Section 103 Applies Only If Society’s Objects Span More Than One State, Supreme Court Rules

A Bench of Justices Vikram Nath and Sandeep Mehta heard appeals by the State of Uttar Pradesh challenging a Division Bench judgment of the Allahabad High Court that had held certain cooperative sugar factories to have become multi‑State cooperative societies consequent to the Uttar Pradesh Reorganisation Act, 2000. The appeals raised the narrow question whether Section 103 of the Multi‑State Cooperative Societies Act, 2002 effected a deemed conversion of societies originally registered under a State law merely by reason of State reorganisation.

The Court allowed the appeals, set aside the High Court judgment dated 26 September 2008 and dismissed the writ petitions. It held that Section 103 did not operate automatically upon reorganisation in every case; the provision applied only where the objects of the society extended to more than one State as reflected in its bye‑laws. The Court emphasised that the residence or domicile of members was "irrelevant for determining whether a cooperative society attains the status of a multi‑State cooperative society." The Court, in its reasoning, observed: “Accordingly, Section 103 of the Central Act would operate only where the objects of the society extend to more than one State. A conjoint reading of Section 103 and Section 5 of the Central Act makes it abundantly clear that the domicile or residence of the members is irrelevant for determining whether a cooperative society attains the status of a multi‑State cooperative society.” The Court further noted that "Section 103 ... does not, by itself, confer an automatic or deemed status of a multi‑State cooperative society upon every society registered under a State Cooperative Societies Act."

Background The dispute concerned Kisan Cooperative Sugar Factory Ltd., registered originally under the Uttar Pradesh Cooperative Societies Act and located in Pilibhit, Uttar Pradesh. After the State was bifurcated in 2000 and Uttarakhand (then Uttaranchal) was created, questions arose whether certain cooperative societies whose members or cane suppliers became residents of the new State had, by operation of Section 103 of the 2002 Central Act, acquired the character of multi‑State societies and thereby fallen exclusively under central jurisdiction. The State of Uttar Pradesh took administrative steps, including an amendment ordinance in 2007, to privatise several unviable cooperative sugar mills. Shareholders and members filed writ petitions in the Allahabad High Court, contending that Section 103 applied because the societies’ operations or membership now involved two States. The High Court accepted that view and declared the State's actions non est in law for lack of competence.

On appeal, the Supreme Court analysed the scheme of the Multi‑State Cooperative Societies Act, 2002—particularly Sections 5, 10, 22 and 103—and distinguished between a society’s "objects" and its "area of operation." The Court explained that registration as a multi‑State cooperative society required that its principal objects be to serve members in more than one State and that conversion under Section 22 required amendment of bye‑laws and Central Registrar registration. The Court found that the High Court had not examined the bye‑laws or the objects of the society on the merits; the State’s pleaded position that the objects remained confined to a single State stood unchallenged in the record. Applying the statutory scheme, the Court concluded that Section 103 could not be read to effect an ipso jure conversion where the objects did not extend beyond one State. The appeals were therefore allowed and the writ petitions dismissed.

Case Details: Case No.: Civil Appeal Nos. 7050‑7051 of 2010 (2025 INSC 1427) Case Title: The State of Uttar Pradesh through Principal Secretary & Ors. v. Milkiyat Singh & Ors. etc. Appearances: For the Petitioner(s): Shri Rana Mukherjee, Senior Counsel (for the State of Uttar Pradesh) For the Respondent(s): No appearance at hearing; counter‑affidavit filed on behalf of respondents (dated 13 August 2010)