UNION OF INDIA v. RAJENDRA N. SHAH AND ANOTHER
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- Supreme Court of India
- Decided
- Bench
- R. F. NARIMAN, K. M. JOSEPH and B. R. GAVAI
- Citation
- [2021] 5 S.C.R. 458
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Headnote — Supreme Court Reports (editorial summary, not part of the judgment)
Catchwords
Constitution (Ninety Seventh Amendment) Act, 2011 – Challenge to, on procedural grounds – Vires of the Constitution 97th Amendment Act, which inter alia introduced Part IXB (consisting of Arts.243ZH to 243ZT) under the chapter heading ‘The Co- operative Societies’ – Whether the constitutional amendment inserting Part IXB was ultra vires the Constitution for want of requisite ratification under Art.368(2) proviso –
Held
From the restrictions contained in Part IXB, it is clear that the exclusive legislative power contained in Entry 32 List II of the 7th Schedule has been significantly and substantially impacted in that such exclusive power is now subjected to a large number of curtailments – By curtailing the width of Entry 32, List II of the 7th Schedule, Part IXB seeks to effect a significant change in Art.246(3) read with Entry 32 List II of the 7 th Schedule inasmuch as the State’s E exclusive power to make laws with regard to the subject of co- operative societies is significantly curtailed thereby directly impacting the quasi-federal principle contained therein – Quite clearly, therefore, Part IXB, insofar as it applies to co-operative societies which operate within a State, would therefore require ratification under both sub-clauses (b) and (c) of the proviso to Art.368(2) of the Constitution – Ratification not having been effected, the Amendment is non-est – The Constitution 97th Amendment Act is void for want of ratification – Constitution of India – Part IXB (Arts.243ZH to 243ZT); Art. 368(2) proviso and Schedule VII, List II, Entry 32 – Co-operative Societies. G Constitution of India, 1950 – Part IXB (consisting of Arts.243ZH to 243ZT) inserted by the Constitution 97th Amendment Act and Art.368(2) proviso – Constitutional amendment inserting Part IXB found to be ultra vires the Constitution for want of requisite ratification under Art.368(2) proviso – Whether, even if Part IXB is H 458 constitutionally infirm qua co-operative societies operating within A a State, it would yet operate qua multi-State co-operative societies and in Union territories which are not States – Held (per R.F. Nariman, J. [for himself and B.R. Gavai, J.]) (per majority) – The Constitution 97th Amendment Act is void for want of ratification but it cannot be said that this would render the entire amendment still- B born – The Statement of Objects and Reasons for the Constitution 97th Amendment Act makes it clear 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 – Part IXB of the Constitution is operative insofar as it concerns multi- State co-operative societies both within the various States and in the Union territories of India – Held (per K.M. Joseph, J.) (dissenting) – Doctrine of Severability must apply on surer foundations – Provisions relating to Art.243ZI to Art.243ZQ and Art.243ZT, are unconstitutional for non-compliance, with the mandate of the proviso to Art.368(2) of the Constitution – However, it cannot be said that the Doctrine of Severability will apply to sustain Art.243ZR and Art.243ZS to the multistate cooperative societies operating in the Union Territories, and that, it would not apply to cooperative societies confined to the Union Territories – Once the Court has painted the substantial provisions (Art.243ZI to 243ZQ), with the brush of unconstitutionality, rendering those provisions, still born, the provisions contained in Art.243ZR and Art.243ZS cease to be workable and are impossible to sustain – F Constitution (Ninety Seventh Amendment) Act, 2011 – Doctrine of Severability – Applicability – Co-operative Societies. Disposing of the appeals, the Court HELD: Per R. F. Nariman, J. [for himself and B. R. Gavai, J.)] G 1.1. Our Constitution has been described as quasi-federal in that, so far as legislative powers are concerned, though there is a tilt in favour of the Centre vis-à-vis the States given the federal supremacy principle, yet within their own sphere, the States have
Reporter's headnote (continued) and case details
458 [2021] SUPREME COURT 5 S.C.R. 458 REPORTS [2021] 5 S.C.R.
(Civil Appeal Nos. 9108-9109 of 2014)
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A exclusive power to legislate on topics reserved exclusively to them. Article 246(3) read with List II of the 7th Schedule of the Constitution of India reflects an important constitutional principle that can be said to form part of the basic structure of the Constitution, namely, the fact that the Constitution is not unitary but quasi-federal in character. [Paras 57, 58][517-B-D] B 1.2. Article 246 of the Constitution contains the power to legislate, the topics of legislation contained in the three Lists are described as ‘fields of legislation’. The non-obstante clause contained in Articles 246(1) and 246(2) and the ‘subject to’ clause contained in Article 246(3) lay down the doctrine of federal C supremacy, i.e. topics in the State List have to give way to topics contained in the Union or Concurrent List in the event of an overlap between entries in these lists. Such overlap is not to be easily found – on the contrary, it is only in the case of an inevitable and irreconcilable conflict that the width of an entry in the State D List can be curtailed by an overlap with an entry in either List 1 or List 3. [Paras 16, 17][491-G; 492-A-C] 2.1. So far as co-operative societies are concerned, it is entirely a matter for the States to legislate upon, being the last subject matter mentioned in Entry 32 List II. Entry 43 of List I, E which deals with incorporation, regulation and winding up of trading corporations including banking, insurance and financial corporations expressly excludes co-operative societies from its ambit. Entry 44 List I, which is wider than Entry 43 in that it is not limited to trading corporations, speaks of corporations with objects not confined to one State. When it comes to Multi State F Co-operative Societies with objects not confined to one state, the legislative power would be that of the Union of India which is contained in Entry 44 List I. [Para 23][497-E-G] 2.2. There are two separate spheres relating to multi-State co-operative societies and cooperative societies. There is no G overlap whatsoever so far as the subject ‘co-operative societies’ is concerned. Co-operative societies as a subject matter belongs wholly and exclusively to the State legislatures to legislate upon, whereas multi-State cooperative societies i.e., co-operative societies having objects not confined to one state alone, is A exclusively within the ken of Parliament. This being the case, it may safely be concluded, on the facts of this case, that there is no overlap and hence, no need to apply the federal supremacy principle. There is exclusive power to make laws, so far as co- operative societies are concerned, with the State Legislatures, B which is contained in Article 246(3) read with Entry 32 of List II. [Para 26][499-D-F] 3.1. The power of amendment of the Constitution is contained in Article 368 of the Constitution of India. Article 368(1) refers to Parliament, which may exercise its “constituent power” to amend the constitution by way of addition, variation or repeal of any provision of the Constitution. This however has to be in accordance with the mandatory procedure laid down in the Article. So far as amendments that are made to any of the provisions of the Constitution, save and except Articles like Article 4 which expressly state that though the Constitution may be amended, no such amendment shall be deemed to be an amendment of the Constitution for the purpose of Article 368, all other articles of the Constitution may be amended but only in accordance with the procedure laid down in Sub-Article (2). However, there is a procedure when it comes to amending certain specified articles/ provisions in the proviso to Article 368(2). [Paras 27, 28 and E 29][500-A; 501-A-D] 3.2. Sub-clause (b) of the proviso speaks of Chapter IV of Part V which deals with the Union Judiciary consisting of the Supreme Court of India, Chapter V of Part VI which deals with the High Courts in the States, and Chapter I of Part XI which F deals with legislative relations between the Union and the States. Sub-clause (c) of the proviso then speaks of any change being made in any of the lists in the 7th Schedule, which would certainly include Entry 32 List 2 of the 7th Schedule. [Paras 30, 31][501- D-G] G 3.3. If the subject matter of an amendment falls within the proviso, then the additional procedural requirement is that such amendment shall also be required to be ratified by the legislatures of not less than one half of the States by resolution to that effect passed by those legislatures before the bill making provision for H
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A such amendment is presented to the President for assent. Unlike the 73rd and 74th Constitution Amendments Acts, which inserted Part IX dealing with Panchayats and Part IXA dealing with Municipalities, which amendments were also ratified by not less than one half of the States, the 97th Amendment which inserts the chapter dealing with co-operative societies has not been so ratified. [Para 32][501-G-H; 502-A-B] 4.1. The ambit of Parliament’s ‘constituent power’ is referred to in Article 368(1). Though an amendment of the Constitution is the exercise of constituent power which differs from ordinary legislative power, such constituent power does not convert Parliament into an original constituent assembly. Parliament being the donee of a limited power may only exercise such power in accordance with both the procedural and substantive limitations contained in the Constitution of India. The procedural limitations are contained in Sub-Article 2 of Article 368. The D substantive limitation is that a constitutional amendment can only pass muster if it does not damage the basic structure or essential features of the Constitution. [Para 33][502-B-E] 4.2. A challenge to a constitutional amendment may, therefore, be on procedural or substantive grounds. The present E case concerns itself with the procedural ground contained in Article 368(2) proviso. For Article 368(2) proviso to apply, various tests have been laid down by this Court in some of its judgments. The tests laid down in Sankari Prasad Singh and Sajjan Singh are referred to in Kihoto Hollohan’s case. A reading of the judgments would indicate that the “change” spoken about by Article 368 (2) F proviso in any provision of the Constitution need not be direct in the sense of adding, subtracting, or modifying the language of the particular Article or provision spoken of in the proviso. The judgments speak of a ‘change-in effect’ which would mean a change which, though not in the language of any provision of the G Constitution, would yet be a change which would impact a particular article and the principle contained therein in some significant way. [Paras 36, 37 and 56][504-F-G; 516-G-H; 517-A]
5. A reading of the Builders’ Assn. of India case and the Seervai’s commentary would show that any significant addition H or curtailment of a field of legislation which is contained in an A Entry in List II of the 7th Schedule of the Constitution would also amount to a ‘change’ so as to attract the proviso to Article 368(2). It is not necessary that a change referred to in the proviso to Article 368(2) would only be if some part of a subject matter given to the States were transferred to Parliament or vice versa. Even B without such transfer, if there is enlargement or curtailment of the subject matter contained in a field of legislation exclusively reserved to the States, then in effect a change has been made to an entry in a legislative list, which change, if significant, would attract the proviso to Article 368(2) and therefore require ratification. [Para 60][520-D-F] C
