The bench headed by Justice RF Nariman, Justice KM Joseph, and Justice BR Gavai on 20th July upheld the decision of 2013 by Gujarat High Court and the validity of the 97th Constitutional Amendment. The decision of the Supreme Court bench came with the majority of 2:1.
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.
97th Constitutional Amendment deals with the issues related to the management of cooperative society and dictated the terms of running a cooperative society. Supreme Court struck down Part IXB of the Constitution while keeping the amendment concerning the Multi-State Co-operative Societies (MSMC) due to lack of ratification.
The issues regarding the 97th Constitutional Amendment:
- Part IXB, introduced into the Constitution through 97th
- The provisions were passed by the Parliament without getting ratified by the State Legislatures.
- The extent of determining the number of Directors a society should possess.
- The length of the tenure of the Directors.
- The necessary expertise required to become a member of society.
Central Government’s viewpoint or overview:
- The Centre government said that it was injecting professionalism and autonomy into the functions of the society.
- There is no lack of accountability among the members of the society which has led to poor services and low productivity.
- The co-operative is not running on well-established principles which have led to failure in performance.
Supreme Court’s ruling-
- Supreme Court struck down Part-IXB keeping only the part relating to Multi-State Co-operative.
- Supreme Court explained that the 97thConstitutional Amendment required ratification by at least one-half of the state legislatures as per Article 368(2) of the Constitution since it dealt with an entry which was an exclusive state subject (co-operative societies).
- Part IX B consists of Articles 243ZH to 243ZT, has significantly and substantially impacted the State legislature’s exclusive legislative power over its co-operative sector under Entry 32 of the State List.
- The court pointed out that Article 243ZI makes it clear that a State may only make law on the incorporation, regulation, and winding up of a society subject to the provisions of Part IXB of the 97th Amendment.
- Since such ratification did not take place in the case of the 97th Constitutional Amendment it was needed to be struck down.
- The Supreme Court declared that Part IXB of the Constitution is operative only insofar as it concerns multi-State cooperative societies both within the various States and in the Union Territories.
- The Supreme Court also held that Parliament cannot enact laws with regard to cooperative societies as it is a State subject.