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2021 Supreme(SC) 367

SUPREME COURT OF INDIA
R. F. NARIMAN, B.R. GAVAI, K.M. JOSEPH, jj.
UNION OF INDIA – APPELLANT
VERSUS
RAJENDRA N SHAH & ANR. – RESPONDENTS
CIVIL APPEAL NOS.9108-9109 of 2014, CIVIL APPEAL NO. 2826 OF 2021, (@ SPECIAL LEAVE PETITION (CIVIL) NO.13329 OF 2018), CIVIL APPEAL NO. 2825 OF 2021 (@ SPECIAL LEAVE PETITION (CIVIL) NO.13215 OF 2018), CIVIL APPEAL NO.282 OF 2020, CIVIL APPEAL NO.281 OF 2020, CIVIL APPEAL NO. 2827 OF 2021 (@ SPECIAL LEAVE PETITION (CIVIL) NO.14227 OF 2020)
Decided on : 20-07-2021

Advocates appeared:
For the Appellant(s) :K.K. Venugopal, Attorney General, Tushar Mehta, SG Kanu Agrawal, Zoheb Hussain, Meenakshi Grover, S.K. Gupta, Shraddha Deshmukh, Chinmayee Chandra, Amrish Kumar, Raj Bahadur Yadav, P.K. Jani, Mohit Paul, Shikha Sarin, Sunaina Phul, Sahil M. Shah, Shivang Jani, Advocates
For the Respondent(s):Masoom K. Shah, Vishwas K. Shah, Neha Shah, Dhrupad Patel, Anup Jain, Udit Gupta, Abhishek Baid, Pulkit Tare, Ritika Sinha, V. K. Monga, K. Maruthi Rao, K. Radha, Anjani Aiyagari, Hemantika Wahi, Tushar Mehta, Solicitor General Manisha Lavkumar, Aniruddha P. Mayee, Advocates

Headnote:

Constitution of India,1950 - Articles 368(2), 243ZI to 243ZQ , 19(1)(c) , 239 , 245 , 246(3) , 54, 55, 73, 162, 241 or article 279A , 136, 226, 227 and 43B - Constitution (Eighty Sixth Amendment) Act, 2002 - Articles 21A, 43B - Bribery Amendment Act, 1958 - Sections 41, 55 , 29(4) and clause (4) of Section 29 - Protection of certain rights regarding freedom of speech - Promotion of co-operative societies - Constitution 97th Amendment Act was passed by the requisite majority Presidential assent to Amendment said Amendment was published in Official Gazette of India into force with effect important question raised in these petitions and decided by a division bench of High Court by impugned judgment whether Part IXB is non est for want of ratification by half of States under proviso to Article 368(2) - Co-operatives movement in India can be legislatively traced to two British Acts Cooperative Societies Act, 1904 and Co-operative Societies Act, 1912 - Government of India Act, 1919, subject ‘co-operative societies’ was contained in entry 13 of Provincial list - Conference of ministers dealing with co-operatives in various states resolved to amend Constitution to ensure democratic, autonomous and professional functioning of co operatives to address key issues of empowerment of co-operatives through voluntary formation, autonomous functioning – Held, Entirely dependent upon provisions contained in Article 243ZI to 243ZQ - This is for reason that both these provisions expressly provide that ‘provisions of this part’, which clearly means foregoing provisions, which are contained in Article 243ZI to 243ZQ, are to apply in regard to multistate cooperative societies and to Union Territories with modifications, which are indicated therein. There can be application and modifications of something which exists - There cannot be either, when elaborate provisions are to be treated as not born – Court will proceed on basis that Parliament intended to produce homogeneity in regard to certain legislative value judgments which would be cast in stone in a manner of speaking by having those values declared in grundnorm itself - It would appear to be that these values were to apply, across board, to cooperative societies born under laws made by the State Legislatures, as also, to those made by Parliament - Court has painted relevant provisions, which are substantial provisions (Article 243ZI to 243ZQ), with the brush of unconstitutionality, rendering those provisions, still born, it would appear that provisions contained in Article 243ZR and Article 243ZS would not have crutches without which these provisions cease to be workable and are impossible to sustain - Unconstitutional part, which is to be an integral part of Article 243ZR and Article 243ZS, must continue to exist, if provisions’, in question, are to bear life to sustain these provisions court would have to resurrect dead provisions contained in Article 243ZI to 243ZQ and Article 243ZT - Doctrine of Severability must apply on surer foundations - Appeals are dismissed

Judgement Key Points

The legal analysis of the constitutional amendments, particularly Part IXB related to cooperative societies, hinges on the procedural requirements outlined in the Constitution, notably the ratification process specified in the proviso to Article 368(2). The core issue is whether the insertion of Part IXB without the requisite ratification by at least half of the State legislatures renders the amendment unconstitutional and non est (!) (!) .

The constitutional scheme clearly demarcates the legislative powers between the Union and the States, with entries in the legislative lists (List I, II, and III) defining the scope of authority. Entry 32 of the State List (List II) specifically pertains to the subject of cooperative societies, and the power to legislate on this subject is primarily reserved to the States (!) (!) (!) .

The amendment process for constitutional changes involves both procedural and substantive limitations. The procedural requirement under the proviso to Article 368(2) mandates that certain amendments—especially those affecting legislative and federal structures—must be ratified by at least half of the State legislatures before being presented for Presidential assent (!) (!) (!) .

