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Written by: Alisha Das (Intern)

Edited by: Anubhav Yadav (Content Head & Developer)

In the case of Union of India v. Rajendra Shah and Ors., a 3-judge bench of the Supreme Court comprising Justices Rohinton Nariman, KM Joseph, and BR Gavai unanimously upheld the 2013 judgment of the Gujarat High Court and struck down most of the provisions introduced by 97th Constitutional Amendment because it required ratification by at least one-half of the state legislatures as per Article 368(2) of the Constitution as ‘co-operative societies’ was an exclusive state subject.

Although, on the question of whether Part IX-B will continue for multi-state co-operative societies, there was a split verdict of 2:1. While the majority, led by Justices R. F. Nariman and B. R. Gavai, upheld the provisions dealing with multi-state cooperative societies in Part IX-B by applying the doctrine of severability, Justice K. M. Joseph dissented, claiming that the doctrine of severability was inapplicable and struck down the entire amendment.

AMENDMENT AFFECTED EXCLUSIVE LEGISLATIVE POWER OF STATE LEGISLATURES

Justice Nariman who wrote the majority opinion affirmed that the exclusive legislative power provided to states in matters under the List II of the Seventh Schedule is a fundamental principle that forms a part of the Constitution’s basic structure.

The judgment referred to the doctrine of federal supremacy and held that in case of an overlap, the subjects in the State List have to give way to the subjects in the Union or Concurrent List. It is only when there is an unavoidable and irreconcilable conflict that the width of an entry in the State List can be curtailed by an overlap with an entry in either the Union or Concurrent List.

As per Article 368(2), to amend an entry in the state list, ratification of one-half of state legislatures is required. Since co-operative societies constituted a state subject, according to Entry 32 in List II of the Seventh Schedule, the amendment adding Part IX-B required ratification under Article 368(2). As the 97th Constitutional amendment was not ratified accordingly, it was liable to be struck down. The co-operative societies as a subject matter belong entirely and exclusively to the State legislatures to legislate upon, the Bench held.

BACKGROUND

The Constitution (97th Amendment) Act 2011 brought the following changes with the objective to encourage economic activities of cooperatives which in turn help the progress of rural India-

  • “Co-operative societies” was added after unions and associations in Article 19(1) (c) as part of fundamental rights.

  • In the Directive Principles of State Policy (Part IV), a new Article 43B on the promotion of cooperative organisations was included.

  • Part IX-B (Article 243ZH to Article 243ZT) was introduced which enacted several stipulations for the state legislations governing cooperative societies.

A slew of petitions were filed in the Gujarat High Court, alleging that the amendment violates the constitution’s basic structure. In 2013, the High Court of Gujarat struck down the provisions of the 97th Constitutional Amendment Act to the extent that it introduced Part IX-B of the Constitution dealing with co-operative societies to be ultra vires due to the lack of ratification by state legislatures under Article 368(2).

The High Court noted that Part IX-B established various limitations on state legislatures’ power to control co-operative societies. Further, it outlined the acts that would be considered offences concerning co-operative societies. It created a set of requirements that the State Legislature could not deviate from. According to the High Court, it was an indirect way of moving cooperative societies from the State List to the Union List or Concurrent List, which would have required ratification by a majority of the states.

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