# Punjab & Haryana High Court: Cooperative Society Management Committee Cannot Act Arbitrarily

The Punjab and Haryana High Court has delivered an important ruling concerning the powers of management committees in cooperative societies. The Court has clarified that an officer working as a Managing Director (MD) of one cooperative institution cannot automatically be subjected to disciplinary control by the management committee of another cooperative institution.

The decision arose from a dispute concerning the Sonepat Cooperative Sugar Mill.

## Background of the Dispute

The case concerned Ashwani Kumar, who was serving as the Managing Director of the Sonepat Cooperative Sugar Mill.

A departmental action was initiated against him, ultimately resulting in an order of compulsory retirement dated July 25, 2025.

The allegations reportedly related to payments made during the expansion of the sugar mill despite objections raised by a technical consultant.

Ashwani Kumar challenged the action before the Punjab and Haryana High Court.

## Who Has the Power to Take Disciplinary Action?

One of the central issues before the Court was whether the management committee of the cooperative sugar mill had the legal authority to initiate disciplinary proceedings against its Managing Director.

The High Court examined the relevant records and found that there was no proposal of the management committee authorising the particular action against the petitioner.

The Court also noted the distinction between the Haryana State Cooperative Sugar Mills Federation and the Sonepat Cooperative Sugar Mill. The mere fact that both entities operate within the cooperative sugar sector does not automatically confer disciplinary jurisdiction upon one institution over an officer of another institution.

## Administrative Power Must Have a Legal Basis

The judgment reinforces a fundamental principle of administrative law:

An authority can exercise only those powers that are legally conferred upon it.

A management committee cannot assume disciplinary powers merely because it considers that action should be taken against an officer.

There must be a statutory, regulatory or otherwise legally recognised source of authority.

## Recommendation Is Not the Same as Disciplinary Authority

The Court observed that a sugar federation may be able to provide advice or recommendations, but that does not necessarily mean that it possesses the power to exercise disciplinary control over the Managing Director of an individual cooperative society.

This distinction is important.

An authority may have the power to recommend an action without having the power to actually impose that action.

## Cooperative Societies and Governance

Cooperative institutions operate through statutory frameworks, bye-laws and governing bodies. Their management committees must therefore function within the limits prescribed by the applicable legal framework.

Even where an officer’s conduct is alleged to have caused financial loss or administrative irregularities, the disciplinary process must be initiated and concluded by the competent authority.

## Court Sets Aside Compulsory Retirement

The High Court ultimately set aside the compulsory retirement order and directed that the petitioner be granted the consequential service benefits.

The decision highlights that disciplinary proceedings can be challenged where the authority initiating or imposing punishment lacks jurisdiction.

## Key Legal Takeaway

For employees and officers working in cooperative institutions, the case demonstrates the importance of examining:

– Who is the competent disciplinary authority?
– What do the applicable service rules provide?
– What do the cooperative society’s bye-laws state?
– Was the disciplinary action authorised by the competent body?
– Was there a valid resolution or proposal?
– Was the employee given an adequate opportunity of defence?
– Was the punishment imposed by an authority having jurisdiction?

A disciplinary order passed without proper jurisdiction can be vulnerable to judicial review.

## Conclusion

The Punjab and Haryana High Court’s ruling reinforces the principle that administrative power must flow from law.

A cooperative society’s management committee cannot exercise disciplinary powers merely because it considers such action appropriate. Before imposing a serious service consequence such as compulsory retirement, the authority must establish that it possesses the legal jurisdiction to do so.

For employees facing disciplinary action in cooperative institutions, identifying the **competent authority and source of disciplinary power** can therefore be a critical part of challenging an adverse order.