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6. In matters affecting the Constitution of India, form always gives way to substance. Had exceptions been provided in Entry 32 List II itself, such amendment to Entry 32 List II would require ratification. Also, in effect if the subject matter “co-operative societies” had been either expanded or curtailed by adding a D definition clause in Article 366 of the Constitution of India, such expansion or curtailment would also require ratification as significant changes have been made in effect in Entry 32 List II of the Constitution of India. Likewise, if a separate part is added in the Constitution of India, the direct effect of adding such part being to curtail the width of Entry 32 List II in a significant manner, again, in effect Entry 32 List II is directly impacted, again requiring ratification. It is of no moment that one method is chosen or preferred to another so long as Entry 32 List II is curtailed either by adding or deleting words in Entry 32 itself or by doing so through an indirect methodology, namely, adding a new definition clause in Article 366 or adding a new part to the Constitution of India. [Para 61][520-G-H; 521-A-C] 7.1. Part IX B of the Constitution consists of Articles 243ZH to 243ZT. From the restrictions contained in Part IXB, it is clear that the exclusive legislative power that is contained in Entry 32 G List II has been significantly and substantially impacted in that such exclusive power is now subjected to a large number of curtailments. Indeed, Article 243ZI specifically mandates that the exclusive legislative power contained in Entry 32 List II of the
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A State Legislature is now severely curtailed as it can only be exercised subject to the provisions of Part IXB; and further, Article 243ZT makes it clear that all State laws which do not conform to the restrictions mentioned in Part IXB automatically come to an end on the expiration of one year from the commencement of the Constitution 97 th Amendment Act. B [Paras 64, 65][521-E-G; 523-C-D] 7.2. An analysis of Part IXB of the Constitution leads to the result that though Article 246(3) and Entry 32, List II of the 7th Schedule have not been ‘changed’ in letter, yet the impact upon the aforesaid articles cannot be said to be insignificant. On the contrary, it is clear that by curtailing the width of Entry 32, List II of the 7th Schedule, Part IXB seeks to effect a significant change in Article 246(3) read with Entry 32 List II of the 7th Schedule inasmuch as the State’s exclusive power to make laws with regard to the subject of co-operative societies is significantly curtailed thereby directly impacting the quasi-federal principle contained therein. Quite clearly, therefore, Part IXB, insofar as it applies to co-operative societies which operate within a State, would therefore require ratification under both sub-clauses (b) and (c) of the proviso to Article 368(2) of the Constitution of India. [Para 67][524-A-C] E
8. Part IX of the Constitution of India was inserted into the Constitution by the Constitution (73rd Amendment) Act, 1992 and Part IXA inserted into the Constitution by the Constitution (74th Amendment) Act, 1992 made similar provisions qua Panchayats and Municipalities. Both the Constitution 73 rd and 74 th F Amendments were sent for ratification and were ratified by Legislatures of more than half the States. The reason is not far to see – like Part IXB, several restrictions are laid down before the States can legislate on Panchayats and Municipalities. Like Part IXB, such legislation is subject to Parts IX and IXA – see Article G 243C and Article 243R. Again, like Article 243ZT in Part IXB, Articles 243N and 243ZF provide that State laws which are inconsistent with the provisions of Parts IX and IXA respectively will automatically cease after the expiration of one year from the commencement of the two Constitutional Amendments. In addition to these provisions, Parts IX and IXA also contain Article H
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243O and Article 243ZG ousting the jurisdiction of the courts A and thereby, in effect, curtailing the provisions of Articles 136, 226 and 227 of the Constitution of India. Ratification of the Constitution 72nd and 73rd Amendments was therefore necessary both under clauses (b) and (c) of the proviso to Article 368(2) in that Article 136 was in effect curtailed (Article 136 occurring in B Chapter IV of Part V of the Constitution of India); Articles 226 and 227 were in effect curtailed (which occur in Chapter V of Part VI of the Constitution of India); Article 246(3) was in effect curtailed (which forms part of the Chapter I of Part XI of the Constitution of India); and Entry 5 List 2, 7th Schedule was also in effect curtailed, which is referrable to sub-clause (c) of the proviso to Article 368(2) of the Constitution of India. It is clear therefore that even previous constitutional practice of Parliament acting in its constituent capacity qua similar subject matters reinforces the submission of the respondent that, like the 73 rd and 74th Amendments, the Constitution 97th Amendment Act also required ratification. [Paras 68, 69][524-C-H; 525-A-C] 9.1. It was argued that the constituent power that is exercised in enacting the 97th Amendment cannot be assimilated with legislative power, and that once the Constitution stands amended by insertion of Part IXB, Article 245 mandates that all legislation made under Article 246 read with Lists in the 7 th E Schedule to the Constitution of India is subject to the provisions of the Constitution, so that legislation made under Article 246(3) read with Entry 32 List II becomes subject to the provisions of Part IXB which is now a part of the Constitution of India. This argument is a classic instance of putting the cart before the horse. F Nobody doubts that had the amendment been ratified under Article 368(2) proviso, it would then operate, as a result of which legislation under Article 246(3) read with Entry 32 List II of the 7th Schedule would then become subject to Part IXB. In the present case, ratification not having been effected, the Amendment is non est. This argument is therefore rejected. [Paras G 70, 71][525-D-F] 9.2. It was then argued that 17 out of 28 States had enacted legislations incorporating provisions of Part IXB, and that,
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A therefore, they had impliedly accepted the restrictions laid down in the said Part. This argument need not detain this Court inasmuch 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. Also, the argument that no State has come forward to challenge the 97th Constitution Amendment does not take the matter any further. 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. [Para 72][525-G-H; 526- A-B] 10.1. It was then argued that instead of having two separate parts within Part IXB, one dealing with State co-operative societies and one dealing with multi-State co-operative societies, the well-known legislative device of “reference” to existing provisions was instead utilised by Article 243ZR and therefore one should view the matter as if a separate part within Part IXB has been enacted insofar as multi-State co-operative societies are concerned. There is substance in this argument. The Statement of Objects and Reasons for the Constitution 97 th E Amendment Act makes it clear 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 F certain matters so far as “other cooperative societies” are concerned. The effect of Article 246ZR is as if multi-State co- operative societies are separately dealt with in a separate sub- chapter contained within Part IXB. Also, there is no doubt that after severance what survives can and does stand independently and is workable. [Paras 76, 77][531-G-H; 532-D-G] G 10.2. It was suggested by the Respondents that the consequence of this Court holding that the Constitution 97 th 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. This argument is rejected for two H reasons. If the doctrine of severability were not to apply for the afore-stated reason, then the majority judgment in Kihoto A Hollohancase would be incorrect. This very reasoning would then render the entire Constitution 52nd Amendment, which inserted the Tenth Schedule to the Constitution of India, constitutionally infirm as then the entirety of the amendment would have to be declared void for want of ratification, which would be in the teeth B of the majority judgment in Kihoto Hollohan case. Further, on this reasoning, the amendments made in Article 19 and the addition of Article 43B would also have to be struck down, which was not pleaded or argued before either the High Court or before this Court. This being the case, it is declared that Part IXB of the Constitution of India is operative insofar as multi-State co- C operative societies are concerned. [Para 77][532-G-H; 533-A- C] 11.1. There can be no doubt that Article 246(3) does not apply to Union territories. Instead, Article 246(4) applies to Union territories, by means of which Parliament can use the State List D also to legislate insofar as the Union territories are concerned. However, given the truncation of Entry 32 List II of the 7 th Schedule by Part IXB, what would operate in Union territories is Part IXB only insofar as it applies to multi-State co-operative societies. So far as co-operative societies within a Union territory are concerned, the same infirmity as is found in the main part of E the judgment continues insofar as the legislative subject “co- operative societies” is concerned under Entry 32 List II. Therefore, for co-operative societies which have no ramifications outside the Union territory itself, Part IXB will have no application. [Para 78][533-C-F] F 11.2. The judgment of the High Court is upheld except to the extent that it strikes down the entirety of Part IXB of the Constitution of India. It is declared that Part IXB of the Constitution of India is operative only insofar as it concerns multi- State co-operative societies both within the various States and in the Union territories of India. [Para 80][534-A-B] G Kihoto Hollohan v. Zachillhu 1992 Supp (2) SCC 651 : [1992] 1 SCR 686 – followed. Sankari Prasad Singh Deo v. Union of India [1952] SCR 89; Sajjan Singh v. State of Rajasthan [1965] 1 SCR 933; Hoechst Pharmaceuticals Ltd. v. State of H
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A Bihar, (1983) 3 SCR 130; Kerala SEB v. Indian Aluminium Co. Ltd., (1976) 1 SCC 466 : [1976] 1 SCR 552; Goodricke Group Ltd. v. State of W.B., 1995 Supp (1) SCC 707: [1994] 6 Suppl. SCR 120; Govt. of A.P. v. J.B. Educational Society, (2005) 3 SCC 212 : [2005] 2 SCR 302; Greater Bombay Coop. Bank Ltd. B v. United Yarn Tex (P) Ltd. (2007) 6 SCC 236 : [2007] 4 SCR 823; State of W.B. v. Committee for Protection of Democratic Rights, (2010) 3 SCC 571 : [2010] 2 SCR 97; Daman Singh v. State of Punjab, (1985) 2 SCC 670 : [1985] 3 SCR 580; Apex Cooperative Bank of Urban Bank of Maharashtra & Goa Ltd. v. C Maharashtra State Cooperative Bank Ltd., (2003) 11 SCC 66; Thalappalam Service Coop. Bank Ltd. v. State of Kerala (2013) 16 SCC 82 : [2013] 14 SCR 475; K. Damodarasamy Naidu & Bros. v. State of T.N., (2000) 1 SCC 521 : [1999] 3 Suppl. SCR 597; Kesavananda Bharati v. State of Kerala, (1973) 4 SCC 225 : [1973] D Suppl. SCR 1; M. Nagaraj v. Union of India, (2006) 8 SCC 212 : [2006] 7 Suppl. SCR 336; I.R. Coelho v. State of T.N., (2007) 2 SCC 1 : [2007] 1 SCR 706; Dr. Jaishri Laxmanrao Patil v. Chief Minister and Ors., 2021 SCC OnLine SC 362; Bhim Singh v. Union of India, (2010) 5 SCC 538: [2010] 6 SCR 218; B.P. E Singhal v. Union of India, (2010) 6 SCC 331; Builders’ Assn. of India v. Union of India (1989) 2 SCC 645 and Vipulbhai M. Chaudhary v. Gujarat Coop. Milk Mktg. Federation Ltd. (2015) 8 SCC 1: [2015] 3 SCR 997 – relied on. F Golak Nath v. State of Punjab [1967] 2 SCR 762; Cellular Operators Assn. of India v. TRAI, (2016) 7 SCC 703 : [2016] 9 SCR 1 and D.C. Wadhwa v. State of Bihar, (1987) 1 SCC 378 : [1987] 1 SCR 798 – referred to. ‘Constitutional Law of India’ (4 th Edition) by H.M. G Seervai, p.3156 – referred to. per K.M. Joseph, J. (partly dissenting)
