States have exclusive power on co-ops, citizens can raise issues: SC

The Supreme Court on Tuesday held that cooperative societies, as a subject matter, belong exclusively to the state legislatures, and when a citizen challenges a constitutional amendment, it is the duty of the court to examine it on merits, even if state governments connected with the matter have not come forward on the issue.

The top court, in a majority judgment, declared that Part IXB of the 97th Amendment to the Constitution, which deals with the effective management of co-operative societies, is operative only for multi-state cooperative societies, both within the various states and in the Union Territories.

Noting that there is no doubt the Constitution has been described as quasi-federal in that so far as legislative powers are concerned, it said: “Though there is a tilt in favour of the Centre vis-a-vis the states given the federal supremacy principle outlined, yet within their own sphere, the states have exclusive power to legislate on topics reserved exclusively to them.”

Attorney General K.K. Venugopal had submitted that no state government has come forward to challenge the 97th Constitutional Amendment, therefore it does not take the matter any further.

However, Justices R.F. Nariman and B.R. Gavai, in their majority verdict, said: “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.”

They upheld the Gujarat High Court judgment except to the extent that it strikes down the entirety of Part IXB of the Constitution.

“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.”

The bench noted that as the Statement of Objects and Reasons of the Constitution’s 97th Amendment Act shows, it is acknowledged that the subject ‘co-operative societies’ is exclusively allotted to the state legislature under Entry 32 of the state list.

“As a result of which, considering the need for reform in the Co-operative Societies Acts of the States, consultations with the State governments have been held,” it noted.

The AG had argued that 17 out of 28 states had enacted legislations incorporating provisions of Part IXB, and that, therefore, they had impliedly accepted the restrictions laid down in the said part.

But the court said: “This argument need not detain us inasmuch as the procedure laid down in Article 368(2) proviso requires ratification of legislatures of one half of the states by resolutions to that effect.”

Justice K.M. Joseph wrote a dissenting judgment striking down the entire constitutional amendment.

“Parliament was fully aware that laws had already been made by State Legislatures, but yet, the object was to usher in reforms by the legislative route, and what is more, a constitutional amendment, which clearly involved, a change in regard to the entrenched provisions,” he said.

On April 22, 2013, the Gujarat High Court, had held that Parliament cannot enact laws or issue notifications with regard to cooperative societies as it is a state subject. The 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.

The Centre had filed appeals in the top court challenging the high court verdict.

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