Objects vs Area of Operation: Supreme Court Narrows Deemed Conversion to Multi-State Cooperative Societies under Section 103, Multi-State Cooperative Societies Act, 2002

I. Introduction

The Supreme Court of India’s decision in The State of Uttar Pradesh through Principal Secretary & Ors. v. Milkiyat Singh & Ors., 2025 INSC 1427, addresses an important and recurring question in cooperative law:

Does the mere reorganisation of a State automatically transform a cooperative society registered under a State Act into a “multi-State cooperative society” governed by the Multi-State Cooperative Societies Act, 2002 (the “Central Act”)?

The case arose from the bifurcation of the erstwhile State of Uttar Pradesh into Uttar Pradesh and Uttarakhand in 2000, and from later attempts by the State of Uttar Pradesh to privatise certain cooperative sugar mills. Some shareholders challenged these steps, contending that by virtue of Section 103 of the Central Act (a deeming provision triggered by State reorganisation), the concerned cooperative society had become a multi-State cooperative society. If that were correct, regulatory competence would shift from the State Government/State Registrar under the U.P. Cooperative Societies Act (“State Act”) to the Union Government/Central Registrar under the Central Act, rendering the State’s privatisation measures ultra vires.

The Supreme Court, speaking through Vikram Nath J. (Sandeep Mehta J. concurring), decisively rejected this broad reading. It held that:

State reorganisation does not automatically convert every pre-existing State cooperative society into a multi-State cooperative society.
The “objects” of the society (as reflected in its bye-laws), and not merely its “area of operation” or the residences of its members, determine whether Section 103 applies.
On the facts, the cooperative sugar factory at Majhola, Pilibhit, remained a State cooperative society governed by U.P. law, and the State Government retained competence to act regarding its restructuring and privatisation.

The judgment thus clarifies the doctrinal limits of Section 103’s “deemed conversion” and draws a sharp line between:

Cooperatives whose objects genuinely span more than one State; and
Those whose operations or membership may incidentally touch more than one State, but whose objects remain confined to a single State.

II. Factual Background

1. The Cooperative Sugar Factory

The dispute centred on Kisan Cooperative Sugar Factory Limited, having its registered office at Majhola, District Pilibhit, Uttar Pradesh. It was:

Originally registered under the Cooperative Societies Act, 1912 (a Central enactment), and
Subsequently governed by the U.P. Cooperative Societies Act, 1965 (“State Act”) when that Act repealed and replaced the 1912 Act within Uttar Pradesh.

The private respondents (writ petitioners before the High Court) were shareholders of the society.

2. State Reorganisation & Central Cooperative Law

In 2000, Parliament enacted the U.P. State Reorganisation Act, 2000, bifurcating the erstwhile State into:
- The present State of Uttar Pradesh; and
- The newly created State of Uttarakhand.
At that time, the field of multi-State cooperatives was governed by the Multi-State Cooperative Societies Act, 1984. In 2002, Parliament enacted the Multi-State Cooperative Societies Act, 2002, repealing the 1984 Act and consolidating law relating to cooperatives whose operations are not confined to one State.
The 2002 Act contains a transitional deeming provision, Section 103, dealing with cooperative societies affected by State reorganisation.

3. Policy Decisions on Cooperative Sugar Mills

After the State’s bifurcation:

A joint meeting of officials from Uttar Pradesh and Uttarakhand was held on 24 May 2006 to settle apportionment of assets and liabilities of public sector undertakings and cooperative institutions.
- It was agreed that no outstanding financial claims would subsist between the two States in respect of shareholdings in cane/sugar mill societies, because the book value of such shares had become nil or negative.
- This indicated that Uttarakhand was not asserting control or financial interest in these sugar mills.
The appellant-State (U.P.) thereafter adopted a policy to restructure and privatise financially unviable cooperative sugar mills, to be executed through the Department of Disinvestment.
On 7 August 2007, the State promulgated the U.P. Cooperative Societies (Amendment) Ordinance, 2007 (No. 21 of 2007), empowering the State Government to transfer unviable cooperative sugar mills to entities in which the State held a majority shareholding.
The State of U.P. held and continued to hold about 95% of the shares in the subject cooperative society.

