'Fundamental Right To Form Cooperative Societies', 'Article 43B': Remnants Of 97th Constitutional Amendment After Supreme Court Judgment

The Supreme Court struck down most of the provisions introduced by 97th Constitutional Amendment on the ground that the requisite ratification from states was not obtained as per Article 368(2) of the Constitution.

The majority (2:1) also held that Part IXB is operative insofar as multi-State co-operative societies are concerned. But there are a couple of important provisions inserted by 97th Amendment which are untouched by the judgment and therefore still remains as part of the Constitution.

Section 2 of the Amendment Act inserted the word 'cooperative societies' to Article 19(1)(c) which now reads as follows:

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.'

The provisions of 97th amendment related to Article 19 and Article 43B are not affected since the challenge before the Court was only against Part IXB inserted by the 97th amendment.

However, Justice RF Nariman's judgment addresses the contention raised by one of the parties that the consequence of holding that the Constitution 97th 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. 

"We reject this argument for two reasons. If the doctrine of severability were not to apply for the aforestated reason, then the majority judgment in Kihoto Hollohan (supra) 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 of the majority judgment in Kihoto Hollohan (supra). 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 us.", the Court observed.

According to Justice KM Joseph dissent, to sustain the provisions (243ZR and 243ZS) the court would have to resurrect the dead provisions contained in Article 243ZI to 243ZQ and Article 243ZT.

The majority judgment accepted the contention raised by the Centre 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 that therefore the matter should be viewed as if a separate part within Part IXB has been enacted insofar as multi-State cooperative societies are concerned.

The legislative device of incorporation by reference is a well-known device where the legislature instead of repeating the provisions incorporates them to apply it for  other subjects (in this case multi-state cooperative societies) for the sake of convenience.

This means that, the provisions of the Part (though not applicable to cooperative societies) will still apply to the multi-State cooperative 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. Also, the provisions of this Part shall apply to 'multi-State cooperative societies' operating in Union Territories with modification suggested in Article 243ZS.

Also from the judgment:

Supreme Court Strikes Down 97th Constitutional Amendment To The Extent It Relates To Co-operative Societies Case

States Have Exclusive Legislative Power In Cooperative Societies' Matter: Supreme Court

Supreme Court Sheds Light On The Contours Of Ministry Of Cooperation

Case: Union of India vs Rajendra N Shah [CA 9108-9109 of 2014]
Coram: Justices RF Nariman, KM Joseph and BR Gavai
Citation : LL 2021 SC 312.

Click here to read/download the judgment