1. The provisions relating to Article 240ZI to Article 243ZQ and Article 243ZT, are unconstitutional for non-compliance, with the mandate of the proviso to Article 368(2) of the Constitution H of India. However, it cannot be said that the Doctrine of
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Severability will apply to sustain Article 243ZR and Article 243ZS A to the multistate cooperative societies operating in the Union Territories, and that, it would not apply to cooperative societies confined to the territories of the Union Territories. [Para 2][534- C-E]
2. The Doctrine of Severability came up for consideration in R.M.D. Chamarbaugwalla case. Therein, this Court has laid down certain Rules in this regard. [Para 10][542-E] 3.1. The first Rule laid down in R.M.D. Chamarbaugwalla case is that, it is the intention of the Legislature, that is the determining factor. The test is also laid down that the question to be asked is, whether the Legislature would have enacted the valid Part, if it had known that the rest of the Statute was invalid. Also, in determining the legislative intent, it will be legitimate to take into account, the history of the legislation and its objects, inter-alia. [Para 16][552-C-D] D 3.2. From the Statement of Objects and Reasons for the Ninety-Seventh Amendment, it is discernible that there were weaknesses found in safeguarding the interests of the members of the cooperative societies. Elections were being postponed indefinitely. There was inadequate professionalism in management. It was found that cooperatives needed to be run on well-established democratic principles and elections had to be held on time and in a free and fair manner. It was further noted that “cooperative societies” is a subject enumerated in Entry 32 of the State List of the Seventh Schedule. That laws were made by the State Legislatures, were noticed. Reforms, were in short, found necessary in the Cooperative Society Acts of the States. Consultation with the State Governments were held several times. The Central Government was committed, it is stated to ensure that the cooperative societies, in the country, were to function in a democratic, professional, autonomous and economically sound manner. It is in this connection that Part IXB G was inserted to empower Parliament in respect of multistate cooperative societies, and State Legislatures, in case of other cooperative societies, to make appropriate law. [Para 18][554-F- H; 555-A-C] H
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A 3.3. The intention discernible was that Parliament intended to provide a uniform set of legislative norms and create rights, liabilities and powers across the board through the length and breadth of the country. In fact, it was to inform all cooperative societies, whether they were governed by laws made by the State Legislatures, falling under Entry 32 of List II of Seventh Schedule, B or the appropriate Entry under List I. In other words, homogeneity was sought to be introduced without any discrimination between cooperative societies falling within the legislative domain of State Legislatures and of Parliament. The setting and the manner, in which the Articles have been ordered C in Part IXB, would go to show that the substantive provisions, which actually conditioned the legislative power, among other things, was directed against the State Legislatures. [Paras 19, 20][555-C-E]
4. The second Rule laid down in R.M.D. Chamarbaugwalla D case is to enquire whether the valid and invalid provisions are so inextricably mixed up that they cannot be separated from one another. It is further declared that if the seemingly valid provisions are so distinct and separate, that after declaring the other set of provisions as invalid, the remaining provisions would remain a complete Code, independent of the rest, then, the distinct and separate provisions, which manifests a complete Code, can become enforceable. [Para 21][555-E-G]
5. The third Rule provides that even if they (the provisions) are distinct and separate, if they all form part of a single scheme, which is intended to be operative as a whole, then, also the invalidity of a part, will result in failure of a whole. In Kihoto Hollohan case, this Court, after bearing in mind the Rules, apparently laid down in R.M.D. Chamarbaugwalla case, has proceeded to clearly articulate the test, inter-alia, viz., as to whether, after severance, what survives, can stand independently and is workable. [Para 22][555-G-H; 556-A]
6. It is plain from the Statement of Objects and Reasons, that Parliament was fully aware that Entry 32 clothed the Legislatures of the State with exclusive legislative power to make laws in regard to cooperative societies, which were not multistate H cooperative societies. Parliament was fully aware that laws had already been made by State Legislatures, but yet, the object was to usher in reforms by the legislative route, and what is more, a Constitutional Amendment, which clearly involved, a change in regard to the entrenched provisions. The Ninety-Seventh Amendment was passed in 2012, several years after the decision in Kihoto Hollohan case. It is clear that the law was laid down by the Constitution Bench of this Court in Kihoto Hollohan case, that having regard to the sublime purpose behind the proviso to Article 368(2), which was to foster and secure the federal nature of the Constitution, what mattered was the substance and not the form. It appears to be further clear that an effort was made to take the States on board by holding several meetings between the States, and what is more, Resolutions were passed apparently at the meet of State Cooperative Ministers. All of this appears to point out that, having regard to the law holding the field and the relevant principles in question, it appears that Parliament would not have made the amendment, had it known that the provisions contained in Articles 243ZI to 243ZQ would not pass muster. The object was clearly to have identical provisions in place to govern cooperative societies. Uniformity and, in fact, identical treatment for all cooperative societies whether they are created under State Law or by Parliament, was the goal. [Para 23] E [556-B-F]
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7. It is the duty of the Court to strive to uphold the law made by the Legislature. When it comes to an amendment to the Constitution, this presumption of constitutionality, and also the duty of the Court, becomes even more pronounced. If, indeed, F on the Doctrine of Severability, the provisions contained in Article 243QR and Article 243QS, can be sustained, the law must survive rather than perish. The question, however, is on the terms of the provisions in question (Articles 243QR and 243QS), and bearing in mind the principles, can they survive on their own, after the invalidation of Article 243ZH to Article 243ZQ and Article 243ZT. G Are the provisions of Article 243ZR and 243ZS independent provisions and workable? Both these provisions are entirely dependent upon the provisions contained in Article 243ZI to 243ZQ. This is for the reason that both these provisions expressly provide that the ‘provisions of this part’, which clearly means H
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A the foregoing provisions, which are contained in Article 243ZI to 243ZQ, are to apply in regard to multistate cooperative societies and to Union Territories with the modifications, which are indicated therein. There can be application and modifications of something which exists. There cannot be either, when the elaborate provisions are to be treated as not born. Are these provisions independent and workable? One will proceed on the basis that Parliament intended to produce homogeneity in regard to certain legislative value judgments which would be cast in stone in a manner of speaking by having those values declared in the grundnorm itself. It would appear to be that these values were to apply, across the board, to cooperative societies born under laws made by the State Legislatures, as also, to those made by Parliament. More importantly, once the Court has painted the relevant provisions, which are the substantial provisions (Article 243ZI to 243ZQ), with the brush of unconstitutionality, rendering those provisions, still born, it would appear that the provisions contained in Article 243ZR and Article 243ZS would not have the crutches without which these provisions cease to be workable and are impossible to sustain. The unconstitutional part, which is to be an integral part of Article 243ZR and Article 243ZS, must continue to exist, if the provisions’, in question, are to bear life. In other words, to sustain these provisions the court would have to resurrect the dead provisions contained in Article 243ZI to 243ZQ and Article 243ZT. The Doctrine of Severability must apply on surer foundations. Unless the provisions, which have been found unconstitutional, are kept alive, Articles 243ZR and 243ZQ are plainly unworkable. [Paras 25, 27, 28, 29, 30][556-G-H; 557- A-C, G-H; 558-A-E] F Kihoto Hollohan v. Zachillhu and others (1992) Suppl. 2 SCC 651 : [1992] 1 SCR 686 – followed. R.M.D. Chamarbaugwalla and another v. Union of India and another AIR 1957 SC 628: [1957] SCR 930 – relied on. G Case Law Reference In the Judgment of R.F. NARIMAN, J. (for himself and B.R. GAVAI, J.) [1952] SCR 89 relied on Para 8 [1965] 1 SCR 933 relied on Para 8 H
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[1992] 1 SCR 686 followed Para 8 A [1967] 2 SCR 762 referred to Para 8 [2015] 3 SCR 997 relied on Para 10 (1989) 2 SCC 645 relied on Para 11 B [1999] 3 Suppl. SCR 597 relied on Para 11 [2016] 9 SCR 1 referred to Para 11 [1987] 1 SCR 798 referred to Para 13 C [1983] 3 SCR 130 relied on Para 16 [1976] 1 SCR 552 relied on Para 17 [1994] 6 Suppl. SCR 120 relied on Para 19 [2005] 2 SCR 302 relied on Para 20 D [2007] 4 SCR 823 relied on Para 21 [2010] 2 SCR 97 relied on Para 22 [1985] 3 SCR 580 relied on Para 23 E (2003) 11 SCC 66 relied on Para 23 [2013] 14 SCR 475 relied on Para 25 [1973] Suppl. SCR 1 relied on Para 33 [2006] 7 Suppl. SCR 336 relied on Para 34 F
[2007] 1 SCR 706 relied on Para 34 [2010] 6 SCR 218 relied on Para 57 (2010) 6 SCC 331 relied on Para 57 G In the Judgment of K.M. JOSEPH, J. [1957] SCR 930 relied on Para 10 [1992] 1 SCR 686 followed Para 14 H
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A CIVIL APPELLATE JURISDICTION : Civil Appeal No. 9108- 9109 of 2014. From the Judgment and Order dated 22.04.2013 of the High Court of Gujarat at Ahmedabad in W.P. (PIL) No.166 of 2012 and 29.04.2013 in Misc. Civil Application No.890 of 2013. B With Civil Appeal Nos. 281 And 282 Of 2020, Civil Appeal Nos. 2825, 2826 And 2827 of 2021. K.K. Venugopal, AG, Tushar Mehta, SG, P.K. Jani, Ms. Manisha Lavkumar, Sr. Advs., Kanu Agrawal, Zoheb Hussain, Ms. Meenakshi C Grover, S.K. Gupta, Ms. Shraddha Deshmukh, Chinmayee Chandra, Amrish Kumar, Raj Bahadur Yadav, Mohit Paul, Ms. Shikha Sarin, Ms. Sunaina Phul, Sahil M. Shah, Shivang Jani, Masoom K. Shah, Vishwas K. Shah, Mrs. Neha Shah, Dhrupad Patel, Anup Jain, Udit Gupta, Abhishek Baid, Pulkit Tare, Ms. Ritika Sinha, V. K. Monga, K. Maruthi Rao, Mrs. K. Radha, Mrs. Anjani Aiyagari, Ms. Hemantika Wahi, D Aniruddha P. Mayee, Advs. for the appearing parties.
