SC majority order quashes part of amendment on setting up cooperatives

Supreme Court on Tuesday in a 2:1 majority verdict upheld the validity of the 97th Constitutional amendment but struck down a part related their setting up and functioning

The Supreme Court on Tuesday in a 2:1 majority verdict upheld the validity of the 97th Constitutional amendment that deals with issues related to effective management of cooperative societies but struck down a part related their setting up and functioning.

A bench of Justices R F Nariman, K M Joseph and B R Gavai said, We have struck down part IX B of the Constitution related to cooperative societies but we have saved the amendment.

Justice Nariman said, Justice Joseph has given a partly dissenting verdict and has struck down the entire 97th constitutional amendment.

The 97th constitutional amendment, which dealt with issues related to effective management of co-operative societies in the country was passed by Parliament in December 2011 and had come into effect from February 15, 2012.

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

While Article 19(1)(c) guarantees freedom to form association 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 IX B 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 Centre has contended that the provision does not denude states of their power to enact laws with regard to cooperatives.

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.

The top court also examined a question whether the provision denuded states of their exclusive power to enact laws to deal with management of cooperative societies.

Attorney General K K Venugopal, appearing for the Centre, said the 97th Constitution amendment is not direct or substantial attack on states' powers to enact law with regard to cooperatives.

Several intervenors have contended that the amendment made a direct in-road into the exclusive domain of states to enact laws with regard to cooperatives.

The Centre has stated that the amendment was enacted to bring in uniformity in the management of cooperative societies and it did not take away the powers of states.

The top court had said if the Centre wanted to achieve uniformity then the only way available was to take the recourse under Article 252 of the Constitution which deals with the power of Parliament to legislate for two or more states by consent.

It said that in effect what the government had done was that the power of States to enact laws with respect to cooperative society has been made no longer exclusive.

On April 22, 2013, the 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.