Is Ratification By States Needed For Constitution Amendment On Cooperative Societies? Supreme Court Hears Appeals Against Gujarat HC Judgment Striking Down 97th Amendment

The Supreme Court on Wednesday heard detailed arguments in the appeals filed by the Union of India challenging Gujarat High Court's judgment striking down certain provisions of the 97th constitutional amendment relating to cooperative societies.

The Gujarat High Court had quashed the amendment for no recourse being taken to Article 368(2) of the Constitution providing for ratification by the majority of the State Legislatures.

A three-judge bench of Justice RF Nariman, Justice KM Joseph, and Justice BR Gavai posted the matter for hearing tomorrow, after hearing extensive arguments by Attorney General KK Venugopal, Adv Masoom Shah and Senior Adv Prakash Jain.

A Division Bench of Justice Bhaskar Bhattacharya and Justice JB Pardiwala of the Gujarat High Court had in April 2013 passed the impugned judgement on a PIL filed seeking quashing of the Constitution [97th amendment] Act, 2011 introducing part IXB, as ultra vires the Constitution of India.

Submissions made by AG On Behalf of Union of India:

Attorney General KK Venugopal appearing for Union of India began his submissions stating that "I had cited three cases, Shankari Prasad, Sajjan Singh and Kihoto, but there is a very interesting discussion on Justice Wanchoo on this, that is there are three dissenting judgements in the Golaknath judgement".

AG submitted "The majority had held that Article 13 is only so far constitutional amendments are concerned under 368, they are the procedure and are in the nature of law and not constitutional law. Therefore they had said all these amendments were hit by Article 13 and these were struck down. However, the chaos would have been so great they had to resort to prospective overruling."

"So far as these 3 judges are concerned, they had held that though there is procedure of amendment in article 368, the amendment is in nature of constitutional law and not mere law. So Article 13 won't apply." AG added.

"The question was what about article 32 A and 31 B as they had been added as amendment without reference to proviso to Article 368 (2) in which case they would have to go through gamut of ratification of half the states. This was dealt with in the Golaknath judgement, by Mr Wanchoo elaborately" AG added.

AG pointed out that so far as 9th schedule is concerned, there are 285 Acts and major acts including, Railway companies Emergency provision Act, Mines and Minerals Act, etc. All these acts have been withdrawn from competence of the High Court under 226 and competence of Supreme Court under Article 32 and 136. Inspite of this, so far as Shankari Prasad and Sajjan Singh is concerned they have held that there is no effect or impact.

"In this backdrop my Lordships will have to consider my case as well", AG said.

The Bench stated that "If you look at Shankari prasad, etc they dealt with arguments based on impact on Article 226 and 32. Article 226, 32 are remedies provided in the Constitution, they are actually meant to enforce fundamental rights. "

"In this case, what we're dealing with in this case is power which is granted. The real power is under Article 246, but 246 incidentally is also independently protected under proviso to Article 368", the Bench added.

"Now take for instance Article 240 3J, which has been inserted by amendment, provides that State may make a law and shall provide by law that number of members of committee shall not exceed 24. Take a case where tomorrow when State Legislature wants to increase or decrease the maximum number , it obviously becomes impossible on basis of Marbury vs Madison, of course you can't have an ordinary legislation going against the Constitution so it will be struck down." Justice Joseph said.

"The minimal intervention has been done to bring out uniformity throughout the country including so far as Parliament itself is concerned. Look at the vast amplitude of requirements in this act, and see So far as the amendment is concerned, see if its minimal or not.Therefore there is a vast ocean of provisions dealing with minutely every aspect of cooperation. " AG stated reading out chapters from the Act.

Justice Joseph stated that " the question is when you have a power, either to exercise or refuse to exercise, then you put a gun on the State Legislature saying that you have a power to make the law. The essence of the power is also to have a discretion whether to exercise it or not. It is for Legislature as a sovereign body, and you cannot place any limits on a sovereign body like Legislature in law making, subject to those found in the constitution as expounded by the Courts. The limits on a sovereign legislature like a State Legislature in a quasi federal set up are well settled. Here through this method you have taken by amending the Constitution. For example supposing you had made these provisions, in exercise of legislative power, it'd have been struck down."

"For example article 240 provides for legislature of seats for Scheduled caste and Schedule Tribes. Can you say that in every part of India irrespective of local circumstances you should have a common yardstick. All this would make an intrude into, a change in other words. " Justice Joseph said.