Judgment
The Judgment of the Court was delivered by R. F. NARIMAN, J.
11. Applications for intervention are allowed. Leave granted.
22. These appeals raise an important question as to the vires of the Constitution (Ninety Seventh Amendment) Act, 2011 [the “Constitution 97th Amendment Act”] which inter alia introduced Part IXB under the chapter heading ‘The Co-operative Societies’. The Constitution 97 th Amendment Act was passed by the requisite majority of the Lok Sabha on 27.12.2011 and the Rajya Sabha on 28.12.2011. The Presidential assent F to the aforesaid Amendment followed on 12.01.2012 and the said Amendment was published in the Official Gazette of India on 13.01.2012, coming into force with effect from 15.02.2012. The important question raised in these petitions and decided by a division bench of the Gujarat High Court by the impugned judgment dated 22.04.2013 is whether Part G IXB is non est for want of ratification by half of the States under the proviso to Article 368(2). The impugned judgment of the High Court has declared that the said constitutional amendment inserting Part IXB is ultra vires the Constitution of India for want of the requisite ratification under Article 368(2) proviso, which however will not impact amendments that have been made in Article 19(1)(c) and in inserting Article 43B in H the Constitution of India.
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33. The co-operatives movement in India can be legislatively traced A to two British Acts, namely, the Cooperative Societies Act, 1904 and the Co-operative Societies Act, 1912. Under the Government of India Act, 1919, the subject ‘co-operative societies’ was contained in entry 13 of the Provincial list. This was continued by the Government of India Act, 1935, ‘co-operative societies’ being contained in entry 33 of the Provincial B list. This was then further continued by the Constitution of India, this time the same entry falling within Schedule VII List II, i.e., the State List as a part of entry 32 thereof. It is therefore important at this stage to set out the constitutional scheme insofar as it applies to co-operative societies thus: Art 19. Protection of certain rights regarding freedom of speech, etc.— (1) All citizens shall have the right— xxx xxx xxx (c) to form associations or unions or co-operative societies; xxx xxx xxx Art 43B. Promotion of co-operative societies.— The State shall endeavour to promote voluntary formation, autonomous functioning, democratic control and professional management of co-operative societies. SEVENTH SCHEDULE (Article 246) List I—Union List F xxx xxx xxx
43. Incorporation, regulation and winding up of trading corporations, including banking, insurance and financial corporations, but not including co-operative societies. G
44. Incorporation, regulation and winding up of corporations, whether trading or not, with objects not confined to one State, but not including universities. xxx xxx xxx H
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A List II—State List xxx xxx xxx
32. Incorporation, regulation and winding up of corporations, other than those specified in List I, and universities; unincorporated trading, literary, scientific, religious and other societies and associations; cooperative societies. xxx xxx xxx
44. On 07.12.2004, a conference of ministers dealing with co- operatives in the various states resolved to amend the Constitution to ensure democratic, autonomous and professional functioning of co- operatives; to address key issues of empowerment of co-operatives through voluntary formation, autonomous functioning, democratic control and professional management; for regular and timely conduct of elections, general body meetings and professional audit. The meeting ended stating:
D “The conference also noted that the central government has taken a laudable step by enacting the Multi-State Co-operative Societies Act, 2002, conforming to the thrust areas of reforms in co-operative legislation and has been widely appreciated. The conference while appreciating the initiative taken by the central government resolved that this subject too should be considered by the high power committee. It was, therefore, resolved a high power committee would be constituted by the Central Government consisting of representatives of the State governments, concerned Ministries of the central government, eminent cooperators and other public officials to review the achievements during the last 100 years and challenges before it and to suggest ways and means to face them and to give a new direction to movement. The constitution of the Committee and terms of reference are to be decided by the Central Government.”
55. Pursuant to these minutes, and after various consultations by the Centre with the State Governments, the Constitution (Ninety Seventh Amendment) Act, 2011 was passed. The Statement of Objects and Reasons for the aforesaid Constitution Amendment is important and is set out hereunder: H
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“STATEMENT OF OBJECTS AND REASONS A The co-operative sector, over the years, has made significant contribution to various sectors of national economy and has achieved voluminous growth. However, it has shown weaknesses in safeguarding the interests of the members and fulfillment of objects for which these institutions were organised. There have B been instances where elections have been postponed indefinitely and nominated office bearers or administrators remaining in-charge of these institutions for a long time. This reduces the accountability of the management of co-operative societies to their members. Inadequate professionalism in management in many of the co- operative institutions has led to poor services and low productivity. C Co-operatives need to run on well established democratic principles and elections held on time and in a free and fair manner. Therefore, there is a need to initiate fundamental reforms to revitalize these institutions in order to ensure their contribution in the economic development of the country and to serve the interests of members and public at large and also to ensure their autonomy, democratic functioning and professional management.
2. The “co-operative societies” is a subject enumerated in Entry 32 of the State List of the Seventh Schedule of the Constitution and the State Legislatures have accordingly enacted legislations on co-operative societies. Within the framework of State Acts, growth of co-operatives on large scale was envisaged as part of the efforts for securing social and economic justice and equitable distribution of the fruits of development. It has, however, been experienced that in spite of considerable expansion of co- operatives, their performance in qualitative terms has not been up to the desired level. Considering the need for reforms in the Co- operative Societies Acts of the States, consultations with the State Governments have been held at several occasions and in the conferences of State Co-operative Ministers. A strong need has been felt for amending the Constitution so as to keep the co- G operatives free from unnecessary outside interferences and also to ensure, their autonomous organisational set up and their democratic functioning.
3. The Central Government is committed to ensure that the co- operative societies in the country function in a democratic, H
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A professional, autonomous and economically sound manner. With a view to bring the necessary reforms, it is proposed to incorporate a new Part in the Constitution so- as to provide for certain provisions covering the vital. aspects of working of co-operative societies like democratic, autonomous and professional functioning. A new article is also proposed to be inserted in Part IV of the B Constitution (Directive Principles of State Policy) for the States to endeavor to promote voluntary formation, autonomous functioning, democratic control and professional management of cooperative societies. The proposed new Part in the Constitution, inter alia, seeks to empower the Parliament in respect of multi- C State co-operative societies and the State Legislatures in case of other co-operative societies to make appropriate law, laying down the following matters, namely:- (a) provisions for incorporation, regulation arid winding up of co-operative societies based on the principles of democratic member-control, member-economic participation and autonomous functioning; (b) specifying the maximum number of directors of a co- operative society to be not exceeding twenty-one members; (c) providing for a fixed term of five years from the date of election in respect of the elected members of the board and its office bearers; (d) providing for a maximum time limit of six months during which a board of directors of co-operative society could be kept under supersession or suspension; F (e) providing for independent professional audit; (f) providing for right of information to the members of the co- operative societies; (g) empowering the State Governments to obtain periodic G reports of activities and accounts of co-operative societies; (h) providing for the reservation of one seat for the Scheduled Castes or the Scheduled Tribes and two seats for women on the board of every co-operative society, which have individuals as members from such categories; H
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(i) providing for offences relating to co-operative societies and penalties in respect of such offences.
4. It is expected that these provisions will not only ensure the autonomous and democratic functioning of co-operatives, but also ensure the accountability of management to the members and other stakeholders and shall provide for deterrence for violation of the provisions of the law.
5. The Bill seeks to achieve the above objectives.” (Emphasis supplied)
66. A new Part IXB was then inserted as follows: C PART IXB THE CO-OPERATIVE SOCIETIES 243ZH. Definitions. — In this Part, unless the context otherwise requires,— D (a) “authorised person” means a person referred to as such in article 243ZQ; (b) “board” means the board of directors or the governing body of a co-operative society, by whatever name called, to which the direction and control of the management of the affairs of a society E is entrusted to; (c) “co-operative society” means a society registered or deemed to be registered under any law relating to co-operative societies for the time being in force in any State; F (d) “multi-State co-operative society” means a society with objects not confined to one State and registered or deemed to be registered under any law for the time being in force relating to such cooperatives; (e) “Office bearer” means a President, Vice-President, G Chairperson, Vice-Chairperson, Secretary or Treasurer, of a co- operative society and includes any other person to be elected by the board of any co-operative society; (f) “Registrar” means the Central Registrar appointed by the Central Government in relation to the multi-State co-operative H
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A societies and the Registrar for co-operative societies appointed by the State Government under the law made by the Legislature of a State in relation to co-operative societies; (g) “State Act” means any law made by the Legislature of a State; B (h) “State level co-operative society” means a co-operative society having its area of operation extending to the whole of a State and defined as such in any law made by the Legislature of a State. 243ZI. Incorporation of co-operative societies. —
C Subject to the provisions of this Part, the Legislature of a State may, by law, make provisions with respect to the incorporation, regulation and winding up of co-operative societies based on the principles of voluntary formation, democratic member-control, member-economic participation and autonomous functioning.
