Cooperative: 97th Constitutional Amendment Act
● A three-judge bench of the Supreme Court on Tuesday quashed part of the 97th Amendment Act and Part IX B of the Constitution which governs the “Cooperative Societies” in the country.
● The three-judge bench held that the Constitution (97th Amendment) Act 2011 will be valid and operational concerning multi-state cooperative societies which relate to cooperative societies existing across many states or union territories.
Why did the Supreme Court strike down part of the 97th Constitutional Amendment Act? Give a short description of the amendment Act.
97th constitutional amendment:
● The 97th constitutional amendment deals with issues related to effective management of co-operative societies in the country.
● The Part IX B of the Constitution inserted by the 97th amendment deals with incorporation, terms of members of the board and its office bearers and effective management of cooperative societies.
● Part IX B contained Articles 243ZH to Article 243ZT, which empowered Parliament (for multi-state cooperative societies) and state legislatures for other cooperative societies to make laws.
● These laws could prescribe standards of incorporation, regulation, winding up, composition, tenure, audit, submission of periodic accounts and reports, provision for reservation and penalty clauses.
Supreme Court’s Ruling:
● Part IX B restricts the power of the states to regulate the cooperative societies since the states already had the power to regulate cooperative societies as they fall under Entry 32 of the State List.
● Since cooperative societies were a subject reserved exclusively for States under the Seventh Schedule. Any change required ratification of half of the state legislatures. Since the states had not ratified the amendment, the Supreme Court struck down the related provisions.
● The Supreme Court held that the Constitution (97th Amendment) Act 2011 will be valid and operational concerning multi-state cooperative societies which relate to cooperative societies existing across many states or union territories. Since Multi-State Co-operative Societies (MSCS) with objects not confined to one State, the legislative power would be that of the Union of India.
Central government’s argument:
● The Centre justified amendment aimed to inject ‘professionalism’ and autonomy into the functioning of the societies.
● It has been argued that the lack of accountability by the members has led to poor services and low productivity.
● The government argued that even elections are not held on time. Co-operatives need to run on well-established democratic principles.
Co-operatives are key tool for socio-economic development in India. The state are better equipped to understand the challenges of their local cooperatives. This judgment would also strengthen democratic and federal contours of India.