, but its effectiveness is being undermined by ambiguous laws and outdated procedures. He cited examples where overlapping jurisdictions and obsolete provisions have caused prolonged disputes and hindered elections, governance, and audits in cooperatives.
Emphasising the need for modernization, he said the new law must ensure efficiency, transparency, and alignment with constitutional principles of cooperative autonomy Without reform, he warned, the sector would remain “entangled in unproductive litigation,” defeating its purpose of member empowerment.
The court has requested the Karnataka State Law Commission to examine the issue and take appropriate steps toward drafting a new, consolidated cooperative statute suited to today’s socio-economic realities.