D 243ZJ. Number and term of members of board and its office bearers. — (1) The board shall consist of such number of directors as may be provided by the Legislature of a State, by law: Provided that the maximum number of directors of a co-operative society shall not exceed twenty-one: Provided further that the Legislature of a State shall, by law, provide for the reservation of one seat for the Scheduled Castes or the Scheduled Tribes and two seats for women on board of every co- operative society consisting of individuals as members and having members from such class of category of persons. (2) The term of office of elected members of the board and its office bearers shall be five years from the date of election and the term of office bearers shall be coterminous with the term of the board: G Provided that the board may fill a casual vacancy on the board by nomination out of the same class of members in respect of which the casual vacancy has arisen, if the term of office of the board is less than half of its original term. (3) The Legislature of a State shall, by law, make provisions for H co-option of persons to be members of the board having experience
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in the field of banking, management, finance or specialisation in A any other field relating to the objects and activities undertaken by the co-operative society, as members of the board of such society: Provided that the number of such co-opted members shall not exceed two in addition to twenty-one directors specified in the first proviso to clause (1): B Provided further that such co-opted members shall not have the right to vote in any election of the cooperative society in their capacity as such member or to be eligible to be elected as office bearers of the board: Provided also that the functional directors of a co-operative society C shall also be the members of the board and such members shall be excluded for the purpose of counting the total number of directors specified in the first proviso to clause (1). 243ZK. Election of members of board. — D (1) Notwithstanding anything contained in any law made by the Legislature of a State, the election of a board shall be conducted before the expiry of the term of the board so as to ensure that the newly elected members of the board assume office immediately on the expiry of the term of the office of members of the outgoing board. (2) The superintendence, direction and control of the E preparation of electoral rolls for, and the conduct of, all elections to a co-operative society shall vest in such an authority or body, as may be provided by the Legislature of a State, by law: Provided that the Legislature of a State may, by law, provide for the procedure and guidelines for the conduct of such elections. F 243ZL. Supersession and suspension of board and interim management. — (1) Notwithstanding anything contained in any law for the time being in force, no board shall be superseded or kept under supersession for a period exceeding six months: G Provided that the board may be superseded or kept under suspension in a case— (i) of its persistent default; or (ii) of negligence in the performance of its duties; or H
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A (iii) the board has committed any act prejudicial to the interests of the co-operative society or its members; or (iv) there is stalemate in the constitution or functions of the board; or (v) the authority or body as provided by the Legislature of a B State, by law, under clause (2) of article 243ZK, has failed to conduct elections in accordance with the provisions of the State Act: Provided further that the board of any such co-operative society shall not be superseded or kept under suspension where there is C no Government shareholding or loan or financial assistance or any guarantee by the Government: Provided also that in case of a co-operative society carrying on the business of banking, the provisions of the Banking Regulation Act, 1949 shall also apply: Provided also that in case of a co-operative society, other than a D multi- State co-operative society, carrying on the business of banking, the provisions of this clause shall have the effect as if for the words “six months”, the words “one year” had been substituted. (2) In case of supersession of a board, the administrator appointed to manage the affairs of such cooperative society shall arrange E for conduct of elections within the period specified in clause (1) and hand over the management to the elected board. (3) The Legislature of a State may, by law, make provisions for the conditions of service of the administrator. 243ZM. Audit of accounts of co-operative societies. — F (1) The Legislature of a State may, by law, make provisions with respect to the maintenance of accounts by the co-operative societies and the auditing of such accounts at least once in each financial year. (2) The Legislature of a State shall, by law, lay down the minimum G qualifications and experience of auditors and auditing firms that shall be eligible for auditing accounts of the co-operative societies. (3) Every co-operative society shall cause to be audited by an auditor or auditing firms referred to in clause (2) appointed by the general body of the co-operative society: H
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Provided that such auditors or auditing firms shall be appointed A from a panel approved by a State Government or an authority authorised by the State Government in this behalf. (4) The accounts of every co-operative society shall be audited within six months of the close of the financial year to which such accounts relate. B (5) The audit report of the accounts of an apex co-operative society, as may be defined by the State Act, shall be laid before the State Legislature in the manner, as may be provided by the State Legislature, by law. 243ZN. Convening of general body meetings. — C
The Legislature of a State may, by law, make provisions that the annual general body meeting of every co-operative society shall be convened within a period of six months of close of the financial year to transact the business as may be provided in such law. D 243ZO. Right of a member to get information. — (1) The Legislature of a State may, by law, provide for access to every member of a co-operative society to the books, information and accounts of the cooperative society kept in regular transaction of its business with such members. E (2) The Legislature of a State may, by law, make provisions to ensure the participation of members of the management of the co-operative society providing minimum requirement of attending meetings by the members and utilising the minimum level of services as may be provided in such law. F (3) The Legislature of a State may, by law, provide for co-operative education and training for its members. 243ZP. Returns. — (1) Every co-operative society shall file returns, within six months of the close of every financial year, to the authority designated by G the State Government including the following matters, namely: — (a) annual report of its activities; (b) its audited statement of accounts; H
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A (c) plan for surplus disposal as approved by the general body of the co-operative society; (d) list of amendments to the bye-laws of the co-operative society, if any; (e) declaration regarding date of holding of its general body B meeting and conduct of elections when due; and (f) any other information required by the Registrar in pursuance of any of the provisions of the State Act. 243ZQ. Offences and penalties. — C (1) The Legislature of a State may, by law, make provisions for the offences relating to the co-operative societies and penalties for such offences. (2) A law made by the Legislature of a State under clause (1) shall include the commission of the following act or omission as offences, namely:— (a) a co-operative society or an officer or member thereof wilfully makes a false return or furnishes false information, or any person wilfully not furnishes any information required from him by a person authorised in this behalf under the provisions of the State Act; (b) any person wilfully or without any reasonable excuse disobeys any summons, requisition or lawful written order issued under the provisions of the State Act; (c) any employer who, without sufficient cause, fails to pay to F a co-operative society amount deducted by him from its employee within a period of fourteen days from the date on which such deduction is made; (d) any officer or custodian who wilfully fails to handover custody of books, accounts, documents, records, cash, security G and other property belonging to a co-operative society of which he is an officer or custodian, to an authorised person; and (e) whoever, before, during or after the election of members of the board or office bearers, adopts any corrupt practice.
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243ZR. Application to multi-State co-operative societies.— A The provisions of this Part shall apply to the multi-State co- operative societies subject to the modification that any reference to “Legislature of a State”, “State Act” or State Government” shall be construed as a reference to “Parliament”, “Central Act” or “the Central Government” respectively. B 243ZS. Application to Union territories. — The provisions of this Part shall apply to the Union territories and shall, in their application to a Union territory, having no Legislative Assembly as if the references to the Legislature of a State were a reference to the administrator thereof appointed under article C 239 and, in relation to a Union territory having a Legislative Assembly, to that Legislative Assembly: Provided that the President may, by notification in the Official Gazette, direct that the provisions of this Part shall not apply to any Union territory or part thereof as he may specify in the notification. 243ZT. Continuance of existing laws.— Notwithstanding anything in this Part, any provision of any law relating to co-operative societies in force in a State immediately before the commencement of the Constitution (Ninety-seventh Amendment) Act, 2011, which is inconsistent with the provisions of this Part, shall continue to be in force until amended or repealed by a competent Legislature or other competent authority or until the expiration of one year from such commencement, whichever is less.] F
77. As stated hereinabove, in the public interest, a Writ Petition being WP No. 166 of 2012 filed before the Gujarat High Court succeeded vide the impugned judgment dated 22.04.2013, by which Part IXB was declared to be ultra vires for want of ratification by the State Legislatures under Article 368(2) proviso. G
88. Shri K.K. Venugopal, the learned Attorney General for India, has submitted, relying upon the Statement of Objects and Reasons, that the Constitution 97th Amendment Act sought to achieve vital social and economic objectives in regard to the functioning of co-operative societies in India, which is a sector that has made a significant contribution to the H
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A economy of the nation. He referred to and relied upon Article 243ZR to state that, in reality, Part IXB is in two separate parts – one dealing with multi-State co-operative societies which have ramifications beyond merely one State, and co-operative societies which exist and operate within a particular state. He argued that even though there was no challenge insofar as multi-State co-operative societies were concerned, the entirety of Part IXB has been struck down, throwing out the baby with the bath water. The same is true for Part IXB as applicable to Union territories which is clear from a reading of Article 243ZS. He then argued that as many as 17 out of 28 States have, after the 97th Amendment, already enacted legislative measures in conformity with Part IXB and that therefore more than half of the States had, in effect, accepted and applied the provisions of Part IXB. What is also of significance is that the Constitution 97th Amendment was preceded by a detailed consultation with the State Governments as a result of which no State Government has come forward to challenge the same. The learned Attorney General, on a reading of several judgments of this Court dealing with ratification of constitutional amendments, argued that there is no change either directly or in effect to Article 246(3) of the Constitution of India, from which the legislative power of the States contained in List II of the 7th Schedule flows, or in Entry 32 of List II of the 7th Schedule. In point of fact, a reading of Part IXB would show that no additional legislative power has been given to the Union. All subject matters relating to co- operative societies fall solely within the legislative domain of the States. Apart from reading out passages in Sankari Prasad Singh Deo v. Union of India, 1952 SCR 89;Sajjan Singh v. State of Rajasthan, (1965) 1 SCR 933 and Kihoto Hollohan v. Zachillhu, 1992 Supp (2) SCC 651, the learned Attorney General relied strongly upon observations in the dissenting judgments of Wanchoo, J. Ramaswamy, J. and Bachawat, J. in Golak Nath v. State of Punjab, (1967) 2 SCR 762. According to him, the examples given by Wanchoo, J. are apposite. On the other hand, Kihoto Hollohan’s case (supra) is distinguishable in that, para 7 of the 10th Schedule of the Constitution had the direct effect of curtailing the operation of Articles 136, 226 and 227 of the Constitution and, by barring the jurisdiction of all courts including the Supreme Court and the High Courts, in regard to all matters covered by the 10th Schedule, this Court held that ratification would be necessary. The learned Attorney General then argued that the additional finding of the Division Bench that the Constitutional Amendment violated the basic structure of the H
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Constitution, in that it tinkered with the federal structure of the Constitution, A was wholly uncalled for and unwarranted inasmuch as the real issue in this case is one and one only, as to whether ratification is or is not necessary. If it be held that ratification is necessary, then it is unnecessary to fall back upon basic structure. Likewise, if it is held that ratification would not be necessary, then the Constitutional Amendment, which in fact strengthens the basic structure of the Constitution in streamlining the co-operative movement, would belie the finding of the High Court.