4. High Court Writ Petitions

Two writ petitions were filed before the Allahabad High Court under Article 226:

W.P. No. 61489 of 2007: Filed by four individuals (one being a member/shareholder of the Kisan Cooperative Sugar Factory) challenging the State’s move to privatise the cooperative sugar mill.
W.P. No. 18556 of 2008: Filed by Mumtaz Ali, a shareholder of another cooperative sugar mill, raising similar grounds against privatisation.

The writ petitioners contended in essence:

On and after State reorganisation, Section 103 of the Central Act applied, and the cooperative society became a multi-State cooperative society by legal fiction.
Consequently, the State of U.P. lacked legislative and executive competence to make laws or take decisions regarding such societies.

The State, inter alia, objected to:

The locus standi of the shareholders to challenge the policy; and
The contention that Section 103 of the Central Act applied at all.

5. High Court’s Decision

By a common judgment dated 26 September 2008, the Allahabad High Court:

Allowed both writ petitions.
Rejected the State’s objection to the locus standi of the shareholder-writ petitioners.
Held that:
- Section 103 of the 2002 Act, being a deeming provision, stood attracted.
- The cooperative societies in question had acquired the character of multi-State cooperative societies consequent to State reorganisation.
- Accordingly, only the Union Government could exercise authority over them.
Declared all steps taken by the State Government in relation to the societies as without jurisdiction and non est in law for want of legislative competence.

Aggrieved, the State of Uttar Pradesh appealed to the Supreme Court.

III. Issue Before the Supreme Court

The Supreme Court framed a single, focused issue:

Whether, by virtue of Section 103 of the Multi-State Cooperative Societies Act, 2002, the subject cooperative society, though originally registered under the statute enacted by the appellant-State, stands transformed into a multi-State cooperative society on account of the State reorganisation?

IV. Summary of the Supreme Court’s Judgment

1. Holding

The Supreme Court allowed the appeals and set aside the judgment of the Allahabad High Court. It held:

Section 103 of the Central Act does not automatically convert every State-registered cooperative society into a multi-State cooperative society upon State reorganisation.
The applicability of Section 103 turns on whether the objects of the society (as reflected in its bye-laws) extend to more than one State after reorganisation.
For the subject cooperative society, the objects remained confined to one State (Uttar Pradesh); only its “area of operation”, at best, might have overlapped with Uttarakhand.
“Area of operation” cannot be judicially substituted for “objects” in Section 103.
The residence or domicile of members, or procurement of raw material (sugarcane) from another State, is legally irrelevant to Section 103.
Accordingly, the society continued to be a State cooperative society governed by the U.P. Cooperative Societies Act, and the State’s steps towards its restructuring/privatisation could not be invalidated for want of legislative competence.

2. Operative Conclusion (para 15)

The Court’s key conclusions can be distilled as follows:

No automatic multi-State status: Section 103 does not automatically bestow multi-State character on all societies upon State reorganisation.
Fact-specific inquiry: One must examine, in each case, whether the society’s objects span more than one State.
Objects vs area of operation: It is erroneous to look at “area of operation” when Section 103 itself refers only to “objects”.
Members’ residence irrelevant: Domicile or residence of members has no bearing on the society’s multi-State character.
Pre-condition for multi-State registration: Under Section 5, registration as a multi-State cooperative requires that the society’s principal objects, as per its bye-laws, serve members’ interests in more than one State.

The writ petitions before the High Court were therefore dismissed.

