SC sheds light on the contours of Ministry of cooperation

Co-operative societies as a subject matter belongs wholly and exclusively to the State legislatures”- this statement made by the Supreme Court in its judgment striking down the parts of 97 th Constitutional amendment dealing with co-operative societies assumes a particular relevance in the context of speculations about the role and purpose of the newly created Union Ministry of Cooperation.

The creation of a Union Ministry of Cooperation in the recent Cabinet reshuffle raised many eyebrows as co-operative societies is a state subject as per the Seventh Schedule of the Constitution.

Some leaders of opposition parties have voiced the apprehension that this move will undermine the power of state governments over cooperative societies.

The official press release said that the Ministry of Cooperation will provide a “separate administrative, legal and policy framework for strengthening the cooperative movement in the country” and “will help deepen Co-operatives as a true people based movement reaching upto the grassroots”.

These broadly worded generic statements do not shed much light into the specific role intended to be played by the new Ministry.

The mention of ‘grassroots’ in the press release also gave rise to apprehensions, as the jurisdiction of the Union is otherwise limited to only multi-state cooperative societies.

In this backdrop lies the importance of the judgment delivered by the Supreme Court yesterday in the case Union of India vs Rajendra Shah and others which annulled Part IXB introduced by the Constitution(97th Amendment) Act 2011 to the extent it deals with state co-operative societies.

A 3-judge bench comprising Justices RF Nariman, BR Gavai and KM Joseph upheld a 2013 judgment of the Gujarat High Court which had struck down Part IXB on the ground that the amendment was passed without obtaining the ratification of at least one-half of the state legislatures as mandated by the proviso to Article 368(2) of the Constitution.

To give a brief background, the 97th Constitutional Amendment, passed in 2011, made the following changes regarding law on cooperative societies :

Made right to form cooperative societies a part of fundamental right under Article 19(1)(c).

Introduced Part IX B to the Constitution, which laid down several stipulations for the state legislations governing cooperative societies.

A bunch of petitions were filed in the Gujarat High Court challenging the amendment as violating the basic structure of the constitution.

The main argument of the petitioners was that the amendment required ratification by the legislatures of at least one-half of the states, as prescribed under Article 368(2) of the Constitution, since it impacted a subject in the state list.

The ratification of state legislatures is needed if an amendment makes changes to an entry which is included in the List II(State List) of Seventh Schedule of the Constitution.

It may be noted that co-operative societies is a state subject as per Entry 32 of List II of the Seventh Schedule of the Constitution. Also, Entry 43 of List I specifically says that co-operative societies is excluded from the Union List.

The Gujarat High accepted the petitioners’ argument to strike down the entire Part IXB introduced by the amendment.

The Supreme Court has now upheld the Gujarat High Court’ judgment but saved the application of Part IXB to multi-state co-operative societies.

The Attorney General for India sought to defend Part IXB by arguing that it did not take away the power of state legislatures and it did not require ratification under Article 368(2) since the state entry was left unchanged.

But the Court rejected this argument by saying that a curtailment of the exclusive legislative power of the state is akin to changing the entry from the state list.

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