99. He also argued that if the doctrine of severability is to be applied, then in the event of this Court finding that State co-operative societies cannot be impacted without following ratification, multi-State co-operative societies, which have ramifications beyond one state can be held to be covered by Part IXB, as would Union territories, and that on applying the aforesaid doctrine, Part IXB ought to be upheld, at least insofar as the multi-State co-operative societies are concerned. He has cited a number of judgments to buttress his submissions which will be reflected in this judgment. D
1010. Shri Prakash Jani, learned senior advocate appearing on behalf of the Mehsana District Co-operative Milk Producers Union in Civil Appeal No. 282 of 2020 supported the arguments of the learned Attorney General. In addition, he argued that it must never be forgotten that while inserting Part IXB into the Constitution of India, Parliament has exercised E its ‘constituent’ power and not ‘legislative’ power. Read with Article 245 of the Constitution of India, it would then be clear that since the legislative power of the States in Article 246(3) is subject to the provisions of the Constitution of India, the legislative head ‘co-operative societies’ contained in Entry 32, List II of the 7th Schedule is now being made subject to Part IXB which is a part of the Constitution of India. He F argued that Parliament in its constituent capacity can deal with State subjects, and relied upon the insertion of Article 21A by Constitution (Eighty Sixth Amendment) Act, 2002. He then argued that as a matter of fact, Part IXB read with Article 43B enhances the basic structure of the Constitution and relied strongly upon the judgment in Vipulbhai M. G Chaudhary v. Gujarat Coop. Milk Mktg. Federation Ltd., (2015) 8 SCC 1 to demonstrate that this judgment, though not dealing with the constitutional validity of the 97th Amendment, yet held that the said Amendment is a great step forward in bringing uniformity and order to the co-operatives movement in India. H
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1111. Shri Masoom K. Shah, learned counsel appearing for the Respondent No.1 in Civil Appeal No. 9108-9109 of 2014, has made an impassioned plea that the donee of a limited amending power cannot do indirectly what it is not permitted to do directly. According to him, a coach-and-four is driven into the principle of federalism as understood by our Constitution, by curtailing/restricting the State’s legislative powers contained in Entry 32 List 2, 7th Schedule. According to the learned counsel, a careful reading of Part IXB of the Constitution would show that the unfettered power of the State legislatures prior to the amendment has now been fettered by the provisions of Part IXB in several material particulars; for example, the fixation of the maximum number of directors of co-operative societies; the reservation provision contained in 243ZJ; the duration of the term of office of elected members of the board of co- operative societies etc. In short, what has been done is to add exception after exception to Entry 32 thereby carving out of Entry 32 a number of matters which otherwise were exclusively within the domain of the State Legislatures. He relied strongly upon Articles 243ZI & 243ZT, making it clear that there is a direct assault on Entry 32, List II of the 7 th Schedule inasmuch as after one year, all State legislations that are contrary to the provisions of Part IXB are of no effect, and that an affirmative obligation is cast upon the States to enact legislation only in accordance with the restrictions contained in Part IXB. He also strongly relied upon the very judgments cited by the learned Attorney General to argue that, in effect, as a direct inroad is made into Article 246(3) and Entry 32 List 2, such amendment would have to be struck down for want of ratification as it impacts a very important part of the Constitution, namely, the federal structure and the distribution of legislative powers between the Union and the States. He also placed strong reliance on Builders’ Assn. of F India v. Union of India, (1989) 2 SCC 645, and a passage from Seervai’s Constitutional Law of India to argue that even if no legislative power is transferred qua co-operative societies from the States to the Union, yet the curtailment (or expansion) of a legislative field which pertains exclusively to the States and which impacts federalism would G certainly amount to a “change” both in Article 246(3) and in the legislative lists and would thus require ratification. For this purpose, he also strongly relied upon para 21 of K. Damodarasamy Naidu & Bros. v. State of T.N., (2000) 1 SCC 521. He then countered the learned Attorney General’s argument with reference to Cellular Operators Assn. of India v. TRAI, (2016) 7 SCC 703 (para 57), to argue that even if 17 States H
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thereafter amend their laws in furtherance of the Constitutional A Amendment, this would make no difference to the constitutional position if in fact the requisite ratification under Article 368(2) proviso is lacking. The validity of a constitutional amendment does not depend upon whether a State government accepts it or whether a State government challenges it. He then went on to make two further arguments insofar as multi- B State co-operative societies are concerned. First and foremost, given the tests of severability, he argued that multi-State co-operative societies are inextricably entwined with co-operative societies and the 97th Constitution Amendment would never have been enacted for multi-State co-operative societies alone. Even otherwise, the challenge made in the Writ Petition was to the entirety of Part IXB and the part relating to C multi-State co-operative societies, not being severable, the entirety of Part IXB has correctly been held to be unconstitutional by the impugned judgment. He also argued that if this Constitutional Amendment is allowed to pass constitutional muster without ratification, there would be no end to further amendments which would then indirectly rob the States D of their legislative powers, changing a quasi-federal state into a unitary one.
1212. He then argued a point that was neither raised in the pleadings nor in arguments in the High Court. He submitted that even qua Multi- State Co-operative Societies, since a change has been made in Entry 44 List I which contains the power to legislate qua Multi-State Co-operative E Societies, the width of the Entry is curtailed by Part IXB of the Constitution, which would, therefore, in any case require ratification by the States. To this contention, the learned Attorney General replied by submitting that it is only those Entries such as Entry 2A of List I (referred to in Entry 2 which is subject to Entry 2A) that would be covered by the F proviso to Article 368(2) if one were to bear in mind that Article 368(2) proviso has been enacted with the object of preserving the quasi-federal structure of the Constitution.
1313. Smt. Ritika Sinha, learned counsel appearing for the Intervenor in IA No. 3/2014 in CA Nos. 9108-9109/2014, stressed the language of G Article 243ZI and 243ZT. According to her, these Articles make it clear that the States’ legislative competence has expressly been made subject to the provisions of Part IXB, thereby engrafting an exception, directly, to Entry 32 of List II. Also, the non-obstante clause in Article 243ZT would make it clear that State legislation that has been enacted under a H
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A plenary power has now been edged out to make way for the provisions of Part IXB, which have to be compulsorily enacted by State legislatures in the place of earlier State legislations to the contrary. For this purpose, she relied upon paras 26 and 27 of Vipulbhai M. Chaudhary v. Gujarat Coop. Milk Mktg. Federation Ltd.(supra). She then relied upon passages in Sajjan Singh (supra) and Wanchoo, J’s judgment in Golak B Nath (supra) to argue that even if the stringent tests laid down therein are to be applied, they would apply on the facts of this case, inasmuch as a direct and substantial inroad has been made into Entry 32 List II of the 7th Schedule. She concluded by relying upon D.C. Wadhwa v. State of Bihar, (1987) 1 SCC 378 (para 7), by submitting that what cannot be achieved directly cannot now be achieved indirectly by means of inserting Part IXB to the Constitution of India. Shri Maruthi Rao, learned counsel for the Intervenor in IA No. 4/2014 CA Nos. 9108-9109/2014, broadly supported the submissions made by Shri Shah and Ms. Sinha.
1414. Having heard learned counsel for all the parties, it is first important to advert to the constitutional scheme of legislative relations between the Union of India and the States. This is laid down in Part IXB, Chapter I in Articles 245 and 246 as follows: - PART XI RELATIONS BETWEEN THE UNION AND THE STATES E CHAPTER I.—LEGISLATIVE RELATIONS Distribution of Legislative Powers
245. Extent of laws made by Parliament and by the Legislatures of States. — F (1) Subject to the provisions of this Constitution, Parliament may make laws for the whole or any part of the territory of India, and the Legislature of a State may make laws for the whole or any part of the State. (2) No law made by Parliament shall be deemed to be invalid on G the ground that it would have extraterritorial operation.