Attorney General responded saying "What has to be noted is, Parliament had competence to enact this entire part in regard to multi state cooperative societies. It has included state cooperative societies as well. So far as purpose is concerned, its laudable, as it wanted these Provisions to apply through out the country to cooperative societies as well as Multi state cooperative societies."

AG referring to Definition of the States under Article 12, stated that State includes parliament and the State legislature. As far as Scheduled caste and Scheduled Tribes are concerned, AG stated that this was a mandate which was to be exercised for benefit of SC ST throughout India so law could've been passed for purpose of giving reservations throughout India and the States.

"Your arguments are based on Articles 15 and 16. These are enabling provisions, no one can demand reservations. Its for the competent legislature to take the call. These don't cloak the Parliament. They give power to dictate to State Legislature how and in what manner it should exercise its legislative power." Justice Joseph said.

Attorney General responded saying that "Identification of Scheduled Castes and Scheduled Tribes who are entitled to reservations, a long list is entrusted to Parliament for whole country. Identification for a state can also be done, simultaneously but limited to State by State Legislature. But if Parliament has done it for the entire country i would say that it would be valid."

At this juncture, Justice Nariman stated that "Can we look at it from slightly different point? So far as entry 32 is concerned, it may be possible for you to argue that, firstly no part of that entry has been taken out and given to Parliament. Therefore there is no impact on the entry. Secondly you are trying to show from Tamil Nadu act, that in point of fact the pith and substance of the Entry speaks several things and you may have touched on two or three of things, so its not a substantial impact it's an insignificant impact. This we understand is your argument in a nutshell "

"However when you come to Article 246, it again requires ratification if in any manner you are actually seeking to make an amendment under separate clause. Now, 246 (3) that within its domain the State has exclusive powers to make laws. Are you not by this constitutional amendment taking away that exclusiveness?" Justice Nariman asked

"The word is exclusive. Now, the State therefore will have exclusive powers so far as Cooperative Societies are concerned and exclusive power is, it's totally upto the Legislature. Does this not directly impact 246(3)?" the Bench asked

The Bench added " Mr Attorney, If you read entry 43 list 1, Entry 32 of list 2 with Entry 43 of list 1, makes situation amply clear. So far as cooperative societies within the state are concerned it will be exclusively under domain of state, and its specifically excluded so far as Central list is concerned"

Justice Nariman further said "If you want to achieve uniformity, the Constitutional way is Article 252 which is what you did so far as Urban Land is concerned. That is the only way. You can't short circuit way by this procedure."

"Each State Legislature will have to pass resolution." AG said.

"Yes. When land was an exclusively state subject you told the Legislatures of the State that you band together, and give up Urban land, plead it to the Centre for this purpose. If you want uniformity qua state subject, you do that under 252" : Justice Nariman said.

"Your lordships should still examine as to whether impact is significant or not. The judgements cited so far do not include the issue of legislative competence. So far as this is concerned, what has been pointed out under Article 246 (3) the Exclusive competence of State Legislature has been taken away, I can still say, if it is only incidental and ancillary the provisions, in such a case, it will not be liable to be set aside." Attorney General said

Calling it erroneous, Attorney General read out the portion of the High Court's impugned judgement which stated that principle of basic structure had been violated because the there was no compliance with the proviso requiring ratification of amendment by the State.

"Your Lordships, the Question of basic structure will not arise on question for not having followed the procedure. If Procedure under this should have been followed, in any case… " AG said

"Its not an additional point. You're right. Its a parasitical point. " Justice Nariman said.

"Suppose I violate the content of Article 246 by passing a law which violates article 246. The question is will it be struck down because of the fact that it is outside the legislative competence." AG said.

"Take a case where through a constitutional amendment where you delete the 'exclusively' in 246. If you do that indirectly what will be the impact? " the Bench asked.

"I'll be violating 246, violation of 246 may not bring about a change in 246. The two are different concepts altogether" AG said

"In effect what are you doing, you are saying so far as cooperative societies are concerned the law making is no longer exclusive." Bench said

"Those limitations are not of a significant character." AG responded.

Attorney General further submitted "Your Lordships may have to recognise the fact that the Parliament was entitled to amend the Constitution with regard to Multi State Cooperative Societies Entry 44"

"With reference to Entry 44 under which you are seeking to rest your power, that doesn't appear to have within its sweep cooperative society for a reason that though it may be a cooperation otherwise, Corporation which is mentioned is all Corporation other than cooperative societies. If you come to Entry 32, the first limb deals with state legislature powers, in respect of Corporations other than in those List 1. They have separately mentioned cooperative societies in the end of it. Cooperative societies is not a Corporation" Justice Joseph said.

