Maratha Quota & Co-operative Societies Cases : Divergent Views Of Supreme Court On Need For Ratification Of 97th & 102nd Constitutional Amendments

This year witnessed two Supreme Court judgments which dealt with the challenge against two Constitutional amendments, viz 97th and 102nd.

In Maratha Quota case [Dr. Jaishri Laxmanrao Patil Vs. The Chief Minister], the constitutional validity of Constitution (102nd Amendment) Act, 2018 was challenged. The validity of Constitution (97th Amendment) Act, 2011, was under challenge in Union of India vs. Rajendra N. Shah. In the former case, the court upheld the Constitutional validity of 102nd amendment, while in the latter it struck down most provisions of Part IXB inserted by the 97th amendment. 

The Constitutional Amendments

The 102nd amendment introduced Article 338B which provides for a Commission for the socially and educationally backward classes to be known as the National Commission for Backward Classes. Further, as per Article 342A introduced by the amendment, President may with respect to any State or Union territory, and where it is a State, after consultation with the Governor thereof, by public notification, specify the socially and educationally backward classes in relation to that State or Union territory..

The 97th Amendment was brought in 2011 'to ensure that co-operative societies in the country function in a democratic, professional, autonomous and economically sound manner.' The Amendment inserted the word 'cooperative societies' to Article 19(1)(c) which now reads thus: All citizens shall have the right to form associations or unions or cooperative societies.

Also, the amendment introduced Article 43B (in Directive Principles of State Policy) which says 'that states shall endeavour to promote voluntary formation, autonomous functioning, democratic control and professional management of cooperative societies.' It also inserted Part IXB laying down stipulations for state laws dealing with cooperative societies.

Challenge And Centre's Defence Of Amendments

Interestingly, in both these cases, the main ground of challenge hinged on the question of lack of ratification by state legislatures. As per Article 368(2) of the Constitution, a Constitutional Amendment which alters an entry in the state list (List II, Schedule 7) will need ratification of at least half of the state legislatures.

The petitioner in Maratha Quota case argued that the 102nd Constitution Amendment impacted the power of the States to identify SEBCs and hence it required ratification under Article 368(2). In the case relating to 97th Constitution amendment, the petitioners argued that it required ratification as it curtailed the power of state legislatures on cooperative societies.

In both these cases, the Centre's defence of respective constitutional amendments were also identical. Justice Ashok Bhushan's judgment in Maratha Quota case, in Para 82, records the Attorney General's submission that the Constitution (One Hundred and Second Amendment) does not amend the lists under Schedule VII; hence, there is no requirement of ratification by the States. In Rajendra N. Shah, the Centre argued that the 97th amendment did not alter Entry 32 of List II of the 7th Schedule, which deals with cooperative societies, and hence did not require ratification.

'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', the centre had contended. (para 8 of majority judgment).

Maratha Quota Case: Interpretation of 102nd Amendment

In Maratha Quota Case, Justice Ashok Bhushan's judgment (Justice S. Abdul Nazeer concurred) agreed with this stand taken by the Centre. "It is, thus, clear as sun light that Parliamentary intention discernible from Select Committee report and statement of Minister of Social Justice and Empowerment is that the intention of the Parliament for bringing Constitutional amendment was not to take away the power of the State to identify backward class in the State." (Para 444 (27). However, the majority(comprising L Nageswara Rao,  Justices Hemant Gupta and Ravindra Bhat) held the 102nd Constitution Amendment had the effect of taking away the power of States to identify SEBCs.

Thus the majority held that 'the power of identification of SEBCs hitherto exercised by the states and now shifted to the domain of the President (and for its modification, to Parliament) by virtue of Article 342A does not in any manner violate the essential features or basic structure of the Constitution.'

On the question of ratification, the majority judgment held thus: "In this regard what is noticeable is that direct amendments to any of the legislative entries in the three lists of the Seventh Schedule to the Constitution requires ratification. Thus, the insertion of substantive provisions that might impact future legislation by the State in an indirect or oblique manner would not necessarily fall afoul of the Constitution for not complying with the procedure spelt out in the proviso to Article 368(2)."

