Supreme Court upholds Gujarat HC order striking down cooperative societies’ part of 97th constitutional amendment

The Supreme Court on Tuesday upheld the Gujarat High Court’s 2013 decision striking down certain provisions of the 97th constitutional amendment which dealt with management of co-operative societies.

The bench of Justices R.F. Nariman, K.M. Joseph and B.R. Gavai, which had reserved its verdict on July 8, dismissed the Centre’s plea challenging the 2013 judgment of the Gujarat High Court. “We have struck down Part IX B of the Constitution related to cooperative societies but we have saved the amendment,” said the Court.

The Apex Court in 2:1 majority verdict in which Justices Nariman and Gavai struck down only Part IX B introduced by the 97th constitutional amendment to deal with cooperative societies, while Justice KM Joseph struck down the entire amendment.

The Centre has contended that the provision does not denude the states of their power to enact laws with regard to cooperatives. The amendment was enacted to bring in uniformity in the management of cooperative societies and it does not take away the powers of the states to enact laws with regard to them, claimed the Union.

The 97th constitutional amendment, which dealt with issues related to effective management of the 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.

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

The High Court had held that the amendment, to the extent it introduced conditions for state laws on cooperative societies, was liable to be struck down as it was passed without the ratification of one-half of the state legislatures as mandated by Article 368(2) of the Constitution. Certain provisions of the amendment pertaining to cooperative societies violated the basic structure of federalism.

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It was an indirect way of shifting the subject of cooperative societies to the Union List or Concurrent List from the State List. Such a shifting of subject out of state list would have required the ratification by majority of the states, opined the High Court.

The High Court judgment 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.

Read the full judgment here;