Attorney General further said "According to me your lordships have no competence to strike down 243 ZR because that does not require ratification. On what basis can you strike this down? You can't say this requires ratification as so far as Parliament is concerned its entitled to amend Constitution and enact this provision. If you can't strike down you are bound to give effect to it. By giving effect to it, your Lordships will strike out wherever the act says State put in Centre. Now you have two acts, side by side. One for multi state cooperative societies and other for State Cooperative Societies"

"What's been shown to us, The scheme is that entire law with 12-13 articles are devoted to domain of State Legislature " Bench said.

"These are severable provisions. They don't require ratification " AG said.

Senior Adv Prakash Jain appearing for one of the other appellants submitted that the amendment has been made by Parliament In exercise of its constituent power and not in its legislative power. The State legislature's power are subject to constitutional provisions particularly article 245. He added that the Right to form cooperative societies being fundamental rights, the amendments were enhancing of basic structure of constitution.

Referring to statement of objects and reasons he stated that they are in sync with cooperative principles to which reference has been made in a previous judgements. He added that broad principles were made including voluntary open memberships, autonomy and independence, education training and information, concern for community, etc. All state laws are basically according to these principles.

"My submission is that Relevant articles in this chapter, from Article 243 ZJ - ZQ, namely around 13 articles essentially aim to subserve cooperative principles and objects, which has culminated into passing of 97th amendment.

Submissions Made By The Respondent:

Adv Masoom Shah appearing for the respondent Mr Rajendra Shah, who was the PIL petitioner before the High Court structured his submissions around:

• How Cooperative societies are a state subject.

• What are restrictions under State Legislative Powers by coming into force of 97th amendment.

• Whether wisdom is necessary or not as per Constitution Bench judgement of the SC

• Whether ratification is required or not, and why it was required to be complied with.

While defending High Court's order, Shah submitted that the Parliament has curtailed and restricted the State Legislature powers, without changing the language of entries of State list, they have tinkered and effected a change in Article 246 (c) and list of 7th schedule i.e List II State list Entry 32.

Referring to a Constitution Bench Judgement Shah stated that Parliament when exercising its powers to amendment constitution under 368 cannot amend the State Act, there is no other article which permits that.

Shah further pointed that example of limited amending power is Article 368 and that limited amending power is itself part of Basic structure of the Constitution as per the court's judgements. Parliament when amends its not acting in its constitutional power, at that point it has a limited power and is acting under a controlled Constitution

Shah stated that there have been restrictions on state's power, so entry 32 should now be read as subject to 9(b) as made by the amendment, so therefore a change has been made in entry 32. According to Shah, the amendment will have absurd consequences if allowed.He stated that List II is not just cooperative societies, it also has police, etc. Police and land are state subject and parliament will legislate by constitutional amendments

"If the same is done in those cases, From a quasi federal state, we'll become a central state" Shah said.

According to Shah, Cooperative society is state subject and therefore ratification under clause b and c of 368(2) is required. He added that 17 states having passed amendment after 97th amendment is of no consequence.

Shah said even if Union or State list is enlarged or curtailed, ratification is important.

"They couldn't have done this without ratification, They are indirectly trying to control state list, and have therefore have done a fraud on the constitution" Shah said.

Further Shah also submitted that the Ratification is even required for entry 44 involved in union list which covers multi state Cooperative society. Shah further said that Entry 44 should read subject to Constitutional amendment, there has been an alteration hence ratification is required

"Even in multi state entry 44 is equally subject to amendment that also requires the ratification. That's your point ? " the Bench asked

Shah replied in the affirmative.

In the last part of his submissions, Shah stated that once subject of Cooperative Society is in list II of schedule 7, by depriving state legislature of their free exercise of right to enact on the same subject, by curtailment of their right over subject matter by duly enacted provision of the Constitution without following requirement of ratification, the doctrine of Federalism which is a basic feature of the Constitution has been infringed.

Shah concluded by quoting eminent Jurist Mr Nani Palkhivala and stated that eternal vigilance is required by the Court in this matter.

"We must compliment you, you have argued extremely well." Justice Nariman said

"You didn't read that sentence that you quoted completely." the Bench pointed out

"Eternal vigilance is only thing that will keep majoritarian Government at bay." Shah read out Mr Palkhiwala's quote.

Click here to read/download the Gujarat HC judgment