V. Detailed Analysis

A. Statutory Framework and Scheme of the Central Act

1. Purpose and Scope of the Multi-State Cooperative Societies Act, 2002

The long title of the MSCS Act, 2002 shows that Parliament intended to:

“Consolidate and amend the law relating to cooperative societies, with objects not confined to one State and serving the interests of members in more than one State”; and
Facilitate democratic functioning, self-help, and mutual aid for economic and social betterment, with functional autonomy.

The Act thus sits in India’s federal scheme as the central code for cooperatives whose objects transgress State boundaries. Local or intra-State cooperatives remain governed by State legislation (here, the U.P. Cooperative Societies Act).

2. Section 5 – Conditions for Registration as Multi-State Cooperative Society

Section 5(1) provides:

No multi-state cooperative society shall be registered under this Act, unless,
(a) its main objects are to serve the interests of members in more than one state; and
(b) its bye-laws provide for social and economic betterment of its members through self-help and mutual aid in accordance with the cooperative principles.

This provision is pivotal. The Court emphasises:

The threshold requirement is that the “main objects” must be to serve members’ interests in more than one State.
The statutory focus is on the object of the society, not on incidental or territorial aspects that may arise out of administrative convenience or commercial dealings.
Section 5 is couched in negative terms (“no…shall be registered unless…”), underscoring its mandatory nature.

3. Section 10 – Bye-laws: Distinguishing “Objects” from “Area of Operation”

Section 10(2) explicitly distinguishes among:

Section 10(2)(a): “name, address and area of operation”; and
Section 10(2)(b): “the objects of the society”.

This structural separation is crucial to the Court’s reasoning:

If the legislature had intended “area of operation” and “objects” to be synonymous, it would not have treated them as distinct heads for bye-law drafting.
When Section 103 later uses the expression “objects confined to one State”, that phrase must be read consistently with the same word used elsewhere in the Act—particularly Sections 5 and 10.

4. Section 22 – Voluntary Conversion of State Cooperatives into Multi-State Cooperatives

Section 22(1) states:

A cooperative society may, by an amendment of its bye-laws, extend its jurisdiction and convert itself into a multi-state cooperative society:
Provided that no such amendment of bye-laws of a cooperative society shall be valid unless it has been registered by the Central Registrar.

The Court draws two key inferences:

Parliament has expressly contemplated a voluntary and deliberate process by which a State cooperative society may choose to become a multi-State cooperative society by:
- Amending its bye-laws to expand its jurisdiction and objects; and
- Securing Central Registrar approval.
Section 22, therefore, recognises that not all State cooperatives falling within reorganised territory will automatically become multi-State cooperatives. If Section 103 were given an automatic, blanket operation divorced from objects, it would largely make Section 22 redundant for cooperative societies in reorganised States.

5. Three Modes of Becoming a Multi-State Cooperative

The Court identifies three distinct routes through which a cooperative can acquire multi-State status under the Central Act:

Direct registration under Section 5 as a multi-State cooperative society.
Voluntary conversion under Section 22 by amending its bye-laws and extending jurisdiction, with approval of the Central Registrar.
Deemed conversion under Section 103 when, due to State reorganisation, a society’s objects (not just operations) come to extend across more than one State.

The present case concerns only the third route.

B. Interpretation of Section 103 – Deemed Conversion on State Reorganisation

1. Text of Section 103(1)

The relevant portion of Section 103(1) reads:

Where, by virtue of the provisions of Part II of the States Reorganisation Act, 1956 or any other enactment relating to reorganisation of states, any cooperative society which, immediately before the day on which the reorganisation takes place, had its objects confined to one state becomes, as from that day, a multi-state cooperative society, it shall be deemed to be a multi-state cooperative society registered under the corresponding provisions of this Act…

Thus, the preconditions are:

There is a State reorganisation law (such as the U.P. Reorganisation Act, 2000); and
The cooperative society in question had its objects confined to one State prior to reorganisation.

The crux is this: What does it mean to say that the society “becomes, as from that day, a multi-State cooperative society”? Under what circumstances does that transformation occur?