Inserting Part IXB into the Constitution, which imposes significant restrictions and conditions on State legislatures’ power to legislate on cooperative societies, effectively alters the legislative landscape. This change substantially impacts the legislative competence of the States, thereby affecting the federal balance. Since the amendment alters the scope of legislative authority reserved to the States, it triggers the requirement of ratification under the proviso (!) (!) (!) .

The doctrine of severability becomes relevant when assessing whether the entire amendment, including parts that failed to receive proper ratification, can be upheld. If the non-ratified provisions are inseparable from the rest, the entire amendment may be deemed invalid. Conversely, if the valid parts are independent and can stand on their own, they may be severed and upheld, provided they do not depend on the invalid portions for their operation (!) (!) (!) .

In the context of Part IXB, the provisions that substantially impact the legislative powers of the States—such as restrictions on the scope of State laws and the automatic cessation of existing laws incompatible with Part IXB—are considered to have a significant effect on the federal structure. Therefore, they require proper ratification (!) (!) (!) .

The application of the doctrine of severability to these provisions hinges on whether the main purpose of the amendment can be fulfilled without the invalid portions. If the core objectives can be achieved independently, then the valid provisions may survive, and the invalid ones can be severed. However, if the invalid provisions are fundamental to the scheme, the entire amendment risks invalidity (!) (!) .

In the specific case of the 97th Amendment, the absence of ratification by the requisite number of States renders the entire insertion of Part IXB, including its definitions and restrictions, unconstitutional and invalid. This invalidity impacts the provisions that are directly linked to the legislative competence of the States, rendering those provisions stillborn unless severed and upheld separately (!) (!) .

Furthermore, provisions applicable to multi-State cooperative societies and Union territories are treated differently. While some parts may be severable and thus valid, the parts directly affecting State legislative powers without proper ratification are invalid. The application of the doctrine of severability depends on the independence and operability of the valid parts after excising the invalid portions (!) (!) .

In conclusion, the constitutional amendments that significantly alter the legislative competence of the States, especially without the mandated ratification, are constitutionally infirm. The doctrine of severability may allow parts of the amendment to be upheld if they are independent and capable of functioning without the invalid portions. Otherwise, the entire amendment, particularly those parts that impact federal principles, must be declared invalid for want of proper ratification (!) (!) .


JUDGMENT :

R.F. Nariman, J.

1. Applications for intervention are allowed. Leave granted.

2. These appeals raise an important question as to the vires of the Constitution (Ninety Seventh Amendment) Act, 2011 [the “Constitution 97th Amendment Act”] which inter alia introduced Part IXB under the chapter heading ‘The Co-operative Societies’. The Constitution 97th Amendment Act was passed by the requisite majority of the Lok Sabha on 27.12.2011 and the Rajya Sabha on 28.12.2011. The Presidential assent to the aforesaid Amendment followed on 12.01.2012 and the said Amendment was published in the Official Gazette of India on 13.01.2012, coming into force with effect from 15.02.2012. The important question raised in these petitions and decided by a division bench of the Gujarat High Court by the impugned judgment dated 22.04.2013 is whether Part IXB is non est for want of ratification by half of the States under the proviso to Article 368(2). The impugned judgment of the High Court has declared that the said constitutional amendment inserting Part IXB is ultra vires the Constitution of India for want of the requisite ratification under Article 368(2) proviso, which however will not impact amendments that have been made in Article 19(1)(c) and in inserting Article 43B in the Constitution of India.

3. The co-operatives movement in India can be legislatively traced to two British Acts, namely, the Cooperative Societies Act, 1904 and the Co-operative Societies Act, 1912. Under the Government of India Act, 1919, the subject ‘co-operative societies’ was contained in entry 13 of the Provincial list. This was continued by the Government of India Act, 1935, ‘co-operative societies’ being contained in entry 33 of the Provincial list. This was then further continued by the Constitution of India, this time the same entry falling within Schedule VII List II, i.e., the State List as a part of entry 32 thereof. It is therefore important at this stage to set out the constitutional scheme insofar as it applies to co-operative societies thus:

    Art 19. Protection of certain rights regarding freedom of speech, etc.-

    (1) All citizens shall have the right-

    xxx xxx xxx

    (c) to form associations or unions or co-operative societies;

    xxx xxx xxx

    Art 43B. Promotion of co-operative societies.-

    The State shall endeavour to promote voluntary formation, autonomous functioning, democratic control and professional management of co-operative societies.

    SEVENTH SCHEDULE

    (Article 246)

    List I-Union List

    xxx xxx xxx

    43. Incorporation, regulation and winding up of trading corporations, including banking, insurance and

    financial corporations, but not including co-operative societies.

    44. Incorporation, regulation and winding up of corporations, whether trading or not, with objects not

    confined to one State, but not including universities.

    xxx xxx xxx

    List II-State List

    xxx xxx xxx

    32. Incorporation, regulation and winding up of corporations, other than those specified in List I, and universities; unincorporated trading, literary, scientific, religious and other societies and associations; cooperative societies.

    xxx xxx xxx

4. On 07.12.2004, a conference of ministers dealing with co-operatives in the various states resolved to amend the Constitution to ensure democratic, autonomous and professional functioning of co operatives; to address key issues of empowerment of co-operatives through voluntary formation, autonomous functioning, democratic control and professional management; for regular and timely conduct of elections, general body meetings and professional audit. The meeting ended stating:

    “The conference also noted that the central government has taken a laudable step by enacting the Multi-State Cooperative Societies Act, 2002, conforming to the thrust areas of reforms in co-operative legislation and has been widely appreciated. The conference while appreciating the initiative taken by the central government resolved that this subject too should be considered by the high power committee.

    It w

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