Himachal Pradesh HC quashes govt nominations to Solan Marketing Federation, orders fresh election

In a major setback to the Himachal Pradesh government, the High Court of Himachal Pradesh has quashed the nomination of three non-official directors to the Board of Directors of The Solan District Cooperative Marketing and Consumers Federation Ltd., on Thursday, ruling that the state cannot appoint nominees without a subsisting financial stake.

In a major setback to the Himachal Pradesh government, the High Court of Himachal Pradesh has quashed the nomination of three non-official directors to the Board of Directors of The Solan District Cooperative Marketing and Consumers Federation Ltd., on Thursday, ruling that the state cannot appoint nominees without a subsisting financial stake. A division bench comprising Justice Vivek Singh Thakur and Justice Ranjan Sharma allowed the writ petition filed by elected directors Sundram Thakur and another, setting aside the government notification dated March 16, 2026. The court also directed the Federation to conduct fresh elections for the posts of Chairman and other office bearers, if required, on or before October 31, 2026.

The dispute arose after the Department of Cooperation issued a notification nominating three private individuals as government directors under Section 35 of the HP Cooperative Societies Act, 1968. The elected directors challenged the move on the grounds that the state government had no share capital, active loan guarantees, or indirect financial assistance in the Federation as of the date of the notification. Defending its decision, the state government argued that it had historically contributed nearly 99% of the Federation's share capital between 1964 and 2014, provided substantial loans and subsidies under central schemes, and allocated land in Solan town. The state maintained that this historical financial backing and infrastructure assistance entitled it to maintain supervisory control through board nominees.

Rejecting the state's contentions, the bench clarified that under Section 35 of the Act, the government's right to nominate directors is strictly contingent upon an active and existing financial commitment such as live share capital, active loan guarantees, or indirect assistance directly augmenting current share capital at the time the notification is issued. The court observed that since the Federation had fully redeemed the state's entire share capital of approximately ₹60 lakh by the 2023-24 financial year, the government's legal right to appoint board representatives had automatically ceased.

The bench further noted that administrative land transfers between government departments or central scheme funding through the National Cooperative Development Corporation (NCDC) do not constitute active state shareholding or direct state assistance. Declaring the March 16 notification null and void from its inception, the court ruled that all decisions or elections influenced by the participation or voting rights of the illegal nominees, including any election of office bearers, stand quashed. (ANI)