A constitutional amendment is a rare event. There have only been 104 such cases of those in the 71 years since the Constitution came into being.
Rarer still is when a court strikes down a constitutional amendment, an event which has occurred only seven times before recent last week.
Such a moment has come to pass once again as Union of India vs Rajendra N. Shah, a judgment delivered by the Supreme Court of India.
The 97th Constitutional Amendment was struck down, albeit in a limited manner.
Contributions made by the Co-operative sector:
- The co-operative sector, over the years, has made significant contribution to various sectors of national economy and has achieved voluminous growth.
- 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.
- However, it has shown weaknesses in safeguarding the interests of the members and fulfilment of objects for which these institutions were organised.
- There have 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.
The background of cooperative societies:
The 97th Constitutional Amendment brought about many changes to the legal regime of cooperative societies.
The amendment added “cooperative societies” to the protected forms of association under Article 19(1)(c), elevating it to a fundamental right.
It also inserted Part IXB in the Constitution which laid down the terms by which cooperative societies would be governed, in more granular detail than was palatable.
Why now violation of 97th Constitutional Amendment happened and challenged:
- The Constitution can be amended only by the procedure provided in Article 368.
- The amendment procedure requires a majority of the total strength of each of the Houses of Parliament and two-thirds majority of those present and voting.
- A proviso to the Article lists out some articles and chapters of the Constitution, which can be amended only by a special procedure.
- The special procedure requires that the amendment will also have to be ratified by the legislatures of half of the States.
- It is precisely on the grounds of violation of this additional requirement that the 97th Constitutional Amendment was challenged.
- It is important to locate this amendment in context. The idea that the cooperative sector ought to be controlled at the State level and not at the central or Union level goes back all the way to the Government of India Act, 1919 which placed cooperatives in the provincial list.
- This scheme carried forward into the Constitution with Entry 32 of the State List in the Seventh Schedule of the Constitution conferring power on the State legislatures to make laws pertaining to incorporation, regulation and the winding up of cooperative societies.
- The rules of the Central and State governments are well-demarcated. They cannot interfere in each other’s jurisdiction.
- The Centre’s role is restricted only to multi-State cooperative banks. There have been reports speculating that the creation of a separate cooperation Ministry was solely to undermine or regulate state cooperatives. But such assumptions are baseless.
- The Supreme court’s verdict came on the Centre’s plea challenging the Gujarat High Court’s decision striking down certain provisions of the 97th constitutional amendment while holding that Parliament cannot enact laws with regard to cooperative societies as it is a state subject.
- The court took the example of the 73rd and 74th Amendments which introduced the chapters on panchayats and municipalities, respectively.
- Those amendments, similar in impact on the legislative power of the States, had been passed by the special procedure involving ratification by State legislatures.
- The court noted that the procedure had not been followed in this case but clarified that the judgment is confined to the procedural lacuna and does not go into the question of the amendment being violative of the basic structure of the Constitution.
- The case for transparency and efficiency in the sector is strong; that goal must be pursued not by scaring the very soul of the sector but by advancing the cooperative spirit.
Way Ahead points provided by author:
- The organising principles and mechanism of these cooperatives differ from area to area and depend on the industry or crop which forms the fulcrum of the cooperative.
- Homogeneity in this area would only result in the creation of round holes in which square pegs no longer fit.
- They also would not really serve to break the control some political interests have taken over cooperatives.
- The cooperative sector has always been in the domain of the States or provinces.
- It is best that the Government takes this judgment in the right spirit and stays away from further meddling in the cooperative sector, notwithstanding the creation of the new Ministry.
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.
These institutions are needed to serve the interests of members and public at large and also to ensure their autonomy, democratic functioning and professional management.