A judgment that must be taken in the right spirit

Context: The striking down of the 97th Amendment (in Union of India vs Rajendra N. Shah) is a reminder that the power to regulate cooperatives must stay with States.

About 97th Constitutional Amendment Act (CAA), 2011

• Elevating cooperative societies as a fundamental right: Added “cooperative societies” to protected forms of association under Article 19(1)(c).
• Inserted Part IXB in Constitution: Laid down terms by which cooperative societies would be governed, in more granular detail than was palatable.

Rationale for the repeal of 97th CAA:

• Challenged for non-ratification with the states: As per Article 368, in addition to the special majority of Parliament, amending some provisions requires ratification by legislatures of half of the States.
• The Supreme court noted that the procedure of this additional requirement had not been followed in the 97th Constitutional Amendment.
• 73rd and 74th Amendments, which introduced chapters on panchayats and municipalities, had a similar impact on the legislative power of States, had been passed by a special procedure involving ratification by State legislatures.
• Further, Supreme Court clarified that the judgment does not go into the question of Amendment being violative of the basic structure of the Constitution.
• Takes away the freedom of states in relation to cooperatives: The idea that the cooperative sector ought to be controlled at the State level goes back all the way to the Government of India Act, 1919, which placed cooperatives in the provincial list.
  • This scheme carried forward into the Constitution with Entry 32 of the State List in the Seventh Schedule of the Constitution conferring power on the State legislatures to make laws.
  • Part IXB, inserted by the 97 th Amendment, impinged upon the legislative power of the States by casting mandatory obligations upon the State legislatures to legislate.

Conclusion: Cooperative sector has always been in the domain of States, and the Government of India shall take this judgment in the right spirit and stays away from further meddling in the cooperative sector, notwithstanding the creation of a new Ministry.