2. High Court / Respondents’ View vs Supreme Court’s View

The writ petitioners and the High Court essentially treated State reorganisation as:

An automatic trigger: any cooperative society previously confined to the unified State would, upon the State’s bifurcation, be deemed to have become a multi-State cooperative society if its area of operation or activities now spanned both successor States.

The Supreme Court firmly rejected this broad understanding, stressing:

Section 103 must be read in conjunction with Section 5 and the overall scheme of the Act.
The expression “objects confined to one State” refers to the society’s objects as set out in its bye-laws, not to its “area of operation” or to de facto commercial activities.

3. Contextual Statutory Interpretation – Reliance on Southern Electricity

The Court refers to the three-Judge Bench decision in Southern Electricity Supply Co. of Orissa Ltd. v. Sri Seetaram Rice Mill, (2012) 2 SCC 108, which held that statutory words must be read:

In their context, and
In harmony with the scheme and purpose of the enactment,

and not in isolation to suit a particular factual scenario.

Applying this principle:

The term “objects” in Section 103 must be read consistently with its usage in Sections 5 and 10.
“More than one State” in Section 5 plainly relates to the objects of the society, not to the residence of its members or to its trading footprint.

4. Objects vs Area of Operation – Why the Distinction Matters

The Court treats the distinction as dispositive:

Section 10(2) expressly lists “area of operation” and “objects” as separate bye-law components.
Section 5 refers only to objects, not to area of operation.
Section 103 likewise refers only to “objects”.

Therefore:

Reading “area of operation” into Section 103 in place of “objects” would be a clear case of judicial legislation, impermissible under settled canons of interpretation.
The legal inquiry under Section 103 is not: “Does the society operate or procure in more than one State?” but rather: “Do the objects stated in the bye-laws extend to, and serve, more than one State?”

5. Residence of Members is Irrelevant

The Court also clarifies that:

“More than one State” in Section 5 pertains to the object of service and functional reach of the society.
The domicile or residence of members—who might have moved to another State due to reorganisation—is wholly irrelevant to determining the society’s multi-State character.

This is important for cooperatives where, due to State bifurcation, original members end up living in different States while still being members of the same society.

6. Fact-Specific Application of Section 103

The Court articulates a clear test:

Examine the bye-laws of the cooperative society, particularly the clauses setting out its objects.
Ask: After State reorganisation, do those objects extend to districts/areas that now lie in more than one State?
- If yes, Section 103 applies and the society is deemed a multi-State cooperative society from the date of reorganisation.
- If no (objects remain confined to one successor State), Section 103 does not apply, and the society continues under the State Act.

Thus, not every cooperative active at some level in a reorganised territory becomes multi-State by default.

C. Precedents Cited and Their Influence

1. Southern Electricity Supply Co. of Orissa Ltd. v. Sri Seetaram Rice Mill, (2012) 2 SCC 108

This case is cited as authority for a contextual approach to statutory interpretation. Its core propositions, as applied here, are:

Individual phrases or words in a statute should not be wrenched from context to generate outcomes inconsistent with the statute’s design.
Interpretation must strive to effectuate, not defeat, the purpose of the statute when read as a whole.

The Supreme Court uses this principle to:

Reject the High Court’s “plain reading” of Section 103 that ignored its link with Section 5 and the structural distinction in Section 10(2).
Reinforce that “objects” cannot be understood in isolation from the Act’s definitional and structural context.

2. Naresh Shankar Srivastava v. State of Uttar Pradesh, (2009) 16 SCC 157

Both sides invoked this earlier Supreme Court decision.

