The Supreme Court quashed certain provisions of the 97th Constitutional Amendment related to functioning and effective management of cooperative societies for want of ratification by half of the states.

The top court, however, held that Part IXB of the Constitution, which dealt with functioning and incorporation of multi-state co-operative societies, will be operative. 

The apex court’s verdict came on the Centre’s plea challenging the Gujarat High Court’s 2013 decision striking down certain provisions of the 97th Constitutional Amendment while holding that Parliament cannot enact laws with regard to cooperative societies as it is a state subject.

What is 97th Constitutional Amendment?

• The cooperative movement in India can be legislatively traced to two British Acts, namely, the Cooperative Societies Act, 1904 and the Co-operative Societies Act, 1912.  

• Under the Government of India Act, 1919, the subject ‘cooperative societies’ was contained in Entry 13 of the provincial list. This was continued by the Government of India Act, 1935, ‘cooperative societies’ being contained in Entry 33 of the provincial list. 

• This was then further continued by the Constitution of India.

• The cooperative societies is a subject enumerated in Entry 32 of the State List of the Seventh Schedule of the Constitution.

• The 97th Constitutional Amendment, which dealt with issues related to effective management of cooperative societies in the country was passed by Parliament in December 2011 and had come into effect from February 15, 2012.

• The then UPA government said there was a need to initiate fundamental reforms to revitalise these institutions in order to ensure their contribution in the economic development of the country, and to serve the interests of members and public at large, and also to ensure their autonomy, democratic functioning and professional management.

• The change in the Constitution has amended Article 19(1)(c) to give protection to the cooperatives and inserted Article 43 B and Part IXB, relating to them.

• While Article 19(1)(c) guarantees freedom to form associations or unions or cooperative societies subject to certain restrictions, Article 43 B says that states shall endeavour to promote voluntary formation, autonomous functioning, democratic control and professional management of cooperative societies.

• The Part IXB of the Constitution inserted by 97th Amendment deals with incorporation, terms of members of board and its office bearers and effective management of cooperative societies.

• The Part IXB contained Articles 243ZH to Article 243ZT, which empowered Parliament (for multi-state cooperative societies) and state legislatures for other cooperative societies to make laws.

• The Centre said that, after the 97th Amendment, as many as 17 states have enacted legislative measures in conformity with Part IXB. 

How did the matter reach the Supreme Court?

• On April 22, 2013, the Gujarat High Court, while striking down certain provisions of the 97th Constitutional Amendment, held that Parliament cannot enact laws or issue notification with regard to cooperative societies as it is a state subject.

• The High Court verdict came on a PIL challenging the legality of the 97th Constitutional Amendment on the ground that Centre had no legislative competence to enact law for cooperative societies which is exclusively a state subject under the scheme of the Constitution.

• The High Court had held that certain provisions of the amendment pertaining to cooperative societies violated the basic structure of federalism.

• The PIL petitioner contended that as per the provisions of Article 368 of the Constitution, if Parliament intends to amend or delete any of the Lists in the Seventh Schedule, such Amendment shall require to be ratified by the legislature of not less than one half of the states by resolution to the effect passed by those legislatures before the Bill making provisions for such amendment is presented to the President for assent. 

• The Centre has contended that the provision does not denude states of their power to enact laws with regard to cooperatives.

What the SC bench said?

• The Amendment requires to be ratified by the legislatures of not less than one-half of the states  by resolutions. This has admittedly not been done in the present case. 

• The argument that no state has come forward to challenge the 97th Amendment does not take the matter any further. When a citizen of India challenges a Constitutional amendment as being procedurally infirm, it is the duty of the court to examine such challenge on merits as the Constitution of India is a national charter of governance affecting persons, citizens and institutions alike. 

• There can be no doubt that our Constitution has been described as quasi-federal in that, so far as legislative powers are concerned, though there is a tilt in favour of the Centre vis-à-vis the states, given the federal supremacy principle outlined hereinabove, yet within their own sphere, the states have exclusive power to legislate on topics reserved exclusively to them.

• The exclusive power to make laws, so far as cooperative societies are concerned, are with the state legislatures, which is contained in Article 246 (3) read with Entry 32 of State List. 

• When it comes to multi-state cooperative societies with objects not confined to one state, the legislative power would be that of the Union of India, which is contained in Entry 44 of Union List.

• It is declared that Part IXB of the Constitution of India is operative only insofar as it concerns multi-state cooperative societies, both within the various states and in the Union Territories of India. 

Creation of ministry of cooperation

• Two weeks ago, the Narendra Modi government created a new ministry of cooperation with an aim to strengthen the cooperative movement in the country.

• The Cabinet Secretariat said the new ministry has been created for realising the vision of ‘sahakar se samriddhi’ (prosperity through cooperation).

• The newly-created ministry is under the additional charge of Union Home Minister Amit Shah. 

• The government said the ministry will provide a separate administrative, legal and policy framework for strengthening the cooperative movement in the country.

• It will help deepen cooperatives as a true people-based movement reaching up to the grassroots.

• The ministry will work to streamline processes for ‘ease of doing business’ for cooperatives and enable development of multi-state cooperative societies.

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