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Supreme Court strikes down parts of a Constitutional Amendment for cooperative societies

  • Posted By
    10Pointer
  • Categories
    Polity & Governance
  • Published
    22nd Jul, 2021

Context

In a major boost for federalism, the Supreme Court struck down parts of a Constitutional Amendment that shrank the exclusive authority of States over their co-operative societies, a sector considered as a massive contributor to the economy.

About the amendments made by Parliament in Co-operative societies

  • Part IXB was introduced into the Constitution through the 97th Amendment of 2012.
  • The provisions in the Amendment were passed by Parliament without getting them ratified by State legislatures as required by the Constitution.
  • These provisions determined the number of directors a society should have.
  • Their length of tenure and even the necessary expertise required to become a member of the society.
  • Justification: The Centre justified it by injection of ‘professionalism’ and autonomy into the functioning of the societies. It said that 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”.

What Supreme Court had to say?

  • The SC however said the Centre has power over Multi-State Cooperative Societies which operate across States.

Multi-State Cooperative Societies

  • The Multi-State Cooperative Societies Bill was introduced in the Parliament and became an act in 2002.
  • The act consolidated and amended the law relating to cooperative societies, with objects not confined to one State and serving the interests of members in more than one State.
  • It was initiated to facilitate the voluntary formation and democratic functioning of co-operatives as people's institutions based on self-help and mutual aid and to enable them to promote their economic and social betterment and to provide functional autonomy, was being felt necessary by the various cooperative societies, and federation of various cooperative societies as well as by the Government.
  • The court held that cooperative societies come under the “exclusive legislative power” of State legislatures.
  • 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 to over the co-operative sector.

Co-operative Societies

  • A cooperative society is a voluntary association of individuals having common needs who join hands for the achievement of common economic interest.
  • Its aim is to serve the interest of the poorer sections of society through the principle of self-help and mutual help.
  • Cooperative Societies Act is a Central Act. However, ‘Cooperative Societies’ is a State Subject.
  • Cooperative Societies is a state subject under entry 32 state list of the Seventh Schedule of the Indian Constitution.
  • According to the Constitutional (97th Amendment) Act, 2011 forming a Cooperative Society is a fundamental right under Article 19(1)(i).
  • Constitutional (97th Amendment) Act, 2011 added the words “or co-operative societies” after the word “or unions” in Article 19(l)(i) and insertion of article 43B i.e., Promotion of Co-operative Societies and added Part-IXB i.e., The Co-operative Societies.
  • Article 43 B says that states shall endeavour to promote voluntary formation, autonomous functioning, democratic control and professional management of cooperative societies.