SC Struck Down Parts Of Constitutional Amendment Related To Cooperative Societies

SC Struck Down Parts Of Constitutional Amendment Related To Cooperative Societies

Redefining the contours of federalism, the Supreme Court on 20th July 2021, Tuesday, in a 2:1 majority judgement annulled some provisions of the 97th Constitution Amendment which limited the exclusive authority of States over their cooperative societies. 

The 97th Constitution Amendment of 2012 introduced part 9B  which deals with the terms of running cooperative societies. Amendment Bill passed by Parliament lacked ratification from States legislatures and the Centre exclusively had the power to decide on the number of directors a cooperative should have, and matters relating to their appointment and tenure., etc. 

Part 9B consists of articles from 243ZH to 243ZT which gave a limited role for state legislatures over its cooperative sector as per Entry 32 of the State List. According to Article 243 ZI, a State is allowed to make laws only on matters of incorporation, regulation, and winding up of society subject to the provisions of part 9B. 

The Bench of Justices R. F Nariman, B. R. Gavai, and K. M Joseph which pronounced the verdict said, “state legislatures will have exclusive legislative powers over cooperative societies… States will have exclusive power to legislate on topics reserved exclusively to them.” However, the Court said the power to regulate multi-state cooperative societies will be retained with the Centre. 

While Justice K. M Joseph disapprovingly said that the Doctrine of Severability cannot be applied to distinguish between single state cooperatives and Multistate cooperative societies and remarked that the whole part 9B should be quashed due to lack of ratification from State legislatures.