SC quashes certain provisions of 97th amendment related to co-operative societies

The top court, however, held that Part IXB of the Constitution, which dealt with functioning and incorporation of multi-state co-operative societies will be operative.

Published: 20th July 2021 10:50 PM  |   Last Updated: 20th July 2021 10:50 PM   |  A+A-

Supreme Court

Supreme Court (File Photo| EPS)


NEW DELHI: In a majority 2:1 verdict, the Supreme Court on Tuesday quashed certain provisions of the UPA era 97th Constitutional amendment related to functioning and effective management of co-operative societies for want of ratification by half of the States.

The top court, however, held that Part IXB of the Constitution, which dealt with functioning and incorporation of multi-state co-operative societies will be operative.

It also held that for co-operative societies which have no ramifications outside the Union territory itself, Part IXB will have no application.

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 IXB 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.

In a majority verdict Justices RF Nariman and BR Gavai held, “it is declared that Part IXB of the Constitution of India is operative only in so far as it concerns multi-State cooperative societies both within the various States and in the Union territories of India”.

“In the present case, ratification not having been effected, the Amendment is non est” it said, adding that Article 243ZR of Part IXB makes it clear that all the provisions of this Part which apply to multi-State co-operative societies would apply subject to the modification shall be construed as a reference to “Parliament, Central Act or the Central Government” respectively.

The bench said that there can be no doubt that in its application to multi-State co-operative societies, neither Article 246(3) nor Entry 32 List II of the 7th Schedule would be attracted.

“It is clear, therefore, that the Scheme qua multi-State cooperative societies is separate from the Scheme dealing with 'other cooperative societies', Parliament being empowered, so far as multi-State cooperative societies are concerned, and the State legislatures having to make appropriate laws laying down certain matters so far as 'other cooperative societies' are concerned”, the top court said.

The bench said that Attorney General KK Venugopal has correctly contended that the effect of Article 246ZR which deals with multi-State co-operative societies are separately dealt with in a separate sub-chapter contained within Part IXB.

“There is no doubt that after severance what survives can and does stand independently and is workable”, the bench said, while rejecting the submission of petitioners before the High Court that the consequence of this Court holding that the Constitution 97th Amendment Act is void for want of ratification would render the entire amendment still-born, as a result of which no part of the amendment can survive.

The bench said, “We reiterate that our judgement is confined to the procedural aspect of Article 368(2) proviso, there being no substantive challenge to Part IXB on the ground that it violates the basic structure doctrine as laid down in Kesavananda Bharati's case (1973 verdict)”.

It did not agree with the Centre's submission that 17 out of 28 States had enacted legislations incorporating provisions of Part IXB, which implied accepted the restrictions laid down in the said Part.

“This argument need not detain us in as much 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. This has admittedly not been done in the present case. 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,” it said.

The top court said that it is interesting to note that Part IX of the Constitution which was inserted by 73rd Amendment Act, 1992 and Part IXA inserted by the 74th Amendment Act, 1992 made similar provisions qua Panchayats and Municipalities but they were sent for ratification and was ratified by more than half number of States.

It upheld the Gujarat High Court 2013 verdict except to the extent that it strikes down the entirety of Part IXB of the Constitution.

Justice Joseph, in his minority verdict dismissed the Centre's plea and said he does not concur with majority view taken that the Doctrine of Severability will apply to sustain Article 243ZR and Article 243ZS to the multi-state cooperative societies operating in the Union Territories, and that, it would not apply to cooperative societies confined to the territories of the Union Territories.

“The Doctrine of Severability must apply on surer foundations. It is my view that unless the provisions which have been found unconstitutional, are kept alive, Articles 243R and 243ZQ are plainly unworkable,” he said.

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