Supreme Court Declares Part IXB of Constitution (97th Amendment) Ultra Vires for Lack of State Ratification, Except for Multi-State Cooperative Societies

Judgment Upholds Amendments to Articles 19(1)(c) and 43B; Applies Doctrine of Severability to Preserve Multi-State Cooperative Societies Provisions

In a landmark judgment delivered on July 20, 2021, the Supreme Court of India, in the case of Union of India v. Rajendra N. Shah & Anr. , pronounced a detailed verdict on the constitutional validity of the Constitution (Ninety Seventh Amendment) Act, 2011, which introduced Part IXB titled ‘The Co-operative Societies’ into the Constitution of India. The judgment, authored by Justice R.F. Nariman with concurrence from Justices B.R. Gavai and K.M. Joseph (with a dissent on severability), addressed the procedural requirement of ratification under Article 368(2) proviso and its impact on the legislative competence of the States regarding cooperative societies.

The crux of the dispute was whether Part IXB, which sought to regulate cooperative societies, was valid without ratification by at least half of the States, as mandated by Article 368(2) proviso, because it arguably affected legislative powers allocated exclusively to States under Entry 32 of List II of the Seventh Schedule and impacted the legislative relations under Article 246(3).

The Court upheld the Gujarat High Court’s decision that the insertion of Part IXB was ultra vires the Constitution for want of the requisite ratification, impacting significantly the exclusive legislative powers of States over cooperative societies. The amendment substantially curtailed the States’ power to legislate on cooperative societies by mandating uniform provisions concerning democratic functioning, reservation, audit, election procedures, supersession of boards, and penalties for offences. These restrictions, the Court observed, amounted to a change in effect in Entry 32 of List II and Article 246(3), thus triggering the need for ratification.

However, the Court distinguished the provisions related to multi-State cooperative societies, governed under Entry 44 of List I, which falls under Parliament’s legislative competence, and upheld Part IXB’s application to multi-State cooperative societies and Union territories. This was grounded in the doctrine of severability, as expounded in the Supreme Court’s earlier rulings such as Kihoto Hollohan v. Zachillhu, allowing severance of constitutional provisions where part of the amendment requires ratification and part does not. The Court held that Articles 243ZR and 243ZS, applying Part IXB to multi-State cooperative societies and Union territories, respectively, are severable and operable independently of the invalidated provisions relating to State cooperative societies.

The Court also clarified that the amendments made to Articles 19(1)(c) (right to form associations including cooperative societies) and Article 43B (Directive Principles promoting cooperative societies) were unaffected by the invalidation of Part IXB and remained valid.

The judgment emphasized the importance of the federal structure enshrined in the Constitution and the procedural safeguards in Article 368(2) proviso designed to protect the States’ legislative autonomy. It highlighted that the constituent power exercised by Parliament under Article 368 is not absolute and is subject to procedural and substantive limitations, including the basic structure doctrine established in Kesavananda Bharati v. State of Kerala.

The Supreme Court’s ruling stems from extensive precedents on constitutional amendments and federalism, citing judgments such as Sankari Prasad Singh Deo v. Union of India, Sajjan Singh v. State of Rajasthan, Builders’ Assn. of India v. Union of India, and Vipulbhai M. Chaudhary v. Gujarat Cooperative Milk Marketing Federation Ltd. The Court underscored that failure to obtain the necessary ratification renders the amendment non est (void) to the extent it affects State legislative powers but does not invalidate provisions that lie within Parliament’s competence.

The judgment also discussed the legislative history of the 97th Amendment and the intent to bring uniform democratic reforms to cooperative societies nationwide, noting that several States had enacted conforming legislation post-amendment. Nonetheless, the Court held that such enactments could not substitute for the constitutional requirement of ratification.

In a partial dissent, Justice K.M. Joseph opined that the doctrine of severability should not apply to sustain the provisions related to multi-State cooperative societies and Union territories, arguing that Articles 243ZR and 243ZS depend on the invalidated provisions and cannot stand independently.

This decision clarifies the constitutional contours governing cooperative societies, federalism, and the amendment procedure, and delineates the limits of Parliament’s constituent power in relation to State legislative autonomy. It mandates compliance with Article 368(2) proviso for amendments affecting State legislative fields and preserves parliamentary competence over multi-State cooperative societies and Union territories.

Statutory provisions

Article 19(1)(c), Article 43B, Article 245, Article 246(1), Article 246(2), Article 246(3), Article 246(4), Article 246, Entry 32 List II Seventh Schedule, Entry 44 List I Seventh Schedule, Article 368(1), Article 368(2) proviso, Articles 243ZH to 243ZT (Part IXB of Constitution)

Union of India v. Rajendra N. Shah (SC) : Law Finder Doc Id # 1857292