HP High Court Directs fresh election of chairman and office-bearers by October 31; decisions influenced by nominees set aside
Shimla:
The Himachal Pradesh High Court has quashed the state government’s nomination of three members to the Board of Directors of the Solan District Cooperative Marketing and Consumers Federation Ltd., holding that past shareholding and financial assistance do not confer an indefinite right to nominate representatives after the relevant statutory conditions cease to exist.
A Division Bench of Justice Vivek Singh Thakur and Justice Ranjan Sharma, in its October 8 judgment in CWP No. 4365 of 2026, declared the nominations illegal, null and void from the date of induction and set aside the Cooperation Department’s notification dated March 16, 2026.
The court also quashed federation decisions influenced by the nominated members’ opinions or voting rights, including the election of the chairman and other office-bearers. Fresh elections, wherever required, have been directed to be held by October 31, 2026.
The petition was filed by elected directors Sundram Thakur and another, challenging the appointment of three non-official government nominees under Section 35 of the Himachal Pradesh Cooperative Societies Act, 1968.
The state argued that it had contributed ₹59.68 lakh to the federation’s share capital between 1964-65 and 2014, accounting for nearly 99 per cent of the total share capital in the 2012-13 balance sheet. Although the shares were fully redeemed by the financial year 2023-24, the government contended that its historical investment, loans, subsidies and other assistance justified the nominations.
Rejecting the contention, the court held that the government’s right to nominate directors depends on the existence of the conditions prescribed under Section 35(1)(a) of the Act. Past shareholding alone cannot sustain that right after the government’s shares have been redeemed.
The Bench also found no documentary evidence establishing that the loans extended under the Integrated Cooperative Development Project (ICDP) were backed by a subsisting state government guarantee. It further held that the ICDP assistance, provided through the National Cooperative Development Corporation, could not by itself be treated as financial assistance from the state.
The government’s reliance on a 2024 land-transfer order was also rejected. The court found that the land had been transferred from one government department to another, with ownership remaining with the state, and had not been allotted to the federation in a manner that augmented its share capital.
The Bench concluded that, as on March 16, 2026, the state had no subsisting shareholding, qualifying indirect assistance in the formation or augmentation of share capital, or established continuing guarantee that could justify the nominations.
Allowing the petition, the court held that the statutory power to nominate government representatives cannot be exercised independently of the conditions prescribed by law.