246. Subject-matter of laws made by Parliament and by the Legislatures of States. — (1) Notwithstanding anything in clauses (2) and (3), Parliament H has exclusive power to make laws with respect to any of the
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matters enumerated in List I in the Seventh Schedule (in this A Constitution referred to as the “Union List”). (2) Notwithstanding anything in clause (3), Parliament, and, subject to clause (1), the Legislature of any State 1*** also, have power to make laws with respect to any of the matters enumerated in List III in the Seventh Schedule (in this Constitution referred to as B the “Concurrent List”). (3) Subject to clauses (1) and (2), the Legislature of any State has exclusive power to make laws for such State or any part thereof with respect to any of the matters enumerated in List II in the Seventh Schedule (in this Constitution referred to as the “State C List”). (4) Parliament has power to make laws with respect to any matter for any part of the territory of India not included 2 [in a State] notwithstanding that such matter is a matter enumerated in the State List. D
1515. A cursory reading of these Articles would show that whereas Parliament may make laws for the whole or any part of the territory of India, the legislation of a State may make laws for the whole or any part of the State. Article 246 then goes on to refer to laws with respect to any of the matters enumerated in 3 Lists contained in the 7th schedule to E the Constitution of India. List I contains subjects or topics on which Parliament has exclusive power to make laws; List III in the Concurrent List contains topics on which both Legislatures may make laws; and List II, with which we are directly concerned, gives the States exclusive power to make laws for such State or part thereof with respect to any of the matters contained therein. So far as Union territories are concerned, F Parliament is given power under Article 246(4) without constraint as to subject matter as it may also legislate with respect to topics covered by List II.
1616. In a catena of judgments of this Court, it has been declared that whereas Article 246 contains the power to legislate, the topics of G legislation contained in the three Lists are described as ‘fields of legislation’. This is felicitously set out in Hoechst Pharmaceuticals Ltd. v. State of Bihar, (1983) 3 SCR 130: “It is equally well settled that the various entries in the three Lists are not ‘powers’ of legislation, but ‘fields’ of legislation. The power H
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A to legislate is given by Article 246 and other Articles of the Constitution” (at pg. 184)
1717. Dealing with the non-obstante clause contained in Articles 246(1) and 246(2) and the ‘subject to’ clause contained in Article 246(3), this Court, following Federal Court and Privy Council judgments, has B held that these non-obstante and ‘subject to’ clauses lay down the doctrine of federal supremacy, which can be stated thus: topics in the State List have to give way to topics contained in the Union or Concurrent List in the event of an overlap between entries in these lists. Such overlap is not to be easily found – on the contrary, it is only in the case of an inevitable and irreconcilable conflict that the width of an entry in the C State List can be curtailed by an overlap with an entry in either List 1 or List 3. Thus, in Kerala SEB v. Indian Aluminium Co. Ltd., (1976) 1 SCC 466, this Court held: - “5. In view of the provisions of Article 254, the power of Parliament to legislate in regard to matters in List III, which are D dealt with by clause (2), is supreme the Parliament has exclusive power to legislate with respect to matters in List 1. The State Legislature has exclusive power to legislate with respect to matters in List II. But this is subject to the provisions of clause (1) [leaving out for the moment the reference to clause (2)]. The power of E Parliament to legislate with respect to matters included in List I is supreme notwithstanding anything contained in clause (3) [again leaving out of consideration the provisions of clause (2)]. Now what is the meaning of the words “notwithstanding” in clause (1) and “subject to” in clause (3)? They mean that where an entry is in general terms in List II and part of that entry is in specific F terms in List I, the entry in List I takes effect notwithstanding the entry in List II. This is also on the principle that the “special” excludes the “general” and the general entry in List II is subject to the special entry in List 1. For instance, though house accommodation and rent control might fall within either the State G list or the concurrent list, Entry 3 in List I of Seventh Schedule carves out the subject of rent control and house accommodation in Cantonments from the general subject of house accommodation and rent control (see Indu Bhusan v. Sundari Devi [(1969) 2 SCC 289]. Furthermore, the word “notwithstanding” in clause (1) also means that if it is not possible to reconcile the two entries the H
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entry in List I will prevail. But before that happens attempt should be made to decide in which list a particular legislation falls. For deciding under which entry a particular legislation falls the theory of “pith and substance” has been evolved by the courts. If in pith and substance a legislation falls within one list or the other but some portion of the subject-matter of that legislation incidentally trenches upon and might come to fall under another list, the Act as a whole would be valid notwithstanding such incidental trenching. These principles have been laid down in a number of decisions.”
1818. In Hoechst Pharmaceuticals Ltd. (supra), this Court held: - C The words “notwithstanding anything contained in clauses (2) and (3)” in Article 246(1) and the words “subject to clauses (1) and (2)” in Article 246(3) lay down the principle of federal supremacy viz. that in case of inevitable conflict between Union and State powers, the Union power as enumerated in List I shall prevail over the State power as enumerated in Lists II and III, and in case of overlapping between Lists II and III, the former shall prevail. But the principle of federal supremacy laid down in Article 246 of the Constitution cannot be resorted to unless there is an “irreconcilable” conflict between the entries in the Union and State Lists. In the case of a seeming conflict between the entries in the two Lists, the entries should be read together without giving a narrow and restricted sense to either of them. Secondly, an attempt should be made to see whether the two entries cannot be reconciled so as to avoid a conflict of jurisdiction. It should be considered whether a fair reconciliation can be achieved by giving to the language of the Union Legislative List a meaning which, if less wide than it might in another context bear, is yet one that can properly be given to it and equally giving to the language of the State Legislative List a meaning which it can properly bear. The non obstante clause in Article 246(1) must operate only if such reconciliation should prove impossible. Thirdly, no question of conflict between the two Lists will arise if the impugned legislation, by the application of the doctrine of ‘pith and substance’ appears to fall exclusively under one list, and the encroachment upon another list is only incidental. (at page 165) H
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1919. Likewise, in Goodricke Group Ltd. v. State of W.B., 1995 Supp (1) SCC 707, this Court reiterated this constitutional scheme as follows:
12. The scheme of the entries in the three lists in the Seventh Schedule is set out in the decision of this Court in M.P.V. B Sundararamier & Co. v. State of A.P. [1958 SCR 1422] and needs no reiteration. Similarly, the proposition that the several entries are legislative heads and must be construed liberally is too well-settled to require any elaboration. It is equally well-recognised that where there are three lists containing a large number of entries, there is bound to be some overlapping among them. In such a C situation, the rule of pith and substance has to be applied to determine to which entry does a given piece of legislation relate. Once it is so determined, any incidental trenching on the field reserved to the other legislature is of no consequence. Of course, the extent of encroachment may be an element in determining whether the Act is a colourable piece of legislation. Yet another relevant principle is the one enunciated in Union of India v. H.S. Dhillon [(1971) 2 SCC 779] where the legislative competence of Parliament to enact a law is questioned, all that one has to ask is whether it relates to any of the entries in List II and if it does not, no further question need be asked and Parliament’s legislative competence must be upheld. This decision also explains why did the Founding Fathers find it necessary to have three lists. In International Tourist Corpn. v. State of Haryana [(1981) 2 SCC 318] however, a caution has been administered that before exclusive legislative competence can be claimed for Parliament, F the legislative incompetence of the State Legislature must be clearly established. In S.R. Bommai v. Union of India [(1994) 3 SCC 1] one of us (B.P. Jeevan Reddy, J.) cautioned that in our constitutional system, where all important legislative heads are assigned to Centre, the courts should be slow to adopt any interpretation which tends to deprive the States of the few powers assigned to them under the Constitution.
2020. In Govt. of A.P. v. J.B. Educational Society, (2005) 3 SCC 212, the aforesaid was reiterated as follows:
9. Parliament has exclusive power to legislate with respect to any of the matters enumerated in List I, notwithstanding anything
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contained in clauses (2) and (3) of Article 246. The non obstante A clause under Article 246(1) indicates the predominance or supremacy of the law made by the Union Legislature in the event of an overlap of the law made by Parliament with respect to a matter enumerated in List I and a law made by the State Legislature with respect to a matter enumerated in List II of the B Seventh Schedule.
10. There is no doubt that both Parliament and the State Legislature are supreme in their respective assigned fields. It is the duty of the court to interpret the legislations made by Parliament and the State Legislature in such a manner as to avoid any conflict. However, if the conflict is unavoidable, and the two enactments C are irreconcilable, then by the force of the non obstante clause in clause (1) of Article 246, the parliamentary legislation would prevail notwithstanding the exclusive power of the State Legislature to make a law with respect to a matter enumerated in the State List.
2121. In Greater Bombay Coop. Bank Ltd. v. United Yarn Tex D (P) Ltd., (2007) 6 SCC 236, it was held:
92. The first three clauses of Article 246 of the Constitution relate to the demarcation of legislative powers between Parliament and the State Legislatures. Under clause (1), notwithstanding anything contained in clauses (2) and (3), Parliament has been given the E exclusive power to make laws with respect to any of the matters enumerated in List I or the Union List in the Seventh Schedule. Clause (2) empowers Parliament and the State Legislatures subject to the power of Parliament under sub-clause (1), to make laws with respect to any of the matters enumerated in List III in the F Seventh Schedule described in the Constitution as the “Concurrent List” notwithstanding anything contained in sub-clause (3). Under clause (3) the State Legislatures have been given exclusive powers to make laws in respect of matters enumerated in List II in the Seventh Schedule described as the “State List” but subject to clauses (1) and (2). The three lists while enumerating in detail the G legislative subjects carefully distribute the areas of legislative authority between Parliament (List I) and the State (List II). The supremacy of Parliament has been provided for by the non obstante clause in Article 246(1) and the words “subject to” in Articles 246(2) and (3). Therefore, under Article 246(1) if any of H
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A the entries in the three lists overlap, the entry in List I will prevail. Additionally, some of the entries in the State List have been made expressly subject to the power of Parliament to legislate either under List I or under List III. Entries in the lists of the Seventh Schedule have been liberally interpreted; nevertheless courts have been wary of upsetting this balance by a process of interpretation B so as to deprive any entry of its content and reduce it to “useless lumber”. The use of the word “exclusive” in clause (3) denotes that within the legislative fields contained in List II, the State Legislatures exercise authority as plenary and ample as Parliament’s. C (Emphasis supplied)
2222. In State of W.B. v. Committee for Protection of Democratic Rights, (2010) 3 SCC 571, this Court held:
25. The non obstante clause in Article 246(1) contemplates the D predominance or supremacy of the Union Legislature. This power is not encumbered by anything contained in clauses (2) and (3) for these clauses themselves are expressly limited and made subject to the non obstante clause in Article 246(1). The State Legislature has exclusive power to make laws for such State or any part thereof with respect to any of the matters enumerated in E List II in the Seventh Schedule and it also has the power to make laws with respect to any matters enumerated in List III (Concurrent List). The exclusive power of the State Legislature to legislate with respect to any of the matters enumerated in List II has to be exercised subject to clause (1) i.e. the exclusive power F of Parliament to legislate with respect to matters enumerated in List I. As a consequence, if there is a conflict between an entry in List I and an entry in List II, which is not capable of reconciliation, the power of Parliament to legislate with respect to a matter enumerated in List II must supersede pro tanto the exercise of power of the State Legislature. G
26. Both Parliament and the State Legislature have concurrent powers of legislation with respect to any of the matters enumerated in List III. The words “notwithstanding anything contained in clauses (2) and (3)” in Article 246(1) and the words “subject to clauses (1) and (2)” in Article 246(3) lay down the principle of H
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federal supremacy viz. that in case of inevitable conflict between A the Union and State powers, the Union power as enumerated in List I shall prevail over the State power as enumerated in Lists II and III and in case of an overlapping between Lists II and III, the latter shall prevail.