Interpreting the judgment in Sajjan Singh v. State of Rajasthan, the Court observed that 'an interpretation which hinges on indirect impact of a provision, the amendment of which needs ratification of the states, does not violate the Constitution and that unless the amendment actually deletes or alters any of the Entries in the three lists of the Seventh Schedule, or directly amends an Article for which ratification is necessary, recourse to the proviso to Article 368 (2) was not necessary'.  Noticing other judgments including Kihoto Hollohan v. Zachillhu and Raghunathrao Ganpatrao v. Union of India, the Court observed that 'a mere change brought about through amendments howsoever serious the impact, cannot per se be regarded as violative of the basic structure.' 

"By these parameters, the alteration of the content of state legislative power in an oblique and peripheral manner would not constitute a violation of the concept of federalism. It is only if the amendment takes away the very essence of federalism or effectively divests the federal content of the constitution, and denudes the states of their effective power to legislate or frame executive policies (co-extensive with legislative power) that the amendment would take away an essential feature or violate the basic structure of the Constitution. Applying such a benchmark, this court is of the opinion that the power of identification of SEBCs hitherto exercised by the states and now shifted to the domain of the President (and for its modification, to Parliament) by virtue of Article 342A does not in any manner violate the essential features or basic structure of the Constitution. The 102nd Amendment is also not contrary to or violative of proviso to Article 368 (2) of the Constitution of India. As a result, it is held that the writ petition is without merit; it is dismissed.", the majority judgment concluded thus on the issue of ratification.

Rajendra Shah Case: Interpretation of 'change'

In contrast with the approach in the Maratha quota case, the Supreme Court in the case of 97th Constitutional amendment took into account the impact and effect of the amendment on the power of state legislatures, rather than merely going by the direct alteration of the entry in the state list.

Justice RF Nariman, in his judgment (Justices BR Gavai and KM Joseph (on this issue) concurring), clearly noted the above observations made in Maratha Quota Case (See Para 42-49). Referring to other judgments on this issue, the court observed that the "change" spoken about by Article 368 (2) proviso in any provision of the Constitution need not be direct in the sense of adding, subtracting, or modifying the language of the particular entry.

The judgment speaks of a 'change-in effect' which would mean a change which, though not in the language of any provision of the Constitution, would yet be a change which would impact a particular article and the principle contained therein in some significant way. (Para 56). The court held that the 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. 

The court then proceeded to examine whether this principle can be said to have been infracted by inserting Part IXB into the Constitution of India so that the States' legislative powers contained in Article 246(3) read with Entry 32 List II of the 7th Schedule can be said to have been affected in a significant manner. Analyzing the changes brought by the 97th Amendment, the Court 'found' that the exclusive legislative power that is contained in Entry 32 List II has been significantly and substantially impacted in that such exclusive power is now subjected to a large number of curtailments.

"The aforesaid 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.", the court observed in Para 67.

Divergent Interpretations Determined Fate Of Amendment

Of course, the judgment in Rajendra N. Shah, indirectly distinguished the Constitution bench judgment in Maratha Quota case. It held that the 'State's exclusive power to make laws with regard to the subject of co-operative societies is significantly curtailed' and therefore 'the impact cannot be said to be insignificant.' 

In Maratha Quota Case, it was contended that by 102nd Amendment,  States were denuded of its power to fully legislate in favour of SEBCs under Entry 25 and Entry 41 of List II, and provide for reservations in favour of SEBCs. It was argued that the power to identify and make suitable provisions in favour of SEBCs has always been that of the States and the amendment 'strikes at the root of the federal structure because it is the people who elect the members of the State legislatures, who frame policies suitable for their peculiarly situated needs, having regard to the demands of the region and its people.' (Para 177 of Justice Bhat's judgment). But curiously, the majority judgment almost accepted this contention, but upheld the Constitutional Amendment though it was not ratified by the state legislatures as per Article 368(2).

In other words, in Maratha Quota Case, the Constitution Bench while upholding the 102nd Amendment interpreted it to have significantly impacted the States' power to identify SEBCs, which it held, has been 'shifted' to the domain of the President (and for its modification, to Parliament) . But to strike down most of 97th Amendment, the three Judge Bench, in Rajendra Shah, it was enough that the states' exclusive power qua cooperative societies was 'significantly' curtailed. Though both amendments lacked ratification, one was saved and that too by interpreting it contrary to centre's stand that the power of states is not at all impacted. Quite recently, it also dismissed the review petition filed by the Central Government in which it had urged the Court to 'retain' States' power to identify SEBCs.