97th Amendment Act, 2011

• The Supreme Court upheld a 2013 judgment of the Gujarat HC which struck down the provisions of the Constitution(97th Amendment) Act to the extent it introduced Part IX B in the Constitution to deal with co-operative societies.
• The bench unanimously held that the 97th Amendment required ratification by at least one-half of the state legislatures as per Article 368(2) of the Constitution, since it dealt with an entry that was an exclusive state subject.

97th constitutional amendment:

• In Part III of the constitution, afterwords “or unions” the words “Cooperative Societies” were added. This enables all the citizens to form cooperatives by giving it the status of the fundamental right of citizens.
• In Part IV a new Article 43B was inserted, which says: The state shall endeavor to promote voluntary formation, autonomous functioning, democratic control and professional management of the co-operative societies”.
• After Part IXA of the constitution, a Part IXB was inserted to accommodate state vs center roles.

Issue with the 97th Amendment

• The provisions were passed by Parliament without ratified by State legislatures as required by Art 368(2).
• It went to the extent of determining the number of directors a society should have or their length of tenure and even the necessary expertise required to become a member of the society.

SC judgement:

• The 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. However, within their own sphere, the States have exclusive power to legislate on topics reserved exclusively to them.
• The 97th Constitutional Amendment required ratification by at least one-half of the state legislatures as per Article 368(2) of the Constitution, since it dealt with an entry which was an exclusive state subject (co-operative societies). Since such ratification was not done in the case of the 97th amendment, it was liable to be struck down.
• Part IX B, which consists of Articles 243ZH to 243ZT, has “significantly and substantially impacted” State legislatures’ “exclusive legislative power” over its co-operative sector under Entry 32 of the State List.
• It is declared that Part IXB of the Constitution is operative only insofar as it concerns multi-State cooperative societies both within the various States and in the Union Territories.

Article 368(2):

• Under Article 368(2), Parliament can amend the Constitution by passing a Bill 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.
• And if following matters included then also require to be ratified by the Legislature of not less than one half of the States.

1. Article 54, Article 55, Article 73, Article 162 or Article 241, or
2. Chapter IV of Part V, Chapter V of Part VI, or Chapter I of Part XI, or
3. any of the Lists in the Seventh Schedule, or
4. the representation of States in Parliament, or
5. the provisions of this article,

Cooperative Societies

• The Cooperative Societies can be defined as an autonomous association of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through a jointly-owned and democratically-controlled enterprise”.
• The Cooperative Movement was started by the weaker sections of society for protecting its members from the clutches of large profit hungry businesses.