Respondents’ reliance: They argued that Naresh Shankar Srivastava had already “settled” that Section 103 (and its predecessor Section 95 of the 1984 Act) addresses the situation where, after reorganisation, a cooperative society whose activities were earlier confined to the undivided State now extends its objects to more than one State. Such a society, they said, becomes a multi-State cooperative by operation of law.
State’s response: The State submitted that Naresh Shankar Srivastava was distinguishable because the societies there were in fact found to be operating in both States, whereas here the sugar factory and its core operations remained confined to U.P.

In the present judgment:

The Court does not deny the principle that Section 103 (or Section 95 of the 1984 Act) can deem a State society to have become a multi-State society upon reorganisation.
Instead, it sharpens and narrows that principle by emphasising the central role of “objects” in the bye-laws, not merely factual activities or area of operation.

Effectively, the Court reads Naresh Shankar Srivastava as consistent with its own view, but confines its application to situations where:

On a proper reading of the bye-laws, the objects of the society post-reorganisation genuinely span two or more States.

The present decision thus operates as a clarifying gloss on Naresh Shankar Srivastava, forestalling its overextension.

D. Application to the Present Case

1. Respondents’ Key Assertions

The writ petitioners (now respondents) had advanced the following core points (mainly in their counter-affidavit):

Area of operation clause: Under Clause 3 of the society’s bye-laws, the “area of operation” covered:
- Tehsil Khatima in District Nainital, Uttarakhand; and
- Tehsil Pilibhit in Uttar Pradesh.
Cane procurement from Uttarakhand: During the crushing season 2005–06, nearly half of the sugarcane supplied to the mill was allegedly procured from cultivators in Uttarakhand.
Post-reorganisation residence of members: Some shareholders/members, including writ petitioners, now resided in Uttarakhand.
Inference drawn: Since the society’s “operations” spanned two States, Section 103’s deeming fiction applied, and the society had become a multi-State cooperative.

2. State’s Position

The State of Uttar Pradesh consistently maintained:

The society’s sugar manufacturing activities and the sugar mill itself were located entirely within Uttar Pradesh (Majhola, Pilibhit).
The objects of the society as per its bye-laws, even post-reorganisation, remained confined to Uttar Pradesh.
The High Court had conflated “area of operation” with “objects”, leading to an erroneous application of Section 103.
Neither under the 1984 Act nor under the 2002 Act had the Central Registrar for over 25 years issued any notice or taken steps for the society’s registration as a multi-State cooperative—indicating that no one had treated it as such in practice.

3. Evidence on “Objects” – Silence of Respondents

The Supreme Court draws a critical inference from the respondents’ pleadings:

The respondents repeatedly stressed the area-of-operation clause and operational facts (procurement from Uttarakhand, residence of members).
However, in their counter-affidavit before the Supreme Court, they did not take issue with the State’s assertion that the objects of the society were confined to one State.
They did not specifically plead or demonstrate that the objects clause in the bye-laws extended to both U.P. and Uttarakhand.

Since:

The High Court had not examined the objects clause at all, and
The respondents did not dispute the State’s assertion before the Supreme Court,

the Court proceeded on the basis that:

The objects of the society remained confined to a single State (Uttar Pradesh) even after reorganisation.

4. Conclusion on Status of the Society

Applying the legal framework:

Section 103 is attracted only where the objects (not merely the “area of operation”) extend to more than one State.
On the admitted or undisputed material, the objects of the Kisan Cooperative Sugar Factory did not extend to Uttarakhand.
Therefore, the society did not qualify as a multi-State cooperative society by operation of Section 103.

It remained a cooperative society governed by the U.P. Cooperative Societies Act, and the State’s measures for restructuring and privatisation fell within its legislative and executive domain.

E. Deeming Provisions and Absurd Results – General Principles

The State argued, and the Court implicitly accepted, certain general propositions about deeming clauses:

Deeming provisions (like Section 103) create a legal fiction to serve a particular legislative purpose.
Such fictions must be:
- Strictly construed; and
- Confined to the precise purpose for which they are enacted.
They cannot be given an “unduly expansive” interpretation that leads to absurd, irrational, or unworkable outcomes, or that conflicts with the rest of the statutory scheme (here, particularly Section 5 and Section 22).