27. Though, undoubtedly, the Constitution exhibits supremacy of B Parliament over the State Legislatures, yet the principle of federal supremacy laid down in Article 246 of the Constitution cannot be resorted to unless there is an irreconcilable direct conflict between the entries in the Union and the State Lists. Thus, there is no quarrel with the broad proposition that under the Constitution there is a clear demarcation of legislative powers between the Union C and the States and they have to confine themselves within the field entrusted to them. It may also be borne in mind that the function of the lists is not to confer powers; they merely demarcate the legislative field. But the issue we are called upon to determine is that when the scheme of the Constitution prohibits encroachment D by the Union upon a matter which exclusively falls within the domain of the State Legislature, like public order, police, etc., can the third organ of the State viz. the judiciary, direct CBI, an agency established by the Union to do something in respect of a State subject, without the consent of the State Government concerned? E
2323. So far as co-operative societies are concerned, it can be seen that it is entirely a matter for the States to legislate upon, being the last subject matter mentioned in Entry 32 List II. At this stage, it is important to note that Entry 43 of List I, which deals with incorporation, regulation and winding up of trading corporations including banking, insurance and financial corporations expressly excludes co-operative societies from its F ambit. Entry 44 List I, which is wider than Entry 43 in that it is not limited to trading corporations, speaks of corporations with objects not confined to one State. This Court has therefore held, on a reading of these entries, that when it comes to Multi State Co-operative Societies with objects not confined to one state, the legislative power would be that of the G Union of India which is contained in Entry 44 List I. Thus, in Daman Singh v. State of Punjab, (1985) 2 SCC 670, this Court laid down: -
7. …. … According to Mr Ramamurthi the express exclusion of cooperative societies in Entry 43 of List I and the express inclusion of cooperative societies in Entry 32 of List II separately and apart H
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A from but along with corporations other than those specified in List I and universities, clearly indicated that the constitutional scheme was designed to treat cooperative societies as institutions distinct from corporations. On the other hand one would think that the very mention of cooperative societies both in Entry 43 of List I and Entry 32 of List II along with other corporations gave an indication that the Constitution makers were of the view that cooperative societies were of the same genus as other corporations and all were corporations. In fact the ve1ry express exclusion of cooperative societies from Entry 43 of List I is indicative of the view that but for such exclusion, cooperative societies would be comprehended within the meaning of expression “corporations”.
2424. Likewise, in Apex Cooperative Bank of Urban Bank of Maharashtra & Goa Ltd. v. Maharashtra State Cooperative Bank Ltd., (2003) 11 SCC 66, this Court delineated the two separate spheres relating to multi-State co-operative societies and co-operative societies as follows: -
2525. Another aspect which must be noticed is that in the Constitution of India, the subject pertaining to cooperative societies is in the State List i.e. Entry 32 of List II of Schedule VII. The Union List has Entry 44 of List I of Schedule VII which deals with corporations. In this case we are not concerned with the validity of a Central legislation and thus do not deal with that aspect. For purpose of the judgment we will take it that a cooperative society with objects not confined to one State would fall within the term corporation, and thus a Central legislation may be saved. However, from the constitutional provisions it is clear that matters pertaining to cooperative societies are in the State List. Thus many States have enacted laws relating to cooperative societies. We have not seen other Acts. However, as this case concerns a society in Maharashtra, the Maharashtra Cooperative Societies Act was shown to us. Significantly, this law does not define a cooperative society. It did not need to, as a society registered under it would be automatically covered. The need to define a cooperative society arises only in a Central legislation which does not cover all cooperative societies and thus needs to indicate to which society it applies.
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25. Likewise, in Thalappalam Service Coop. Bank Ltd. v. State A of Kerala, (2013) 16 SCC 82, this Court held:
2626. The cooperative society is a State subject under Schedule VII List II Entry 32 to the Constitution of India. Most of the States in India enacted their own Cooperative Societies Act with a view to provide for the orderly development of the cooperative sector in the State to achieve the objects of equity, social justice and economic development, as envisaged in the directive principles of State policy, enunciated in the Constitution of India. For cooperative societies working in more than one State, the Multi-State Cooperative Societies Act, 1984 was enacted by Parliament under Schedule VII List I Entry 44 of the Constitution. The cooperative society is essentially an association or an association of persons who have come together for a common purpose of economic development or for mutual help.
26. It may thus be seen that there is no overlap whatsoever so far as the subject ‘co-operative societies’ is concerned. Co-operative societies as a subject matter belongs wholly and exclusively to the State legislatures to legislate upon, whereas multi-State co-operative societies i.e., co-operative societies having objects not confined to one state alone, is exclusively within the ken of Parliament. This being the case, it may safely be concluded, on the facts of this case, that there is no overlap and hence, no need to apply the federal supremacy principle as laid down by the judgments of this court. What we are therefore left with is the exclusive power to make laws, so far as co-operative societies are concerned, with the State Legislatures, which is contained in Article 246(3) read with Entry 32 of List II. In fact, in K. Damodarasamy Naidu & Bros. v. State of T.N., (2000) 1 SCC 521, this court held: F
“21. Parliament, when exercising the powers to amend the Constitution under Article 368, cannot and does not amend State Acts. There is no other provision in the Constitution which so permits and there is no judgment of this Court that so holds. The power to make laws for the States in respect of matters listed in G List II in the Seventh Schedule is exclusively that of the State Legislatures. …..” (emphasis supplied)
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2727. At this stage it is important to refer to the power of amendment of the Constitution contained in Article 368 of the Constitution of India. Article 368 reads as follows: - PART XX AMENDMENT OF THE CONSTITUTION B
368. Power of Parliament to amend the Constitution and procedure therefor. — (1) Notwithstanding anything in this Constitution, Parliament may in exercise of its constituent power amend by way of addition, variation or repeal any provision of this Constitution in accordance with the procedure laid down in this article. (2) An amendment of this Constitution may be initiated only by the introduction of a Bill for the purpose in either House of Parliament, and when the Bill is passed in each House by a majority of the total membership of that House and by a majority of not less than two-thirds of the members of that House present and voting, it shall be presented to the President who shall give his assent to the Bill and thereupon the Constitution shall stand amended in accordance with the terms of the Bill: Provided that if such amendment seeks to make any change in— E (a) article 54, article 55, article 73, article 162, article 241 or article 279A or (b) Chapter IV of Part V, Chapter V of Part VI, or Chapter I of Part XI, or F (c) any of the Lists in the Seventh Schedule, or (d) the representation of States in Parliament, or (e) the provisions of this article, the amendment shall also require to be ratified by the Legislatures G of not less than one-half of the States by resolutions to that effect passed by those Legislatures before the Bill making provision for such amendment is presented to the President for assent. xxx xxx xxx
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2828. It may be seen that Article 368(1) refers to Parliament, which may exercise its “constituent power” to amend the constitution by way of addition, variation or repeal of any provision of the Constitution. This however has to be in accordance with the mandatory procedure laid down in the Article.
2929. So far as amendments that are made to any of the provisions of the Constitution, save and except Articles like Article 4 which expressly state that though the Constitution may be amended, no such amendment shall be deemed to be an amendment of the Constitution for the purpose of Article 368, all other articles of the Constitution may be amended but only in accordance with the procedure laid down in Sub-Article (2). So far so good. However, we are concerned with the procedure when it comes to amending certain specified articles/provisions in the proviso to Article 368(2). Sub-clause (a) of the proviso refers to Articles 54 and 55 which deal with the President of India, Articles 73 and 162 which deal with the executive power of the Union and the State Governments, Article 241 which deals with High Courts for Union territories, and Article 279A D which deals with the Goods and Services Tax Council. In this case, we are not directly concerned with Sub-clause (a) of the proviso.
3030. Sub-clause (b) of the proviso is important and speaks of Chapter IV of Part V which deals with the Union Judiciary consisting of the Supreme Court of India, Chapter V of Part VI which deals with the E High Courts in the States, and Chapter I of Part XI which deals with legislative relations between the Union and the States. We are directly concerned with sub-clause (b) insofar as the impact of a constitutional amendment on Article 246, which is part of Chapter I of Part XI, is concerned. F
3131. Sub-clause (c) of the proviso then speaks of any change being made in any of the lists in the 7th Schedule, which would certainly include Entry 32 List 2 of the 7th Schedule, with which we are directly concerned. Sub-clauses (d) and (e) refer to the representation of the States in Parliament and a change to be made in the provisions of Article 368 itself respectively, with which we are not directly concerned. G
3232. If the subject matter of an amendment falls within the proviso, then the additional procedural requirement is that such amendment shall also be required to be ratified by the legislatures of not less than one half of the States by resolution to that effect passed by those legislatures before the bill making provision for such amendment is presented to the H
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