A crucial ruling on legislative domains

Center, Parliament cannot encroach on states' turf

The Supreme Court's judgement striking down parts of the 97th Constitutional Amendment dealing with cooperative societies is an important assertion of the rights of states. The judgement has particular relevance in the context of the formation of a Union Ministry of Co-operation and discussions about its purpose, role and scope. The judgement annulled Part IX B introduced by the Constitution (97th Amendment) Act, 2011, to the extent that it deals with state cooperative societies on the ground that it was passed without obtaining the ratification of at least one-half of the state legislatures as mandated by the Constitution. It upheld a 2013 judgement of the Gujarat High Court partially, and held that the amendment would hold good for multi-state cooperative societies, on which Parliament is competent to enact laws.

Cooperative societies are a state subject. The constitutional amendment was done with the intention of improving their functioning. Most cooperative societies are known to be poorly managed and ill-regulated and lacking in transparency. They control large parts of the economy in some states like Maharashtra and are vulnerable to control by politicians. The amendment was intended to make them more autonomous and democratic and to encourage professional management. It laid down some guidelines for state legislation on cooperatives which touched upon their structure, composition and functioning. These included provisions related to reservation of seats for SC/STs and women, duration of the tenure of elected members, etc. The court has found that this is an encroachment into the jurisdiction of states. States did not object to these provisions, but the court felt that Parliament could not make laws on state subjects. It found that the amendment went against the basic structure of the Constitution.

The court said this clearly: “There can be no doubt that our 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...yet within their own sphere, the states have exclusive power to legislate on topics reserved exclusively to them.” Any further move by the Centre on cooperative societies or on any subject that falls within the state list will have to take into consideration this ruling by the Supreme Court. Though the judgement is about the legislative powers of state Assemblies and Parliament they hold good for executive powers also, because executive powers are co-extensive with legislative powers. That would mean that the powers of the newly created Ministry of Co-operation will be limited to multi-state cooperative societies. State cooperative societies will be outside its domain.