In this case, interpreting Section 103 as automatically converting every cooperative in a reorganised State into a multi-State cooperative would:

Ignore the disciplined statutory focus on “objects” in Section 5, Section 10 and Section 103.
Undermine the voluntary conversion mechanism in Section 22.
Potentially upset the balance between Union and State competence by reading multi-State character into societies which are, in substance and structure, still local in object.

F. Impact and Future Significance

1. Immediate Impact on U.P. Cooperative Sugar Mills

For the parties:

The cooperative sugar mills in question, including Kisan Cooperative Sugar Factory, remain State cooperative societies.
The U.P. Government’s policy decisions and legislative measures (including the 2007 Ordinance) relating to their restructuring and privatisation cannot be struck down merely on the basis that the societies are allegedly multi-State cooperatives.
The Union Government and the Central Registrar have no exclusive regulatory control over these mills on the basis of Section 103.

2. Guidance for Reorganised States and Cooperative Institutions

The judgment provides a clear roadmap for similar disputes in other reorganised States, such as:

Bihar/Jharkhand,
Madhya Pradesh/Chhattisgarh,
Andhra Pradesh/Telangana, etc.

In any such context:

Courts and regulators must:
- Examine the objects clause of the relevant society’s bye-laws; and
- Determine whether those objects, as a matter of legal formulation, extend beyond one State post-reorganisation.
They must not equate:
- Members’ residence,
- Supply or procurement arrangements, or
- Incidental operations in another State
with multi-State objects within the meaning of the MSCS Act.

3. Federal Balance and Legislative Competence

The decision reinforces the constitutional demarcation between:

State cooperatives (within State List competence), and
Multi-State cooperatives (within the Union’s domain).

By insisting that only societies whose objects genuinely span multiple States are governed by the Central Act, the Court avoids:

Unwarranted encroachment on State legislative space; and
The risk that ordinary State cooperatives might be transformed into Central subjects merely because of post-reorganisation demographics or supply chains.

4. Practical Implications for Drafting and Governance of Cooperatives

For cooperative drafters, regulators, and litigants, the case underscores:

The central importance of bye-laws—especially the objects clause—in determining jurisdiction and applicable law.
The need for careful drafting when a cooperative wishes to:
- Deliberately evolve into a multi-State cooperative (via Section 22), or
- Remain under a particular State’s cooperative law after reorganisation.
That arguments based solely on area-of-operation clauses or the geography of members and suppliers are unlikely to succeed in shifting a society into the multi-State regime absent a corresponding objects clause.

5. Clarifying Uncertainty After Naresh Shankar Srivastava

While Naresh Shankar Srivastava had recognised Section 103/Section 95 as mechanisms to deem certain societies to be multi-State cooperatives after State reorganisation, there was room for:

Overbroad readings that focused on factual “activities” and “operations” rather than legal “objects”.

This judgment narrows that field of uncertainty by:

Reaffirming that it is the objects clause, not merely operations, that triggers Section 103.
Preventing Section 103 from being used as a blunt instrument to federalise local cooperatives.

VI. Complex Concepts Simplified

1. “Objects” vs “Area of Operation”

Objects:
- These are the purposes and goals for which the cooperative exists, as set out in the bye-laws. For instance:
  - “To establish and run a sugar factory at X for the benefit of member cane-growers.”
  - “To provide credit facilities to members in region Y.”
- They define the cooperative’s legal mission and scope of activity.
Area of operation:
- This is the geographical territory from which the cooperative may draw members or conduct its activities.
- For example:
  - “The area of operation shall comprise Tehsil A and Tehsil B.”
- It is more about where the society operates rather than what its core objects are.

The Supreme Court insists that, for Section 103, the “what” (objects) matters, not merely the “where” (area of operation).

