SC quashes parts of the 97th amendment

Context:

The Supreme Court in a 2:1 majority verdict upheld the validity of the 97th constitutional amendment that deals with issues related to effective management of cooperative societies but struck down a part inserted by it which relates to the Constitution and working of cooperative societies.

Relevance:

GS-II: Polity and Governance (Constitutional Provisions, Judiciary, Government policies and interventions, Issues arising out of the design and implementation of these policies)

Dimensions of the Article:

1. What are Cooperative Societies?
2. Cooperative Movement
3. Provisions in the Constitution regarding Cooperative societies
4. 97th Amendment
5. Issue with the 97^th Amendment
6. About the Recent Supreme Court Ruling on the 97^th Amendment

What are 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.

Cooperative Movement

In pre-Independence era

• The British government came forward and passed three acts- the Deccan Agriculture Relief Act (1879), the Land Improvement Loan Act (1883) and the Agriculturists Loan Act (1884) – when farmers agitated against extortion by money-lenders.
• However, that Cooperative movement was introduced with structure and shape when the British enacted the Cooperative Credit Societies Act, 1904.
• In 1919, Cooperative societies became a provincial subject and the provinces were authorised to make their own cooperative laws under the Montague-Chelmsford Reforms.

After Independence

• After independence cooperatives became an integral part of Five-Year Plans.
• In 1958, the National Development Council (NDC) had recommended a national policy on cooperatives and also for training of personnel’s and setting up of Co-operative Marketing Societies.
• In 1984, Parliament of India enacted the Multi-State Cooperative Societies Act to remove the plethora of different laws governing the same types of societies.

Provisions in the Constitution regarding Cooperative societies

• Directive Principles of State Policy enshrines under article 43 that- the State shall endeavour to promote cottage industries on an individual or co-operative basis in rural areas.
• Right to form cooperatives can also be construed as a Fundamental Right, Article 14 – (Right to Equality) and Article 19(1)(c) as ‘Right to form Associations or Unions.
• The Constitution (Ninety Seventh Amendment) Act 2011 relating to the co-operatives is aimed to encourage economic activities of cooperatives which in turn help progress of rural India.

97th Amendment

• In Part III of the constitution, after words “or unions” the words “Cooperative Societies” was added. This enables all the citizens to form cooperatives by giving it the status of fundamental right of citizens.
• In Part IV a new Article 43B was inserted, which says: The state shall endeavour 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 centre roles.

Issue with the 97th Amendment

• The provisions in the Amendment were passed by Parliament without getting them ratified by State legislatures as required by the Constitution.
• 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.

Central Government’s Argument

• It justified that the government was injecting ‘professionalism’ and autonomy into the functioning of the societies.
• Lack of accountability by the members has led to poor services and low productivity.
• Even elections are not held on time. Co-operatives need to run on well-established democratic principles.

About the Recent Supreme Court Ruling on the 97th Amendment

• 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.
• 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.
• 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.
• The SC did not strike down the portions of Part IXB of the Amendment concerning ‘Multi State Co-operative Societies (MSCS)’ due to the lack of ratification. MSCS have objects not confined to one State, the legislative power would be that of the Union of India which is contained in Entry 44 List I (Union 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.

-Source: The Hindu