Co-operative bye-laws may validly prescribe participation-linked eligibility criteria distinct from statutory disqualifications.

The appellants, Chairpersons of five District Milk Producers’ Co-operative Unions in Rajasthan, challenged a Rajasthan High Court judgment that struck down certain bye-laws.

The District Milk Unions had framed Bye-law Nos. 20.1(2), 20.1(4), 20.2(7), and 20.2(9) under the Rajasthan Co-operative Societies Act, 2001 ("Act"), prescribing eligibility conditions for primary societies' representatives seeking to contest elections for the Unions' Board of Directors.

These conditions included audit classifications (Category A or B), operational continuity (not closed for >90 days), and minimum milk supply requirements (270 days and minimum quantity).

Certain primary societies (respondents) successfully challenged these bye-laws in writ proceedings, where the High Court declared them ultra vires the Act for imposing unauthorized disqualifications.

The appellants, who were not impleaded in the original writ petitions, filed this appeal claiming the judgment prejudiced their governance structures without a hearing.

The Court primarily applied the Rajasthan Co-operative Societies Act, 2001, specifically Section 8 and Schedule B (power to frame bye-laws for internal management), Section 28 (statutory disqualifications), Section 32 (conduct of elections according to bye-laws), and Section 58 (mandatory arbitration for election disputes).

It relied on Thalappalam Service Co-operative Bank Ltd. v. State of Kerala, establishing that co-operative societies are not "State" under Article 12.

It further applied the principles from Federal Bank Ltd. v. Sagar Thomas, holding that regulatory control does not render a private entity amenable to writ jurisdiction.

Regarding election rights, it relied on Jyoti Basu v. Debi Ghosal and K. Krishna Murthy v. Union of India, which clarify that the rights to vote and contest are purely statutory and subject to regulation.

Finally, the doctrine of actus curiae neminem gravabit and principles of natural justice from Dattatreya v. Mahaveer were applied regarding the non-joinder of affected parties.

The Court held the writ petitions were not maintainable because District Milk Unions are autonomous co-operative bodies, not "State" instrumentalities under Article 12, as they lack deep and pervasive State control.

Furthermore, Section 58(2)(c) of the Act provides a specialized, multi-tiered remedial framework for election disputes, which the respondents improperly bypassed.

On the merits, the Court found the High Court failed to distinguish between the "right to vote" (not restricted) and the "right to contest" (a statutory right that can be conditioned).

It determined that the bye-laws were not unauthorized "disqualifications" under Section 28, but "eligibility criteria" under Section 8 and Schedule B, designed to ensure that only active, functioning societies participate in the federal union's management.

The Court also noted a gross procedural error: the High Court struck down bye-laws in rem across all unions in the State without hearing the unions or their chairpersons, violating the principle of audi alteram partem.

It held that the impugned bye-laws are intra vires the Act, as they are traceable to the enabling powers under Section 8 read with Schedule B and do not trench upon the statutory disqualifications under Section 28.

The Court concluded that the High Court lacked jurisdiction under Article 226 and erred by conflating eligibility conditions with disqualifications while ignoring the mandatory statutory dispute-resolution mechanism.

The validity of Bye-law Nos. 20.1(2), 20.1(4), 20.2(7), and 20.2(9) was upheld.