2. Multi-State Cooperative Society

A multi-State cooperative society is not simply any cooperative with members or suppliers in different States. Rather, it is a society that:

Has been registered (or deemed registered) under the MSCS Act, 2002; and
Whose principal objects, as expressed in its bye-laws, are to serve the interests of its members in more than one State.

3. Deeming Provisions and Legal Fiction

A deeming provision creates a legal fiction—it directs that something be treated “as if” it is something else, even if in fact it is not, to achieve a legislative purpose.

Section 103 directs that, when its conditions are met, a cooperative society shall be deemed to be a multi-State cooperative society registered under the Act. This:

Spare societies from having to re-register afresh after reorganisation; but
Does not mean that every society in a reorganised State is automatically deemed a multi-State cooperative.

The fiction applies only when its express conditions are satisfied, here: that the society, after reorganisation, has objects spanning more than one State.

4. Conversion by Operation of Law vs Voluntary Conversion

Conversion by operation of law (Section 103):
- Triggered by a State reorganisation statute.
- Automatic, but only when the society’s objects now genuinely extend across more than one State.
- No separate application or Central Registrar registration needed once the statutory conditions are met.
Voluntary conversion (Section 22):
- Initiated by the society itself by amending its bye-laws to extend jurisdiction/objects.
- Requires Central Registrar’s registration/approval.
- Not dependent on State reorganisation.

5. Legislative Competence and Extra-Territoriality (Simplified)

The respondents argued that if Section 103 were not read broadly, the State Act would have extra-territorial application (governing areas or persons outside the State, like members or cane-growers in Uttarakhand). The Court’s response, in substance, is:

Legislative competence for cooperatives turns on what the society’s objects are and where they are legally located, not on incidental cross-border dealings.
A State cooperative society can still legally remain under its State Act even if some members or suppliers now live outside that State due to reorganisation.

Thus, mere cross-border effects do not automatically transpose the cooperative into the Union’s multi-State regime.

VII. Conclusion and Key Takeaways

The Supreme Court’s decision in State of Uttar Pradesh v. Milkiyat Singh is a significant clarification in cooperative jurisprudence. Its chief contributions can be summarised as follows:

No blanket conversion upon State reorganisation: State reorganisation does not, in itself, transform all State-registered cooperative societies into multi-State cooperative societies. Section 103 is not a universal switch.
Objects, not area or residence, are decisive: The legal character of a cooperative (State vs multi-State) hinges on its objects as set out in its bye-laws. Area of operation, member residence, or supply arrangements are insufficient triggers.
Section 103 must be read with Section 5 and Section 10: The Court anchors its construction in the Act’s scheme, particularly the centrality of objects for both registration (Section 5) and bye-law structure (Section 10).
Voluntary vs deemed conversion are distinct: Section 22 allows voluntary conversion through bye-law amendments; Section 103 triggers deemed conversion only in narrowly tailored circumstances of State reorganisation and multi-State objects.
Federal balance preserved: By holding that domicile and incidental operations are irrelevant to Section 103, the Court maintains the constitutional boundary between State-regulated cooperatives and Union-regulated multi-State cooperatives.
Practical guidance for future litigation: Courts must:
- Conduct a bye-law based, object-focused inquiry when Section 103 is invoked; and
- Resist interpretations of deeming clauses that disregard the broader statutory architecture or produce absurd results.

On the specific facts, the Kisan Cooperative Sugar Factory at Majhola, Pilibhit, remained a State cooperative society under the U.P. Cooperative Societies Act. The Allahabad High Court’s declaration that it had become a multi-State cooperative by operation of Section 103 was therefore set aside, reinstating the State’s competence to legislate for and take policy decisions regarding such society.

Beyond the immediate sugar mills dispute, the judgment will serve as a guiding precedent for courts and regulators confronting similar questions in other reorganised States and in disputes over the proper jurisdictional home of cooperative institutions straddling State boundaries.